tv Bloomberg Daybreak Australia Bloomberg October 18, 2021 6:00pm-7:00pm EDT
take concrete steps to protect the planet. >> we need to restrict the growth and temperatures to 1.5 degrees by the end of the century. we think with the commitments we are seeing we could do it, but we are going to need some real action. haidi: u.s. shares extend their rebound. shery: and why china may be dialing back on its economic overhaul as ordinary citizens feel the pain. haidi: let's get more from our exclusive conversation with prime minister boris johnson. he sees tough change. also saying countries must take real action. he says he's making a last ditch calls to take these last up to protect the planet. he says participants must keep alive the prospect of containing
global warming to one point five degrees celsius. he says these talks were always going to be extremely tough but he's urging countries to make some hard pledges. also in that conversation, he spoke about the northern ireland protocol and commenting on the uk's relationship with china, saying he doesn't want u.k. to turn away chinese investment, saying he's no xenophobia and he's not about to pitchfork offers a way from china despite concerns from domestic lawmakers. shery: we have continued to see rising tensions between u.k. and china as other countries are trying to steer away from chinese companies investing in their 5g networks. that plus regulations leading to those concerns when it comes to the chinese adrs. despite the concerns come we continue to see the rebound of the golden dragon china index. 13% higher just this month.
we have a very strong earnings season with the s&p 500 rising for a fourth consecutive session to a five-week high. we are seeing u.s. futures muted at the open. we also have the crude oil price at around $82 a barrel. not changed after a 24 week high. we heard about opec failing to meet targets and russia to offset sending more gas to europe. higher commodity prices really filtering in to the inflation debate. take a look at yields at the front end -- highest since the pandemic and we see the 10 year yield headed toward that 160 above level, the gap between a five and 30 year yield at the
narrowest since april of 2020, potentially signaling and economic slowdown when you have these inflation concerns and perhaps a fed tightening that might come faster. at one point falling below that 84 basis point level. in february, at that 157 basis point level. if you step back and look at the spread between the two and 10 year, you will see yields remain at wider levels. when you look at the global picture, it's all about the surge in yields. we saw new zealand's inflation accelerating at the fastest pace in 10 years, leading to yields surging higher. u.k. yields also jumping because of that hawkish signal coming from the boe, so that broader surge in the belly really seen around the world.
haidi: key to the global economic recovery is how the pandemic plays out and part of that is the covid booster shots. we are hearing a report from the new york times that the fda is to allow mixing and matching as an approach to covid boosters. they said the government would not recommend one shot over another but using the same vaccine where prof -- is referable but we've seen studies finding recipients of the j&j single dose shot got extra rises in antibodies when they were given the modernity booster as opposed to another shot of the johnson & johnson vaccine. so we are hearing the fda could act this week. we are hearing from the moderna ceo speaking to us saying they expect that covid booster could get cleared this week. the u.k. prime minister, boris
johnson, is committing real action on climate change ahead of the cop 26 summit in glasgow. he spoke asked lucidly -- he spoke exclusively to bloomberg. the prime minister insisting he does not want to turn away chinese investment. p.m. johnson: when i was running london, i went several times to china and had fantastic trips. this investment in stocks that drives growth in this country, look at what is happening in greenwich -- things have taken off because of chinese investment, so i'm not going to tell you the u.k. government is going to pitchfork away every overture from china, of course
not. china is a gigantic part of our economic life and will be for our lifetime. that does not mean we should be naive in the way we look at our critical infrastructure, you mentioned power, you mentioned 5g technology -- those are all legitimate concerns many other governments around the world have. i've said this many times and it's worth repeating -- i'm no xenophobic. china is a great country. john: what about wind power? p.m. johnson: i think you would have to look at what you are defining as strategic or
