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tv   Bloomberg Daybreak Asia  Bloomberg  May 2, 2022 7:00pm-9:00pm EDT

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haidi: a very good morning. day one of the australian conference in sydney. shery: we are counting down to
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asia's major market opens. our top stories. asian stocks may get a boost from volume on wall street. hong kong investors eyeing a rally. money markets see aggressive action but the governor has a history of caution. elon musk's grand vision for twitter faces a reality check in twitter while reports surface about talks to take on more financing. breaking news out of south korea. the latest cpi numbers for april coming in at 4.8% acceleration year on year the fastest gain in inflation since october 2008. and faster than the previous month. cpi rose then 4.1 percent which was already a decade high. we have the be ok raising rates in april 2 1.5% from 1.25 percent. this will give more confirmation
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that inflationary pressures are still very much present. month on month, a gain of 0.7%. higher than analysts expected. and the same rate of appreciation from the previous month. core consumer prices stay volatile. a gain of 3.6% year on year. suffice it to say that all eyes are on the bank of korea which has already said they are expecting inflation above 4% for some time. another rate decision coming up at the end of the month. haidi: when it comes to the equities open in asia we may have gotten the boost from dip buyers emerging in the u.s. particularly when it comes to the opportunity in tech but it does not look to be feeding through to the asian session. it is still a holiday in asia. may day holidays. futures are sinking for
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australia. not a great deal of risk appetite going into the start of trading in the equity session. it looks like it is extending the decline from yesterday. we are watching more weakness when it comes to momentum selling and the aussie dollar and the kiwi dollar and the big move in australian bond yields -- in your yields jumping to the highest since november 20 14 falling in line as the global selloff in sovereign bonds. and as we get into the week, it is not just the rba but also a move from the fed. watching for that move in the yen. over 130 but most economists do not expect intervention. shery: as we continue to see the surge in the dollar index, the highest since april 28. we see treasury yields rising. futures not doing much but we saw the 10 year yield trading near the 3%, the highest level since november 2018.
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we had a 20 year bond become the first benchmark security to top 3% in the current cycle of rising rates. other rates topping 3% in april. as you said, looking forward to the potential jumbo rate of as much as 50 paces point -- 50 basis point hike. futures seeing pressure. the s&p 500 closing higher than the previous session. the crude rose. haidi: not jumbo but still momentous as the rba decision is due out in the next few hours. let's bring in kathleen hays and garfield reynolds. i feel a bit like a broken record when i say it is exciting, the latest rate decision because every decision
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is pretty momentous. what is going to determine whether the rba moves given the governor's history of being cautious? >> importantly the governor has to set a single -- send a signal which he has not done yet. if you hike before the election, is that the right thing to do? right now come in our latest bloomberg survey, i think traders are all over the map. 19 of 38 columnists see a 15 basis point hike. that would get them to the key cash rate up to 50. i am showing you an inflation chart. a lot of people say you have to hike the kiwi now. inflation is at 5.1% year-over-year and the labor market is tight and unemployment is at 4% the lowest since 2008
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boosting wage is higher. everyone is hiking. look at wages. this is important to the rba governor. they were as low as 1.4% during the pandemic. wages move up to 2.3. they expect it to be 2.5 on the next reading but the governor says he has to see it at 3% to have sustainably high inflation. after the last meeting he underscored that the rba's reaction function on wages and inflation. when you look at the timing of the rba, the next rate is not due until may 18. the election is may 21 and the next meeting is june 7. why not wait a month and let the election go by? because the governor has not signaled a rate hike at today's meeting, this is pushing a lot
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more people to the boat saying wait until june and do the 40 basis point hike. anything could happen but that seems to be the latest. shery: why your money markets expecting such aggressive moves coming from the rba? are they getting ahead of themselves? garfield: there are a number of factors. one is simply that everyone is doing it so why not phil. the other is the cpi which was very strong. a lot of economists who had been forecasting this hold in may, 40 basis points in june are now saying he cannot not go in may. he has basically missed the bus by underestimating how rapidly we would get to strong inflation numbers. after all, a cash rate of .1% does not look appropriate. on the other side globally, there is a lack of willingness
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among traders to take the other side of the bids on how aggressive all central banks will be. that is feeding through into australia and i have people telling me, this is no one taking the other side. part of what has driven the rate hike bids so high is no one wants to bet against them going fast because of where inflation is. and finally, the other thing that is playing into this is because the rba has been concentrating so strongly on talking about when it might start to hike, there has been no guidance as to how rapidly they would go and where it would go to. that has led traders to lean on the old legacy rates and say come australia will go to 3%. -- and say, australia will go to 3%. haidi: we are seeing no real alleviation of the outside
