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tv   Bloomberg Daybreak Australia  Bloomberg  March 24, 2022 6:00pm-7:00pm EDT

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haidi: good morning. we are counting down to asia's major market open. >> good evening from new york, i'm kathleen hays. president biden calls from removal from the g20. haidi: u.s. stocks rise and treasury and oil sliding as
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investors wait economic resilience. china is set to sign its first security deal in the pacific. the s&p 500 gaining 1.5% today. all 11 sectors were higher. led by big tech, nvidia which told investors it's going to use its cash to boost growth. not to buyback shares. it was the biggest gain or for the s&p 500. you can see the positive sentiment spilling over into futures today. the grain is on the screen. a smaller plus was a drop in the price of oil. about $2.50.
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now you can see in the market that it is falling more in the futures market. another 1.2%. what's going to happen between joe biden and the eu when it comes to further sanctions for russia? will the europeans get on board? the margin requirements have been raised for brent crude again. another 19% after dutch 32% increase earlier in the month. that's creating a lot of volatility hitting the oil market. as for treasuries, the 10 year yield it was up. what people were focused on was this chart. this is the 10 year breakeven chart. look how it has shot up in the last couple of months. the far right side of the screen, 3% it top 3%. that's the highest ever for 10
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year inflation breakeven. it goes to show that people see oil prices, inflation hi. weekly jobless claims the u.s. this week down the lowest level since 1969. it looks like the economy is holding up even as inflation rises and the fed gets ready to hike rates. haidi: president biden is in brussels for high-level meetings over the war in ukraine. he is calling for russia to be removed from the g20. >> my answer is yes. it depends on the g20. that was raised today. i raised the possibility that if it can be done, if indonesia and others don't agree, then we should in my view have to have both ukraine be able to attend the meetings. haidi: let's bring in our white
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house correspondent who joins us now. what did we hear in these discussions particularly pertaining to our next round of actions against moscow and also some kind of protection for the eu against ramifications of these actions? >> first, we had more sanctions put in place on russia from the united states. this after individuals, most notably the head of russia's biggest bank. the entire state duma, this is russia's parliament, they are all sanctioned. the u.k. has similar sanctions today. right now, we have the eu meeting. the president did address the eu . what we expect tomorrow is a potential announcement from the u.s. about what they can do to help europe when it comes to fortifying access to natural gas and oil and loosen the
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dependency they have on russia. there is no way we see sanctions immediately or in the short-term on russian oil and gas from europe. they are too dependent, it's too difficult to turn off the tap at this moment. this is something you see a lot of growing support for. lafayette gets 90% of their natural gas from russia. -- latvia gets 90% of their 90% of gas from russia. >> it's interesting depending on how close you are to ukraine, if you are in eastern europe like the baltic states versus being farther west, you seem to have not only a different view because of your dependence on oil and gas, but your proximity to what is going on. how is that aspect going to play out? there still seems to be a subtle difference in nations over what kind of signal to send vladimir
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putin about the possible response from nato. >> it's a great question. we are sitting in eastern europe, this is your doorstep. you are quite concerned and you've been dealing with the russians as your neighbors for centuries. what we are seeing is a bolstered military presence on the eastern flank. i spoke to the press secretary for the pentagon today about the fact that potentially, this may be long-term. he didn't have an answer that this might be short-term deployment. what we are seeing in terms of american and other troops nato troops bolstering the eastern flank. what he said is that this changes the entire security apparatus for europe and we have not seen the end of world war ii. haidi: what other meaningful implications of russia being moved from the g20?
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>> one, it would be incredibly symbolic. russia was also removed from the g8 after the annexation of crimea. this would be almost deja vu of that history. if he was to be removed from the g20, this would be a little bit of a harder place to rally the troops. these are 20 nations that would decide on this. president putin has a number of friends in the world right now to clearly in beijing. this would take a number of countries. one thing that was under discussion today, even if russia was to attend because they couldn't find the support to this invite russia to the next g20, that volodymyr zelenskyy and the ukrainian delegation should also be in attendance to show ukraine and make sure your voice is heard in his international body.
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haidi: let's take a look at our asian markets. the action we have seen across equity and bond markets so far this week. relative calm as we get into the start of trading. thi asx 200 futures rising. we could see an early gain. we saw wall street stocks gaining, all indexes gaining except for energy. new zealand we are seeing an upside. they're pretty steady when it comes to the australian 10 year yield, we did see the diversions continuing to play out when it comes to the treasury market, rates market, and equities and treasuries waning again. the 10 year rising again.