critical. but i certainly think -- our trading relationship with china, in spite of all the difficulties, in spite of all the angry conversations or difficult conversations about the dalai lama or hong kong, we will continue to stick to our points. we will continue to stick to our views. but trade with china has continued to expand for a long time and i think probably will continue to expand for the rest of our lives. that doesn't mean that we shouldn't be cautious about how we handle our see ni and our fbi from china. that's why we brought in some of the legislation we have. john: obviously a huge deal in cop, a deal with xi jinping
unlikely to come at the moment. what your personal goal? p.m. johnson: i think cop was always going to be extreme he tough. we are hoping we will get a good turnout in spite of the pandemic. what we do want to focus on is the contributions in reducing co2 and making is hard pledges. we want commitments on coal, cars, cash come and trees. we want the world to move away from coal by 2040, 2034 developed nations. we want to make sure everyone stops using internal combustion engine cars and the u.k. is in the lead there. we said we would stop that by 2030. we want to big package for the developing world to help countries that haven't been historic emitters, so we need that hundred billion dollars. the last thing is we want to make sure we plant millions and millions of trees to help fix
the carbon and restore the balance of nature. we need to keep 1.5 alive. we need to restrict the growth in temperatures to 1.5 degrees by the end of this entry. we think with the clements we are seeing we could do it, but we will need to see some real action from the participants in glasgow. shery: u.k. prime minister speaking exclusively with john micklethwait. you can watch the full conversation just under 30 minutes now. the u.k. signaling it won't turn away chinese investments even if president xi jinping continues to shake up its key industries. let's bring in stephen engle our global economics and policy editor, kathleen hays. all of this coming as china is considering changes to the
advertising sector. >> obviously, there's been a confluence of economic and regulatory shocks ahead of the party planning next month and party congress next year as xi jinping has been stamping his political authority ahead of those big confab's in beijing. as the regulatory push continues, the big question is after those gdp numbers that were somewhat disappointing yesterday, how hard will xi jinping and the authorities in china tapped the brakes to protect economic growth? we've not necessarily seen and abating of the pressure on those tech platforms. the latest news telling -- latest sources telling bloomberg news that m.i.t. is said to be mulling asking these platform companies to let rivals like baidu, search companies
essentially to access and display their content in search results. this is important. it could have massive ramifications on marketing and advertising spending. beijing has been going after what they call the walled garden comedies ecosystems that have been built in we chat and alibaba to break up allegedly monopolistic behaviors and break down these walled gardens. this could have significant impact on companies like baidu. of the companies, baidu, alibaba, tencent, baidu has suffered -- has suffered the most as far as not being to tap the advertising revenue from those walled gardens. this would be an interesting thing to see if it does play out. haidi: it is the fed versus the markets.
kathleen: steve matthews from the bloomberg eco-team, the fed watching team in the region dug into this and was looking at a last-minute of the october meeting showed the federal reserve, the facts saying inflation will go down below 2% this year at a time when their key inflation indicator has risen 4.3% through august. so it continues to rise and jay powell continuing to rely on this and high inflation will abate. there's a lot of uncertainty but a former fed staff economist, she says 400 plus economists can dig down, there's no firm on wall street with that big a staff. the staff forecast could beat wall street consensus. but remember, the fed banks have
their own research departments. at the st. louis fed, jim bullard has been in front about this concern about inflation and hiking rates sooner. he says there's a 50% chance inflation will persist. so far, inflation is not proving to be transitory. inflation moved much higher than they expected and the markets are not waiving. after the bank of england made those hawkish comments, to rate hikes and 125 basis points by the end of next year, so investors have a different view, so we will watch them closely. haidi: let's get that market aspect as to what we are seeing. sophie: we are seeing that percolate through bond markets.