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pressure on global yields. when does the market expect to see some sort of peak? garfield: it already expected to see a peak when the 10-year gilts and the u.s. -- 10 year yield went to 2%. three did seem to be a sticky barrier. a lot of it depends on when inflation turns around. and that is a tough ask. the other thing that has gone on that has surprised a lot of people is the yen and the way it has collapsed. it has collapsed partly because the boj has stuck to its guns pushing japanese investors to stay away from global bonds. they have been pulling back from global bonds at a time when a lot of other people including central banks are pulling back from central bonds. the absence of those deep pocketed japanese investors who would normally be expected to buy a fair bit, that has been a
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major part of the problem in this week, japan is on holiday for three days. that helps to explain more of the weakness we are seeing coming through. haidi: garfield reynolds and kathleen hays. don't miss our continued coverage from the australian conference and we will be discussing all of those rba expectations with moves. we will talk with the founder of pinnacle management investor -- investment. let's get you to vonnie quinn. vonnie: european union administrators are attempting to keep a united front against russian demands to pay for natural gas in rubles. poland is pulling for an embargo. the eu is proposing to gradually phase out imports of russian oil but hungry may veto the move. european union will stick to
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step up cooperation with african countries to help replace imports of russian natural gas. a drafted document includes countries such as nigeria and senegal offering them untapped potential. the goal is to reduce dependence by two thirds this year. germany has confirmed its plans to invite indian prime minister modi to a g-7 summit in june. the invitation as part of an effort to grow global alliances against russia. the chancellor did not -- the indian leader did not confirm his plans to attend. indians -- india supreme court has directed the government to disclose data on covid vaccine trials. of the court also upheld the vaccine policy while suggesting it review restrictions on the unvaccinated. all data from past and future vaccine trials must be disclosed to the public.
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global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: coming up, beijing imposes more virus restrictions as cases in shanghai receipt. more on the outbreak in china ahead. we will discuss with -- which asian countries are most vulnerable to the covid zero policy. this is bloomberg. ♪
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>> if inflation does not break soon here, he will have to hit the brakes pretty hard and that will put us into recession. >> i think people that have benefited from this extreme low rate high liquidity environment where all manner of growth have been rewarded, that is where the greatest correction will come. >> it is simply unfeasible for economics or economies, for human beings and their livelihood and well-being to such -- to shut down the fossil fuel industry and i think we are seeing this live in europe with the russian crisis. >> if inflation is transitory,
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we are heading towards 4% by the end of the year, he has a lot more room to maneuver rates in 2023. haidi: some of our guests at the global conference. as we see, this global wave of tightening come of the economic risks given china's lockdown are still being felt across asia. joining us now is frederic neumann from hsbc. is this really something policymakers should be giving more consideration to as we continue to look at these jumbo sized hikes? and for australia, the first hike expected since 2010. how do you balance that? frederic: you are right, it is a tricky path. you have outside risk on inflation because of supply chain issues. and the downside risk to growth because some goods and components are not coming through. on balance we would highlight as
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we go into the second half of the year, you're likely going to see a fairly sharp reduction in overall demand growth coming through so the growth risk for us is starting to dominate all that we understand that central banks still have to move. it is about anchoring inflation expectations. you cannot sit on your hands with inflation readings coming through right now. haidi: when it comes to the options available to chinese policymakers, they have talked the old playbook of reinvesting in infrastructure to meet the gdp target what happens from the demand-side? is that a bigger risk? frederic: there are still tremendous drags on demands. services in china are still struggling to make headway but you also see the chinese government trying to cushion the impact. the main policy tool they have available is the old trusted path of accelerating
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construction particularly infrastructure. with one foot on the gas and one foot on the break, it will go back and forth. growth will not be great but it means lower inflationary pressures for the world. china hitting the gas on construction will put upward pressure on commodity prices. it is a very delicate path for the chinese government. it is not necessarily good for the world because there will be lower growth but higher pressure on commodities because of accelerated construction. it is a tricky situation for central bankers at the moment. shery: exactly at a time when we continue to see the leveraged outlook of china not looking great at the levels of local government debt that they have, can they afford to do more infrastructure spending come up more of this acceleration in terms of driving the car? frederic: they have a norma's
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powers to mobilize -- enormous powers to mobilize resources. lower land sales -- a big expenditure on covid-19 strategy as well. there is less money left over for construction but the central government has enormous amounts of resources at its disposal. we think there is still enough policy muscle left to drive construction. the question is will it be the good kind of construction? a sustainable type of construction that will raise productivity growth in the future? there is a risk you could go all out but you are not doing terribly wise investment decisions. it is a quality of growth. shery: talking about going all out, the boj seems to be doing that as we continue to see pressure on the japanese yen.