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chicago nikkei futures pointing to a softer start in tokyo. we had profit taking, but a lot of it is going to be on the fx side of things. look at the dollar-yen trading. we have heard that we could potentially see sheet out reacting before the boj as we see the yen breaching these key levels even potentially opening up the door to 1.25. >> those technical levels can be very volatile. let's get more analysis on the markets from emily barrett. this continued selloff in bonds, much more scope for yields to rise further. on top of that, we have inversion of the curves. >> the yield curve has been a
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tremendous focus recently. we have seen parts of that curve hit below zero. what's interesting about this is we are talking now about the idea that there could be a curve inversion from the two stands. -- two and 10. you won't see any signal -- purely because we have had so much stimulus that has been purged -- pushing the curve around. haidi: we have also seen this popular narrative the stocks are an inflation hedge. that has been driving the diversions between what we see in stock market performance and the rates market. are going to continue to see that? that pathway crossing? >> that's the really interesting question. the thing that we are seeing is investors have had a shortage of options in terms of where
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they're supposed to go for hedges. obviously, the portfolio where we can rely on treasuries offsetting a loss from stocks. it's taken some real hits recently because we've seen both markets go down. we see that switch around with treasuries rising as stocks are rallying. the interesting thing here is investors are struggling to find where they can go for inflation hedges. commodities are a volatile market right now. it's tough to put your money on that with any great certainty. right now they want to diversify away from too much in one place. we have heard a lot from sources about wanting to try to take stocks as their hedges. kathleen: thank you so much. now let's go to vonnie quinn. vonnie: president joe biden and the japanese president have condemned what they call north korea's first long-range
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ballistic missile test in years. the lunch violated several un security council resolutions and they called on pyongyang to halt actions. north korea has been ramping up activity since january. a chinese foreign minister has met with taliban leaders in afghanistan and his first visit since a militant group seized power last year. it says improving bilateral trade was on the agenda for talks. more than 180 pieces of wreckage, and engine, and human remains. the wreckage was found 10 kilometers away. it may have broken loose long before impact.
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all 132 people on board are presumed dead. nearly half of the european companies in hong kong are planning to exit the city. that's according to the european chamber of commerce which found that firms intend to fully relocate in the next year. another 24% expect to partially move away. this is a sign that tough restrictions are eroding business in hong kong. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. >> still ahead, a group representing hundreds of companies tells us why the war in ukraine increases the urgency of maximizing u.s. domestic power resources. up next, offspring global investment joins to discuss how the economy may decelerate faster than anticipated as the fed tightens. this is bloomberg.
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>> it is likely to require significantly greater interest rate hikes than the fed or markets are now expecting. we need clear signals that we are prepared to accept some slowdown in economic activity if that's the price of reducing inflation. >> that was the former u.s. treasury secretary larry summers. our next guest says the u.s. economy may decelerate further than anticipated. he is a senior investment strategist at all spring global investments. larry said that even after jay powell got on board with the rate hike, that has definitely made it clear that they are all in favor of a rate hike at each meeting this year. yet the stock market says and people say this, the fed says
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the economy is going to be fine. so we can buy stocks. >> it seems like the fed is trying to match market expectations as opposed to manage expectations. that's the feeling i got from the press conference and speeches from jay powell. one of the big issues is it marks there growth outlook for this year particularly due to the situation in russia and ukraine. that's probably not the big explanatory variable behind the downshift from 5% growth to 2.5% growth. more of it is probably due to this increase in interest rates, renewable accommodation. it's not just the level of rates, is the rate of change. if they suddenly go 50 basis points here or there, that induces uncertainty. it could crimp financial conditions materially. >> it's interesting in their
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economic forecast, they did not increase the unemployment rate for the next three years. some people call that the magical summary of economic projections. if you trust the fed and they are right, it's a great time to continue to be bullish. i wonder what your investment strategy is if you are skeptical about how they can possibly raise rates, get inflation down. >> we are a little bit cautious mainly because we aren't sure they're going to be able to stick the landing or whatever the metaphor is like in 1994. 1994 was a great year for the financial markets. maybe this is more like 1999 where they had to reverse course after 12 months because they pushed it too far. we still do like high-quality credit because we think credit
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spreads having widened and even the lower quality names like short-term high-yield is one of our favorites, but we prefer more relative value trades as opposed to going out right long or even outright short for particular markets. being able to add value. for example, we are bullish on the topics relative to the s&p 500. both of them could go down or up. do we think that's the difference? areas like consumer staples, energy and health care relative to the s&p 500. haidi: talk to me more about the opportunities you see for the japanese market. >> one of the reasons why we think the yen has weakened materially, the weaker yen is pushing up the cost of some of their imports. especially being a net importer
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of food and fuel. that should probably bode well for a number of the corporations in japan as well as the -- weaker yen to be a tailwind for some of their exports. that's one of the reasons why we like it, plus it has underperformed the u.s. market so we think it has some economic momentum than also relative value opportunity. haidi: with the war in ukraine and this new expected deal for the u.s. to use gas supplies to the eu, it seems like there might be an acceleration of the u.s. tapping more of its energy capabilities and potential. does that inform the weather you invest across energy or energy and commodities exposure? >> it does, and i had a conversation with our teams this morning about what are some of the major themes for this year and next?