check out the aussie five year yield. pulling up the chart right now, the prospect may be signaled by the copper and gold ratio. this is as they jumped to record highs on a tightening supply with copper facing a historic squeeze when it comes to inventory due to the power crunch which had advisors revise their views on china. several projection seeing growth closer to 8%. ubs pinning growth at 7.6%. we do have winners in the global refining space, asian refiners seeing a boost to their margins. operating rates in the fourth
quarter returned to the highs we saw in early 2020. shery: let's go to vonnie quinn with the first word headlines. vonnie: the sec has debunked some conspiracy theory surrounding this year's frenzied gamestop trading. a report analyzes when retail traders took on wall street, sending game stock and other -- gamestop another stocks soaring. several market including payment for order flow. it did not offer specific policy recommendations. india nearing the one billion vaccine milestone mark, but the gap between people who are fully inoculated and those who have had just one shot is widening. they've given two doses to 20% of the population. by comparison, 51% have had a single dose. experts point to a number of factors, including less urgency
given lower case numbers. carrie lam is in the hospital after suffering an elbow fracture. she fell at her government house residents on monday night. a statement concern -- a statement says she will stay under observation. an executive council meeting is scheduled for tuesday but has been canceled. 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 funny quinn. this is bloomberg. haidi: still ahead, apple unveils a of airpods and macbooks. coming up, we will speak to joanne from capital management. this is bloomberg.
>> we are calling for yields to continue to rise here in treasuries but believe the fed rate hiking path will be relatively shallow all things considered. the market is trying to figure out whether policymakers will lean against the inflation we are seeing. our view is currently there's too much rate hike priced in for 2022. >> the role for the central bank is to provide marginal liquidity at the time for crisis and withdraw after the economy started to stabilize and come back. central banks are now running the markets. shery: major market voices weighing in on monetary policy. our next guest says inflation could worsen before getting better but investors can also insure against it. let's bring in a partner and portfolio manager at advisors capital management. always great having you with us.
how much more clarity will we get from third quarter corporate results on how best to hedge against inflation? joanne: investors ought to be hedge against inflation right now and not wait for the information that's coming over the course of the third quarter earnings report. i think one place two hedges in financial. banks tend to do better as rates go up. real estate is another place, but less obvious are some of the tech companies that provide income. the reason for that as their products are in such strong demand right now. these companies are going to be able to raise dividends and they are going to be able to increase their prices as inflation continues. companies like broadcom or cisco, there's an upgrade cycle in the cloud computing space and those companies are going to continue to do well and probably
be able to raise their dividends as fast, probably more so than the rate of inflation. that's an unusual way to build some hedging into your portfolio against inflation. haidi: we are seeing inflation because of the supply chain disruption and that includes chip shortages. will that impact the 5g rollout and will that have implications for some of the tech companies you are mentioning? joanne: that's a good question to think about and it's going to depend on which devices they are supplying to. suppliers to some of the higher end smartphones, we think they and their production is going to get priority among some of the foundries because you want to make sure you serve apple and get those products out the door. there are some that i think our top-tier customers that are
going to do just fine. so you have to really pick and choose and no which some conductor suppliers are supplying for which kind of devices to really understand whether they are going to be able to deliver to market expectation. this quarter is going to be more volatile for individual names. we are going to get a lot of names with these third-quarter reports that will tell us a lot about which companies can pass on the increases and which ones have priority getting there products produced and shipped. haidi: it feels like the end of year is going to be a confluence of risky factors for investors. if you look at congress, another round of debate, what are investors not thinking about at the moment? joanne: one of the things they are not recognizing is we are in a relatively calm time right now
and with the earning report coming out, we will get information on whether margins are being squeezed by shortages, higher prices and wages continuing to go up. on the political front, we are going to see more volatility because the debt ceiling has to be revisited or there will be information about fiscal spending. that means all along the way we will get this information about whether there will be more infrastructure spending. industrial companies may end up being more volatile, which is why for clients, we are making sure if they need income from their portfolios that we have enough dividend payers in their and some insurance not just against inflation but covid, we are worried about this variant coming from the united kingdom, so having names like biontech can ensure again set as well. plenty of sources of volatility over the next few months but maybe not for the market as a
shery: here's a check of the latest business flash headlines. apple has unveiled its macbook pro lineup, featuring its most powerful chips yet. it's a major step toward ending their 15 year reliance on intel for high-end processors. apple had been using its own chips in lower grade max, but the new processors are more thin. iron ore exports slumped in the september quarter.