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where are we headed there? the boj does not believe the inflationary pressures can actually last. frederic: the boj has been very clear, the governor said we need to see inflation sustainably above 2% and what we see right now is not sustainable. it is just a brief inflation shock that is negative for growth. from the boj's perspective, just stick to the course and a lower yen is forhe economy. it raises food prices at the moment but looking further down the line, it could give the japanese economy a competitive boost. for the time being, i think the boj is just going to stay on hold. they could maybe tweak a little the tenure yields but -- 10 year yields but that would be a high hurdle. a weak yen.
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shery: frederic neumann, always great to have you. in today's edition of daybreak, terminal subscribers go to dayb . this is bloomberg. ♪
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>> we think you're going to see about 3%, 3.5% on the 10 year from here. >> it will be interesting to see if in the current cycle, the 10 year can go above 3.4%. >> i think we will get 3.25% in this cycle. >> it is enough to begin slowing growth and start raising concerns about the session.
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-- about recession. >> at some point the fed will be less hawkish. >> this is may be getting to peak hawkish in us. >> i don't think we are at the peak yet, we have not backed off in the market or seen any proper capitulation yet. shery: bloomberg tv guests weighing in on the survey on when yields will peak as we see the global bond selloff continue into the asian hours. the key decision today would be the rba. the expectation is for the first rate hike since 2010 and money markets factoring in the most aggressive tightening in australia at least since the 1990's as we continue to see the
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kiwi tenure yield as -- the highest since 2015. on the back of treasury yields continuing to gain ground. the tenure yield finishing at the 3% level. we have already seen the 20 year bond top the 3% in this current rate rise cycle. we have already seen the five, the seven, the 30 already top 30 per -- 3% in april. haidi: let's get a quick check of the hide lines. elon musk [indiscernible] the entrepreneur [indiscernible] in an attempt to spare his own wealth. tesla shares -- may also be trimmed depending on new interest. a billionaire [indiscernible]
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to oppose the company's low exit from coal. growth ventures as no agl's largest shareholder -- agl is australia's biggest electricity generator and says it remains committed to the plan. spirit airlines board has unanimously rejected jetblue's unsolicited pre-$.6 billion takeover on concerns that the deal may not go through. spirit says it will stick with the lower offer from frontier group. spirit had accepted frontiers $2.9 billion cash and stock offer earlier this year before jetblue stepped in last month with its bid. mgm resorts reporting -- that beat estimates. analysts had been expecting an adjusted loss for the quarter. the company also -- leo vegas which mgm says is a move to
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expand international online gaming. shery: take a look at u.s. futures under a little pressure in the asian session. we are talking about the nasdaq 100 futures losing. we had a rally in giants like microsoft and tesla despite the fact that we had yields continuing to gain ground. he talked earlier about the tenure yield trading at the highest level since november 2018 and that has been pressuring the tech giants. in the new york session we did not see that. u.s. futures with the s&p futures unchanged. u.s. stocks closing higher in the new york session when we had dip buyers emerging late afternoon. it is surprising because we are seeing the worst month for the s&p 500 since the onset of the pandemic. this coming at a time when we continue to see strength and the u.s. dollar that we have not seen in years with treasury
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yields gaining ground. the bloomberg dollar index -- the april 28 peak, the highest since 2020. we will discuss the cautious signs
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shery: all cautious signs emerge that shanghai's covid outbreak is receding. for the latest, let's bring in our chief north asia
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correspondent stephen engle. it seems these cities are going in opposite directions. stephen: we do have to give an update on the numbers simply because it is very much tied to what xi jinping reaffirmed on friday at the politboro meeting which is we want growth and we will meet targets but we will keep took covid zero. you won't get growth until covid zero starts to relax a number of economists saying and that policy will not relax until the numbers come down. the good news is the numbers in shanghai daily infections was below 10,000 for the second day in a row. 7800 on saturday. beijing, ok, they have 41 new cases on sunday and 51 on saturday. the lockdown is continuing as we enter the third day of a five day holiday period or they have -- where the capital wants to limit people's movements and
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limit the spread during the holiday. a labor day holiday which ends tomorrow. this is the fourth day of five. they are closing movie theaters and gymnasiums and requiring tests to go on public transportation and into public areas and they are having another mass round of testing today. essentially again, i think they have -- i think they had two or three rounds last week beijing is tightening restrictions. let me bring up this quote from nomura economists saying we remain deeply concerned about economic growth. despite the raft of policy measures announced by the politboro meeting on friday which also lifted the markets as we saw on friday, we still believe orchids should remain focused on the development of the pandemic and the corresponding hero covid strategy. all other policies are of secondary importance. we got a shot in the arm on