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resource resilience or supply chain -- we think those are two major themes. business try to get more control and flexibility with their supply chain, but also resources. we know that resource security whether it's food or fuel or raw materials is probably going to be a driving force behind a lot of governance investment, government policy and this is investment as well. we see some good longer-term opportunities in those businesses that are more geared toward those areas. sector wise, that would be more in the materials or energy and your industrials. >> always great to speak with you. we appreciate your time. you can get a roundup of the stories you need to know to get your day going in this edition of daybreak. you can customize the settings to get the news on the
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industries and assets you care about. this is bloomberg. ♪
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>> let's take a look at the day ahead for australia and new zealand. more predictions for australia's pre-election budget. the red-hot economy drives down unemployment. soaring economy -- commodity prices providing a windfall to the government. visitors to new zealand may be asked to pay more to access the country's natural attractions. china and a nation of small islands could see a naval base established less than 2000 kilometers off of australia's coast.
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what is this agreement? >> it's important to stress that this is a draft agreement. it's alarming enough for australia. this covers things like the maintenance of public order, humanitarian disaster relief. in november, we sell riots in the capital. this was triggered by the prime minister decision to switch diplomatic recognition from taiwan to china. at the time he requested help from australian police to quiet down the riots. there are still troops there. australia last week pledged more budget assistance for the solomon islands. this agreement cast doubt over that. long-term one is worried that
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this could undermine the sovereignty of the islands and go further than that as well. >> how long has this been in the works? can we assume that maybe this has suddenly come to the fore because of russia ukraine, china sensing that it has more leeway on these kinds of things? >> this is been going on for some time before that. for a long time, 36 years the solomon islands recognized taiwan over china. that only changed in 2017. it's more to deal with the aid and financial assistance. you consumer this is potentially heading. for australia it's not hard to and it -- imagine a naval base 2000 kilometers away from the coast. writing is not particularly uncommon and the majority live on one island they like the relationship with taiwan.
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>> thank you so much. we w
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vonnie: president biden is calling for russia's removal from the g20. he told reporters that if other members don't agree, ukraine should be allowed to attend the summit later this year. the comments come after russia confirms the vladimir putin is planning to attend the meeting. >> my answer is yes, but it depends on the g20. i raised the possibility that if it can't be done, indonesia and others do not agree, then we
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should in my view have to have both ukraine be able to attend the meeting. vonnie: china says the u.n. charter is the bottom line for its cooperation with russia. while there are no limits to the partnership, norms and international law still apply. russia is set to a race 15 years of economic gains. no assessment shows the russian economy is expected to contract 15% this year. due to sanctions and the exodus of corporations from the country . the report added that after the initial hit to the economy, growth will suffer in the long term because of brain drain. one of the prosecutors who led
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new york's investigation into donald trump insist that he is guilty of the lenny's involving his finances. he quit the manhattan das office last month. he claims the office has more than enough evidence for a conviction. a spokeswoman says the probe is continuing. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. >> has been volatile. there has been a rebound today. steps taken by the london metal exchange barring some from taking orders. goldman sachs has talked about
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clearing trade for people who are trying to move their nickel tons. a lot of volatility there, but it looks like optimism is being put forward. gold surging. people are waiting to see what happens with sanctions on russia. as that progresses among the meetings between president biden and the eu in brussels. again earlier today, a much bigger gain. now we are seeing a marginal gain. it you could almost say it's flat. the sentiment is to buy gold. natural gas is looking lower probably because of a deal being struck between joe biden and the eu that will pave the way for more imports of lng from the
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u.s. to help replace russian imports. haidi: the u.s. and eu are nearing a deal to curb reliance on russian energy. we expect details to be released by the end of the week. our next guest says the u.s. has plenty of capacity to replace supply. when you take a look at such a huge supply-side shock as this that could potentially worsen if energy is included in more rounds of sanctions, how able is the u.s. market industry to be able to react and cleat to that? >> we are prepared and we want to help. our allies in europe, this industry, we are right access
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-- excess capacity for lng, but there is more they can be done in the u.s.. there is certainly some -- the could be expedited. infrastructure that we need here in the u.s. to be focused on. so that we can export more. but we are ready to move forward as quickly as we can. we see the u.s. producers doing that right now certainly as they are called to and able to use the united states to support our allies. >> how do you address the issue which is that this is a short-term may be a medium-term supply issue due to geopolitics? that is a shock to be fair. in the longer term, we are still looking at a world transitioning away from fossil fuels. the producers be willing to turn the taps back on to restart the investment cycle knowing that the writing is on the wall inevitably?