haidi: the yucaipa minister, boris johnson, has issued a rallying cry for real action ahead of cop 26. he spoke with john micklethwait for an exclusive and wide-ranging conversation covering china and exit. they began discussing whether britain's departure from the eu has damaged the attractiveness for international investors. p.m. johnson: the u.k. remains the number one destination for fdi. we are a colossally attractive place for people to come invest.
you see massive investments in the last few weeks. yes, the summit we are having is already a success, another 10 billion going on, a lot of green technology. that's on top of 5.8 billion triggered by the 10 point plan i set out for the green industrial revolution. the reason the u.k. remains attractive for short-term and medium reasons are all the fundamentals remain the same. the times, the language, the rule of law, the deep pools of liquidity in the city of london. having many of the best universities in the world. but it is also the moment. we've got a series of things coming together. the u.k. is deciding to make a big bet on ring technology.
setting the regulatory framework to encourage the private sector to come in in the way that they are. i quoted some of the numbers, so we are making a big bet on wind power, electric big -- electric vehicles, carbon capture, all those things will stop you are also seeing a government creating the bedrock, as it were, for investment across the whole of the u.k. we are investing in huge quantities of new infrastructure , which we have long needed in this country to address our productivity gap. we are putting about 640 billion pounds into infrastructure of all kinds, into technology and into skills.
the third thing we are doing that is different and new is we are taking advantage of our regulatory freedoms. the u.k. will be even more attractive as a place to invest and do business because we are going to be making sure that when it comes to the growth areas of the 21st century, when it comes to cyber, ai, gene editing or quantum, tech of all kinds, the u.k. is the place to put your dollar, your yen or whatever it happens to be. john: i think you made the case very strongly. let's come back to green tech and regulation. look at regulation, many of the people coming here would say we are in margaret thatcher's old study.
you used to be an economic liberal. we now have highest tax stake in terms of national income going to the government. all these new regulations. people expected you to come in with the regulatory -- p.m. johnson: one thing that you have missed as we've been through a colossal pandemic which has sadly necessitated the expansion of state activity into all sorts of fields neither you nor i would have wanted or previously contemplated. john: you're putting up corporate taxes -- p.m. johnson: they remain amongst the lowest in the g7. john: will you reduce them? p.m. johnson: any decisions the chancellor may make on the fiscal side, you can -- a
staunch low tax conservative, he believes in an enterprise economy. that's why they are doing all the things we are doing. one of the things we are doing to make this country more attractive to investing is you talk about tax, huge super deduction to investing capital, write that off against tax. in order to deal with that activity issue, it takes an incredibly successful economy given we basically don't exploit the potential of so much. that's what the whole leveling up agenda is about. john: many people would say it's the most successful part of the british economy. blackrock, goldman sachs, j.p. morgan -- they would all say the same thing. they like the city of london, but they are also hedging their
bets, putting some jobs in paris and amsterdam. but behind all of it, they would say we are at -- we are an industry, the finance industry brings in 160 billion pounds a year. you put most of your energy into arguing with the french about fishing rather than this big issue with china. p.m. johnson: on the contrary. in 2008 or 2009, there was only one politician that spoke up repeatedly for the city of london and that was me. i know the city of london is crucial, not just for us but for this whole hemisphere. that's why it is profoundly in the interest of our partners to ensure we do have good relations that we do continue to see proper flows of capital services
between london and parts of europe. i'm sure that will continue. if you want to raise money around europe, if you want to finance your merger or whatever it is, london is still the place to come and always will be. the interesting thing about the way finances going is finances in fintech -- it is the tech side that is developing so fast. and that, you have to admit, the u.k. has an extraordinary mixture of things that make it propitious for that kind of development. we've got 106 or more tech unicorns, for the benefit of bloomberg viewers who don't know, the unicorn being not a mythical beast but a company
with a billion dollars in revenue. there are 106 in this country. another european union nation that modesty prevents me from mentioning has a quarter of that. john: i think that's france. but to use that point, that's the hard-hitting captains of industry were saying -- look you are stuck in these arguments about fishing, about finance -- they are the people blocking london's ability to trade with the rest of europe. is it time to fix those problems? p.m. johnson: i've got great relations with the french government, with emmanuel macron and will continue to ensure the u.k. and france -- the u.k. and