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friday but we got terrible pmi's on saturday. haidi: you mentioned the ugly pmi prints. what does -- what do you see when it comes to the ongoing economic toil? stephen: it is mounting. the pmi numbers are astounding but representative of entire cities of 20 plus million being locked down and the manufacturing sector is being locked down and the logistics and supply chains being locked down. the pmi for manufacturing, 47.4 the lowest since the beginning of the pandemic. a nonmanufacturing, 41.9. the pessimists are stacking up quicker then all of those inventories compared to optimists. the consensus was for 46. well below the consensus estimate. inventories of finished goods
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and this is where it plays into the lockdowns leading to supply chain bottlenecks which leads to down the road inflation around the world. inventories rose to the highest level in more than a decade. products piling up at warehouses across china because of the supply chain bottlenecks. it is up to the policymakers in beijing after we got policy assurances from xi jinping on friday, we got assurances from the pboc as monday on liquidity and the central finance committee on infrastructure spending and then we have the state council promising jobs creation. all secondary to zero covid, obviously. haidi: our chief north asia correspondent stephen engle. china's covid zero strategy has manufacturers across the globe scrambling to move out of the country but the citigroup ceo says it is not a quick process. or an easy process. she discussed the challenges
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with bloomberg at the conference in los angeles. >> i think the most interesting piece is what our clients are telling us. generally, you do not want to have single sources of dependency anymore. you are trying to build up resiliency. the just-in-time becomes just in case. it is hard to move away from china and we are seeing chinese imports to china -- to the u.s. has been rising. why is this? scale, efficiency and they are good at a lot of what they have done. i am a mother of teenagers. they care about their footwear. it will take 5-10 years to move the supply chain from china to india. why is that? scale, efficiency and quality of production. it takes some time for this to occur. the new normal in supply chains will be a 5-10 your journey and not a one-year one. >> you are automatically
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identifying -- [indiscernible] the downside of that is that citi is feeling that also. are we seeing the unwind of globalization? >> ironically, if you are a global bank and in 100 countries, it is an opportunity because we help our clients navigate the crisis and we are there for them on the ground and elsewhere. it is a time you shine. what we see in terms of the client perspective is it is a shift. they want more resiliency, more duplication. we are on boarding new supplies for clients iq would not believe. we move $4 trillion daily. that number is going to double before very long. globalization, certainly there
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are areas where it is retreating. it is not dead. it is changing. america plays a very important role in making sure we have of patient structures to manage that. haidi: the citigroup ceo speaking with bloomberg. let's get to vonnie quinn. vonnie: hong kong's economy contracted in the first quarter as the government imposed tough covid curbs and china's -- that would be hong kong's first contraction since the end of 2020. citadel founder ken griffin things the fed will be able to ease off monetary tightening if inflation drops to 4% by year end. however he warned that if inflation remains around the 8.5 percent level -- the billionaire
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also highlighted the big disconnect in the labor market. >> we are better off running the economy with a slightly higher risk of inflation then -- and try to bring back as many people into the workforce as possible rather than letting people be out of the workforce where their skills and employ ability crumble quickly with time. vonnie: a measure of u.s. manufacturing unexpectedly dropped in april as growth in orders, production and employment softened. the gauge fell to 55.4 weaker than all but one estimate in a bloomberg survey. the latest data underscores --. new zealand's governor will raise its debt ceiling and set a target for surpluses. the finance minister said services will be kept within a band of 0% up to 2% of gdp over
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time. the budget will be and it down later this month. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: extreme weather events are exacerbating problems caused by supply shortages. we will get some analysis. this is bloomberg. ♪
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haidi: we are tracking the fallout of the global supply chain crunch and here are our top stories. u.s. is looking to build up its to battery supply chain with the biden administration pledging to spend more than $3 billion to support the production of advanced batteries used in dvds and energy storage. the top trade negotiator says the relief from tariff on china will be one way to combat inflation. u.s. natural gas futures have extended gains after a record april performance. concern over inventories and signs of growing demand. shery: u.s. gas prices over the last year -- we continue to see that volatility rain hi and those gas prices especially with