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>> i think that what this shows is that the world is going to require oil and natural gas for a long time because while this is a short-term crisis, it has been exacerbated in a huge way by the crisis in ukraine. demand is only growing in the world. the non-oecd countries are growing. they need reliable affordable energy. that means everything. they need nuclear, oil, gas, wind, solar, and geothermal. they need development as correct energy mix that specified geographically for each area. what i see we are discovering is that it doesn't do us any good to try to take any of our options off the table. it has not done as well to try to say that we are moving entirely away from oil and natural gas because that will not support the development of
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society across the world and certainly does not enhance national security. >> it seems to me that part of the debate, you can go on either side. no limitations on oil output or no oil at all because we want to go green immediately. is the debate more about the speed of getting there? the transition that if we just did away with -- we can already see what's happening in europe. how do you deal with that in your world? >> i see that, the radical middle in that is the development of clean energy. cleaner energy every day. that includes oil and natural gas. with carbon capture and sweet -- sequestration. what would help that conversation is to assume that there is a binary easy answer and kick two options out. that is not the answer. the best with a look at it is to
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say how can we produce energy cleanly and that is what the u.s. domestic industry is doing in all of the technologies, the low carbon tech that they are investing in. the companies i work with that are traditionally oil and gas are also working on reduction in emissions technology, methane monitoring, carbon capture, geothermal, we can develop and deliver energy at scale. you just want to take any of your options off the table. >> you worked 15 years in washington. you worked in the senate, you worked at the white house. i put that on the table for our audience because i want to ask you about the complaint from the oil producers in the u.s. is president biden has said please produce more oil, but he has not come out more definitely on this. he has not apparently some people say he is afraid of
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alienating his green supporters. what do you see? >> there's a certain faction of voices that think that oil and gas should be removed entirely, but if you understand how global energy works, you know that it cannot be removed, it needs to be produced more cleanly. we do that better in the united states than anywhere else in the world. when i take my experience and i see that he has made climate promises, i think he can deliver on those. i think he can deliver cleaner burning lng to allies in europe. we need to deliver to asia and india. in china, they are still using so much coal. we can achieve climate goals with cleaner produced oil and natural gas and that's what we're focused on doing. that's what my political experience shows me. he can deliver on this. >> thank you so much for joining us.
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that was the ceo of energy workforce and technology council. a president says it's possible for his company -- country wing itself off of russian gas. he says it is the price latvians will pay for freedom. >> a clear decision -- >> this is going to hurt your economy. >> yes, we should pay for our freedom and independence in a short a possible time, we will do it. >> last year, latvia took in 90% of its oil from russia. now, it is asking for those contracts to be paid in rubles. is that possible? >> not only for us, but for
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germany and others. you will see how we will answer. in general, europe also latvia has decided already to cut the energy dependence on russia as soon as possible. >> if next week, you had to pay in rubles to keep the lights on and the house was warm, is latvia willing to do that? >> we have enough reserve for the moment. >> if you start to wean yourself off of russian gas, where we find it? >> it is possible to get alternative lng, there are terminals in europe and it's also possible to replace russian gas. >> are you talking to those's -- partners? >> yes. >> the cost will be higher. is there something the
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government is willing to do to ease the pain for consumers? >> yes, i can repeat this is a price for our freedom. it is better to pay in dollars or in euros as the ukrainians are doing with blood. >> i want to ask you about your time at the european court of justice because the united states is saying vladimir putin is a war criminal. you agree and how do you think this is going to proceed in the legal sense? >> international criminal court in the hague has already opened investigations into war crimes which russia committed. the investigations are now going on only the second week. it takes some time. then of course, with i feel that it will end with an accusation against responsible persons.