france, for a long time, if you look at what we do together around the world, we are very close partners, we are friends, and it is vital and it is a deep will of our populations that should remain the case and we will continue to do great things together. is there a problem with the northern irish -- we will fix that. i don't think that's the end of the world. john: the biggest source of investment at the moment is china. $130 billion they are investing. you've come up with a strategy saying you will let them invest in nonstrategic assets which,
not technology and not nuclear power, what sorts of things will they be allowed to invest in? p.m. johnson: when i was running london, i went out several times to china and had fantastic trips. there is no investment in stuff that drives the country -- look wet happening in greenwich. things have taken off there because of chinese investments. i'm not going to tell you the u.k. government is going to pitchfork away every overture
from china. china is a gigantic part of our economic life and will be for a long time, for our lifetime. that does not mean we should be naive in the way we look at our critical national the structure -- you mentioned nuclear power, you mentioned 5g technology, those are legitimate concerns that many other governments around the world have. i've said this many times and it's worth repeating, i'm no xenophobia. china is a great country and civilization. john: what about wind power? p.m. johnson: you would have to look at what you are finding a strategic were critical.
i certainly think -- our trading relationship with china, in spite of all the cult these, in spite of all the angry conversations or difficult conversations about the dalai lama or hong kong or the uighurs where we will continue to stick to our point, we will continue to stick to our views. trade with china has continued to expand for a long time and i think probably will continue to expand. that doesn't mean we shouldn't be cautious about how we handle our cmi and our fbi from china. that's why we brought in some of the legislation we have. john: xi jinping looks unlikely to come to cop at the moment. what is your personal goal in
terms of cop? p.m. johnson: i think cop was always going to be extremely tough. we are hoping we will get a good turnout in spite of the pandemic. we want to focus on the contributions in reducing co2, plus we want commitment on coal, cars, cash, and trees. we want the world to move away from coal by 2040, 2030 four developed nations. we want to make sure everybody stops using hydrocarbon fueled combustion engine cars and the u.k. is in the lead there. we said we would stop that by 2030. we want a big package for the developing world, so we need that $100 billion a year and the last thing is we want to plant millions and millions of trees
to help fix the carbon and restore the balance of nature. we need a nationally determined contribution. we need to keep 1.5 alive and restrict the growth in temperatures to 1.5 degrees by the end of the century. we think with the commitments we are seeing we could do it, but we are going to need to see some real action from the participants in glasgow. shery: u.k. prime minister boris johnson speaking exclusively to john micklethwait. we do have a big -- a big guest coming up later, talking that how tensions between china and the u.s. are affecting global trade. let's get to first word news with vonnie quinn. vonnie: china's coming's party will convene for the first time in more than a year on november 8 to 11th. the plenary sessions are typically the most important events on the country's clinical
calendar. it brings together about 400 state leaders and provincial bosses and top academics. it's expected to pave the way for extending xi jinping's term is later. european union may trigger a move to freeze funding to members failing to adhere to democratic standards. the conditionality mechanism could be applied against hungary and poland which are accused of violations. hungary would forfeit 7.2 billion euros. the legal order could be determined within days. >> we need to sort of pay attention to a link between policies and the rule of law, democracy and civil rights. if we are not doing that at home , it's going to be difficult to be critical -- to be credible
and we are speaking out of europe. vonnie: colin powell, the first african american to become secretary of state and joint chief of staff has died of complications from covid-19. he falsely claimed saddam hussein had weapons of mass distraction. he acknowledged it blemishes decorated diplomatic and military career. he was 84. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: coming up next, we take a look at apple's biggest macbook pro overhaul in years. this is bloomberg. ♪
haidi: capital has taken its most aggressive steps to replace chips from intel with its own one. the new mac book pro features its own semi conductors and has updated its airpods. our apple reporter joins us now with the details. what stood out to you when it comes to this launch? how quickly is that going to help supply chain issues? >> today was a massive launch.