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the u.s. natural gas futures extending above the mark. we had a record april performance given daily inventories as well as signs of growing demand and we had colder than usual weather for some parts of the u.s. in new york it was pretty cold. that is sending prices higher. and european natural gas shortages continuing. bloomberg terminal users can read more about those stories on and i trade nl. the impact of the war in ukraine on critical supplies is being exacerbated by extreme weather events. a significant amount of raw materials needed for man-made fertilizers are being cut off due to the war while summer storms in the u.s. have disrupted production. the man in india is -- demand in india is being made worse by heat. the power crisis could worsen in
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the coming months. let's bring in our reporter on how these issues are impacting global policy. let's talk a little about south asia because it is being hit hard by all of these problems. any hope for a quick resolution here? >> i wish i could be optimistic. unfortunately, it is more likely we will see these challenges geographically expand as well as the severity getting worse. we have already seen japan's operator raise concerns about peak summer demand. even in the u.s., this week in texas there are concerns about demand being higher due to hotter temperatures. if you look at -- if you look back at what is happening, weather events disrupting --
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that is partly because of come on -- climate change. russia's invasion of ukraine is forcing a redrawing of the commodity supply chains which again is hard to do. it is very hard to see how we could have a quick resolution to all of these challenges. haidi: by trying to accelerate the shift away from dependence on russia. >> we have seen japan and korea say they will quit buying coal from russia. they have not linked up -- to be able to reduce reliance on coal. you are seeing private buyers reduce their purchases from
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russian exports. in the same manner, we are not seeing an accelerated shift to alternative technologies in response to that. haidi: we do have an update when it comes -- agl responding saying they remain committed to progressing the proposed demerger and say it is still in the best interests of shareholders saying shareholders are advised to take no action at this time. this in response to the personal office buying 11% of agl energy to oppose its plan to demerger the retail and power generation asset business under the proposal that would keep coal plants running for decades. they are highly critical of what they say is a slow exit from coal. the billionaire saying the
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demerger makes no sense in monetary terms. we believe it destroys value for everyone. he made that statement on twitter earlier. two takeover approaches have been rejected from a consortium that was found by --. shery: we are getting confirmation from citi that the trash air or was fixed in minutes. bloomberg has heard from sources that the london trading desk was behind the flash trash in europe that sent shares across the continent tumbling. we are hearing from citibank that the trader error was fixed in minutes. the selloff we have heard from sources was triggered by a large erroneous transaction made by the citibank london trading desk , that knee-jerk reaction --
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wreaking havoc endorses across the region. citibank saying the flash crash error was fixed in minutes. can see that chart right there that happened from the erroneous transaction. we will have plenty more to come on daybreak: asia. this is bluebird. ♪
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haidi: apollo global management cofounder and ceo mark rowen is warning about a volatile time for markets speaking at the conference. he's -- he told bloomberg that 14 years of money printing will likely see a big correction in tech stocks. >> i think we are seeing things correct, we are a long way from means and medians and the equity market we are at 30% from the median age is pretty scary. and the credit market we also have a long way to go. but i do think the mentality with which investors have focused, they have been lulled into a sense that everything goes up and goes well because you have had one could say 30 plus years of declining rates. but extreme liquidity in the past 14. >> if you think about what you
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see and what you anticipate, you have an idea of what businesses of yours still work, what businesses don't work anymore, yours or others? >> i think the on the run long only markets business are difficult. to the extent you have been the beneficiary of trends. there will be a number of speakers that will talk about the massive increase in technology and the technology growth curve and i would say tech and growth have benefited from low rates because their business plans are further out, they are discounted back at much lower rates and they have been the beneficiaries of the speculative boom" one of the speakers we will hear from later, technology -- technological change is real and fundamental but that does not mean the purchase price does not
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matter and the entry point does not matter. i think people that have benefited from this extreme low rate high liquidity environment where growth, all manner of growth have been rewarded. that is where the greatest correction will come. >> and that is not just the etf manager whom you are thinking of , that presumably extends to growth equity, it extends to late stage venture, early stage venture? >> it extends to all of the markets. i look at the traditional alternative market and so much of it has become beta as well. even with our own firm, my joke internally is -- you have worked for me for 10 years but i still do not know if you are a good investor. i think we are about to find out. [laughter] >> any sense, having lived through three solid market cycles?