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i should remind responsible persons, all which belongs to the chain of command. from the first person to the last executor of this command. from a legal point of view, it would be determined by the international court by the international criminal court. of course on the first side, there is no doubt that there are war crimes which russia has already committed in ukraine. >> that was the latvian president. coming up next, two months ago xi jinping and vladimir putin declared the friendship between beijing and moscow with no limits. now, a limit. we will get the details ahead.
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this is bloomberg.
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let's check in on markets. we are setting up for the final friday session of the week. the yen is going to be in focus. a bunch of different key levels
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to watch. certainly, worlds are watching out for potentially any kind of action from the boj. opening up the door if you look at the momentum indicators that it is -- has surpassed. if you look at the equity session, kiwi stocks are up. we might see a bit of modest upside. pretty much every sector in the s&p 500 trading in the green. other than energy as we watch details of further sanctions as well as this much touted deal between the u.s. and eu to keep the eu -- give them some gas supplies to protect them from the impact of the further russian sanctions. kathleen: another big story, there are growing indications that china's no limit deal with
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russia does indeed have limits. one expert says there is a bottom line to acceptable behavior. with the latest, let's bring in our chief north asia correspondent stephen engle. what is the envoy saying and how powerful is this statement? >> is pretty powerful. nuanced as well. the chinese ambassador to the united states, he spoke to phoenix television a local chinese language network. his comments are the first from a senior chinese official that clarifies sweeping joint declaration between moscow, xi jinping and moscow and vladimir putin ahead of the olympics in february that declared their relationship had no limits. in this interview, he said china and russia's cooperation has no
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forbidden areas. but, it has a bottom line. that line is the tenets of the principles of the u.n. charter. to recognize basic norms of international law and international relations. he added that this is beijing's guideline he follows and all of the bilateral relations. since the invasion, beijing has had the debt -- delicate balancing act supporting vladimir putin and not the war but vladimir putin of the united nations and castigating the united states for provoking war because of expansion policies with nato. at the same time, recognizing ukraine's sovereignty. xi jinping is facing more pressure to distance himself. the u.s. warning there would be consequences to beijing if it added military or sanctions assistance to moscow. haidi: what do we know about the
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domestic reaction to the war in china? >> we know that the state media controls the public dialogue on the internet as well as television. like in russia, people have vpns. they get all kinds of opinions and news pieces. there have been some outspoken academics in china who have condemned the war in ukraine. i take for example -- in a now censored commentary, from the state council affiliated public policy research center advocating in early march for a clear break from russia as soon as possible. also another at the highly influential chinese academy of social sciences in beijing. he says china and russia's strategic partnership that i talked about earlier, that emerged he says from a state of no war.
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he says the war in ukraine has changed that dynamic. haidi: we will get more perspective on the geopolitics surrounding china. this is bloomberg. ♪
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>> softbank is said to be asking for valuation of its subsidiary. how do we get to this ipo? after the nvidia deal fell apart? >> it has always been plan b for softbank. there is a loan that is attached come up that will go ahead of the ipo. today it was learned that they have picked underwriters for the margin loans and it will be goldman sachs, jp morgan and one other. they are aiming for a $60 billion plus valuation. it will be a significant jump from what softbank got in 2016.
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>> what did they have to do to win the ipo mandate? >> a lot of what the investment banks put in check for a loan -- it's a sizable loan that's worth $8 billion. it depends on how the banks cut their checks and whether their relationship with softbank is good enough. haidi: when are we likely to see a deal? >> with the slowness in the ipo market in the first quarter so far, it has to happen in the second quarter at the very earliest, but given how volatility is still relatively high because of geopolitical
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events and interest rates and those macro economic concerns, it will likely be a second half transaction. also, the loan is a huge component here. once that is done, we will probably see the ipo happen next. kathleen: the second half is just months away. now for a quick check of the latest business flash headlines. apple is working on a subscription service for iphones and other hardware products. sources say it should be apple's biggest push into automatically recurring sales allowing users to subscribe to hardware for the first time and helping apple generate more revenue. toshiba is weighing plans to take itself private. the company is in talks with financial institutions for a buyout proposal that would be led by domestic investors. that's after shareholders rejected a plan to split the conglomerate into two companies.
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philip morris is exercising options to exit the russian market. it has already reduced manufacturing operations and canceled product launches in the country. daybreak asia is next. this is bloomberg. ♪
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haidi: a very good morning. we are coming down to asia's major market open. kathleen: welcome to daybreak: asia. our top stories this hour. president biden once russia booted from the g20 as the u.s. and allies won moscow against using chemical weapons. asian stocks set for a steady open with real prices in focus. investors


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