the new macbook pro, expectations were skyhigh and apple either matter slightly exceeded expectations for this ne machine. the new processors are the talk of twitter at this point, based on apple statistics and the numbers they are putting out. these blow intel machines out of the water. in terms of vertical integration, this is the fourth or fifth mac line apple has transitioned to. these are processors based on the arm architecture designed by apple and manufactured by tsmc. but we've seen in terms of supply chain is they've been doing a fairly good job cranking out processors for apple products. the problem comes down to receiving other components that are not vertically integrated. we are seeing shipment delays on the new macbook pro deep into december and if you combine that with the shipment delays we are
seeing across the apple portfolio, they have a real problem on their hands going into the holiday season. shery: what did you think of their upgrade to the audio line? >> the home pot update was basically nothing. i'm not sure why they did that. the new apple music plan is screen list. it's using apple music without an app. i'm not sure i would pay five dollars a month for a service that requires you to use siri to operate. at this is targeting a new feature amazon rolled out about a year ago which allows you to pay a lower price for amazon music used through your echo speakers. in terms of the new airpods, my question is where is the new airpods pro? these are better than the airpods pro -- an extra hour of battery life, you get universal fit. the only difference is it doesn't use noise cancellation, which to be honest, it's not
very good anyway. for airpods bands, people who want to buy new airpods comedies 180 dollar airpods are probably for you. shery: always a pleasure having you on. the latest changes there in the company. time now for morning calls ahead of the asian trading day. bond call staying in focus. sophie: we are seeing three and five year yields, a jump ahead of that report and given the focus on bonds, i want to focus on china's bonds. they join the global selloff to push yields above 10%. they expect that move will reverse given the signals on the economy, which they say will remain very weak. as well as the hit to exports
expected. capital economics predicting it will drop back toward 2.5% even as benchmark treasuries are at 225 by the end of next year. haidi: tune into bloomberg radio to hear more from the big newsmakers and get analysis from the daybreak team. you can listen via the app or bloombergradio.com. plenty more ahead. this is bloomberg. ♪
haidi: a quick check of the latest business flash headlines. goldman sachs is topping the bond market with a $9 billion sale, issuing debt in five parts. the longest portion will mature in 2030 two and will yield 105 basis points above treasury. bank of america and morgan stanley also selling bonds. the softbank founder is clashing with the ceo over the company's latin american funds. when wants to spin off the $8 billion fund he oversees to build the business and boost compensation.
however, in a statement, he denied discussions about what he called a strong relationship. swd, the insurance company hired by richard lee is said to be facing increased scrutiny by u.s. regulators, stalling its new york listing. they haven't been able to secure approval for its u.s. ipo with the sec asking about risks like chinese regulation. bloomberg is being told it's unlikely the ipo will be completed this year. shery: just minutes away from the australian open. let's turn to sophie. sophie: keeping an eye on bhp this morning. after posting a 4% drop in iron ore shipping. softer prices me indicate we could have a peek in the earnings cycle and when it comes to the deal front, bhp assuming the merger -- regulators say it
started reviewing that deal in december. also keeping an eye on northern star. the production forecast has been maintained with output waited toward the second half of 2022. shery: coming up, more market insight from the head of research and we discussed the above apple products with a senior research manager. we do have the australian open next as we continue to see the aussie dollar hanging around 74 u.s. cents. we had an advance in the last session with stocks finishing higher led by miners and banks. that's it for daybreak australia. daybreak asia is next. this is bloomberg. ♪
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>> hello and welcome to "daybreak asia". sophie: i in hong kong. we are counting down to asia's major market open. >> our top stories this hour. apac investors weight inflation and taper concerns after wall street extends its rebound. asian tech make it a boost with reports of beijing breaking down the online search barrier.
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