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four? how long this shakeout lasts? >> no. >> a known unknown. >> if we profess to know, we just mislead. haidi: mark rowen speaking with bloomberg's erik schatzker. let's get you the latest headlines. facebook is pulling out of podcasts and -- and planning to remove them altogether starting june 3. the company will stop letting people load podcasts this week and will discontinue similar audio services. live audio rooms will be integrated into facebook live. shery: citigroup is in active dialogue with potential buyers of his commercial and -- and russia. the financial sanctions on many of russia's ends could thwart city's efforts to exit the country.
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>> we are selling our consumer franchise on the ground and we are in active dialogue around that. we have also been focusing on helping the multinationals on the ground. a lot of our client base -- they are names we all know and many of them are looking at exiting. you cannot exit if you don't have your bank on the ground. shery: we are getting a little more clarity on what happened with european shares that crashed and tumbled after the 8% loss in swedish stocks. citibank saying it was a trader made flash crash error but it was fixed in minutes. let's get more details from su keenan. the markets were rolled over because of this. what happened? >> it roiled the markets in europe. what is important to know is
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even if they only last a matter of minutes, because of the increasing use of computerized trading, a sharp drop can trigger an automatic cell and billions of losses can occur by such a mistake and it appears that was the case here. people close to the matter told bloomberg they thought mistake had come from the citi desk and the nasdaq in stockholm said it was clear from the beginning it was not a technical error. it appeared a large and significant transaction was mistakenly made and it had set off this course of events. there was a knee-jerk 8% drop in the omx which spread havoc from paris to warsaw and even though the initial 8% decline was paired by the and of trading on the omx, it was only down about 2% which is on par with the losses in europe that day, it caused over 300 billion dollars
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in losses at the low point. a lot of observers say the error could potentially cause monetary and reputational damage to citibank because nasdaq has said it will not cancel any trades paid on the nordic markets. we are hearing from citibank that they do take responsibility for the error. they say it was quickly fixed that there is likely to be a lot more explaining and discussion of whatever losses took place to come forward after this. haidi: we will continue to watch that story. we do have the latest shanghai covid case numbers crossing the bloomberg. 5669 new local covid cases reported for monday. this as numbers continue to fall below to 10,000. beijing curbs are starting to rise as the capital shuts restaurants over the key first
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may 1 labor holiday. those case numbers continuing to come down and shanghai adding to cautious signs that the financial hubs outbreak is starting to ease but we are starting to see the new restrictions moving to a crisis potentially unraveling in the capital. would you have the market opens coming up and that is next in sydney and seoul. this is bloomberg. ♪
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>> welcome to "bloomberg daybreak: asia. here in sydney. >> are top stories this hour, asian sales track with gains, expectations of aggressive tightening ahead.
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interviews from the australia conference, we will be hearing from the heads of development of novak. another big interview with the tourism minister of new zealand, part of moving the country away from the mass travel model. >> take a look at the yen. equity markets away on holiday. we continue to see the weakness, trading 130 against the u.s. dollar. we are close to that peak for dollar-yen on april 28. that was the lowest level of the japanese yen and the past 20 years. we continue to see the weakness, given that the doj is doubling down on's monetary policy. we are watching things in japan's of the cost of hedging is rising. they fueled that global bonds selloff. we are watching bond features, yields have continued to gain ground.
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as we continue to see weakness on the korean you on -- korean wan. read cpi numbers out of korea showing 4.8%, the fastest pace of acceleration in south korea since 2008. we are watching this closely. with the be ok will do another central banks as well. -- what the be ok will do. >> markets are affecting the move today. you are saying the risk aversion, we just went 18 days out from the federal election. it is rare for the central bank to move during an election campaign. also, when you look at market expectations, it's a big divergence, summer expensing --
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some are expecting 50 basis points. equity trading plate -- pretty flat at the moment. over new zealand, where seeing a stable session. watching this tour operators as receipt day two of the international -- as they try to shift away from that mass travel. we see continued weakness in the aussie dollar and the kiwi, there could be some impetus to move is to get a hawkish look from the bank today. a bit of the downside when it comes to the s&p in many futures. watching oil as well, we see crude price holding above $105 a barrel. still playing demand against the
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lockdowns continuing across major cities in china. treasuries -- the selloff we saw really looking to intensify the 10-year yield brings them ahead of the fed. >> lave -- let's dive deeper into the rate -- market action. around 3% for the 10-year yield, we haven't seen that level since 2018. at the time when we are also seeing this global bonds selloff. and then the end, institutional investors drop -- dropping treasuries. >> the difficulty is finding sufficient buyers for some bloated government bond markets, even with the prospect that u.s. treasury is expected to sell your bonds, it is still a small step down from the very large
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market, a market fed by other central bank buying. not only the fed's a also foreign central banks buying fedex or service. -- fx reserves. when you got that by of along with the rate hike tomorrow, you've got to keep the other buyers buying. the have been feeling your -- fielding yields where they were. that the boj -- soft means there taking losses, the yen has dropped so rapidly that that makes it far more complicated for them. they need them to hedge their currency exposure on the rest yen bounces back. the same thing is going on in australia. australian hedged deals have dropped a lot relative for yen investors at a time when
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japanese yields have come up, just not as far. there is a reluctance for the japanese to come in. this week's three daybreak would not matter so much. people -- with the rate hikes are starting to get some certainty. that yen selloff still strong with the concern that japanese investors are not going to come back to treasuries, not to come back to australian government bonds anytime soon, that makes bond markets that much more vulnerable. we have a measure of u.s. bond volatility jump to a fresh post-pandemic high. the highlights how nervous bond investors are. >> what do we see as a potential
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catalyst for equity investors going forward? we saw a bit of buying, >> i think they want to see fx and bond markets down a bit. but today's rba meeting, and the fed, also the boe, not everybody expects rate rises, what is the messaging around that? where the clear guidelines as to where they're going? will there be some certainty or will there be the concern that either the rba is going to be behind or go too fast? are we going to get -- that the fed is going to hike by 75 basis points in june to follow on the 50 basis points in may. i could hurt equities, the
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goalposts keep moving at a time when the earnings part of the picture isn't strong enough to reassure investors that companies can pope with just about any fed hike. >> we just need that certainty. garfield reynolds, are rate corn -- chief white correspondence. we are just hours away from the rba decision. let's bring in kathleen hayes, the central bank divisions are getting exciting. the rba seems to be -- could be a big one to come? >> i think this is one of those meetings, this is a g10 country, i think it is being watched around the world. the bell of the pressure on them to hike rates. there inflation rates nowhere near as high as the u.s. and there an election coming. the rba governor is being put to the test right now, according to our latest survey, 19 of the 38
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economies we surveyed are looking for the 50 basis point rate hike. why 50? you got up to 25, there are six we are looking for, a 40 basis point rate hike today get you up to 50. the main reason for the rate hike now, inflation is up to 5.1 percent year-over-year, the target is two to 3% -- 2% to 3%. you got a tight labor market, unemployment at the lowest since 2008, the expectation that ranges are going to keep rising -- wages are going to keep rising. the gun down about one point 4% but they have got back up to 2.3%. the next reading is supposed to get to 2.5%. they think you need wages at 3% to keep that inflation rate
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sustainably at or above target. in april, after the last meeting, the rba's reaction fund should focus on both wages and inflation. in terms of the timing, the next wages report does not come out until may 18, the election is may 21. then policy meetings in june. importantly, the politics of this, the prime minister has campaigned on the government strong economic record. the edge of the interest rates will always be lower under his conservative administration, and the last time the rba raised their keyword rate during an election was 2007, the same prime minister losses election. why not wait until june? i don't think the rba wins or loses in either case. if they wait, -- they may hurt
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scott morrison. he is not signaled a central bankers often do that he is ready to go ahead, even though you could take patients have the equation, after the last inflation report, there still waiting for wages. i think that is why a lot of people are saying you get that 40 basis point hike in june. this is exciting, it feels like anything could happen and it could definitely be a market mover. >> all the central banks, still watching china as well. we do have an update why comes to the beijing case numbers, reporting 62 local covid cases for may 2, after they continue to see and numbers when it comes to shanghai coming down lower, below 10,000. closer to 5000 new cases. as we said those numbers falling in shanghai, there are now signs that some of the restrictions are moving to the capital.
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authorities try to contain the outbreak in beijing. we are seeing restaurant dining being closed going into this estimate labor day holiday. we are expecting mass testing to ramp up after the holiday as well. cases still creeping up in beijing at this point. 52 local cases. let's get you to vonnie quinn with the first world had lines? vonnie: there prepared to ease off monetary tightening by year end. he warned as inflation remains along the 8.5% level of the central bank will have to technique aggressively and take the economy into recession. >> we are better off rain -- running the economy with a slightly higher risk of inflation and try to bring as many people back to the workforce as possible rather
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than letting people get out of the workforce for their skills and employed -- will crumble quickly. vonnie: u.s. manufacturing unexpectedly dropped in april, the isn gave -- 55.4. weaker than all but one estimate in a bloomberg survey, the latest data, made worse by the lockdown in china. european union energy ministers are trying to keep a united front against paying russia intervals. they're calling for an embargo on russian gas as well as a push on oil. the eu proposing to gradually phase out russian oil is about hungry has indicated it may veto the move -- hungary has
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indicated it may veto the move. gdp is expected to fall in hong kong, from a year ago. global news 24 hours a day on air and on bloomberg quick takes a powered by more than 27 hundred journalists and analysts and more than 120 countries. i'm vonnie quinn. this is bloomberg. >> two big exclusive interviews from the conference. a little later we will be speaking to the ceo of the world's largest -- we will talk to him about the road to recovery. we are joined by susan lloyd hurwitz, on the word the rba may raise rates for the first time in 12 years. this is bloomberg. ♪
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>> we follow the latest on the covid pandemic across china. in beijing, 62 local cases were reported for may 2, in shanghai, coast -- covid cases surpassing 5600. let's bring in our chief north asia correspondent, we continue to see the shanghaiup. but beijing continues to see more restrictions. >> on the covid front, let us go to the good news bad news. the good news, shanghai is
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coming down. 5000 and change as you just mentioned after two straight jaden -- days of below 10,000. now three days in a row. yes there was a hiccup, that has brought a lot of scorn on social media with an elderly home individual who was alive sent to the morgue. that has been taking over social media before those critical comments were scrubbed from the internet. the numbers and the covid situation is getting better in shanghai. there were restrictions that government lifted. so we are into week six of a citywide lockdown. 25 million people. we need to get more indications, perhaps today, of that relaxation, if those districts have met the qualifications to have some sort of relaxation. also, we are seeing other cities get lockdown, xinjiang, a small city, they had 1/8 of the cities
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and lockdown. there is good news. we have the toyota restarting production after a month long halt because of covid. beijing is a tricky situation right now. it is the central power, there were 60 new -- 62 new cases, we have 59 on saturday. there's going to be another round of mass testing in 12 of the 16 districts. there are testing requirements to take public transport, to going to public spaces. there's not lockdown, but during this -- we are in dave for of a five day holiday, the beijing authority with this outbreak, 400 cases so far in the last couple weeks. they want to contently and -- contain it.
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>> what have we seen in terms of the economic told this is taking? >> look at that bp numbers. we got more policy shots in the arm from xi jinping. tech stocks rose in hong kong. today will be the second day following the epic rally on friday. we can see whether there are some lights on those tech stocks when xi jinping and other government officials essentially said they support the healthy development of an internet space. policymakers have been saying they want growth. and they want jobs. the spot companies like alibaba and tencent and others, we will be watching them for signs whether there is lasting momentum from this policy move. the pmi's became a day after xi jinping and the pull barrel it got shot in the arm, -- hewlett barrow -- politburo.
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people are not optimistic about the economy right now. >> our chief north asia correspondent with the latest on china. plenty more to come on daybreak asia. this is bloomberg. ♪
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>> we are here at the conference , [indiscernible] montreal and the canadian market as well. talk about the recovery is a big back to the pre-pandemic norm. speaking of a return to normal, as nearly back to return to normal in terms of day today. >> it is great to see everyone.
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good to be here in person. the traffic for the first time, and the last two weeks we've had traffic across all the networks in australia. returning to pre-pandemic levels. in the u.s., about 10% below. it is good to see people moving again. we are seeing a strong resurgence in freight. we are 70% above pre-pandemic levels. does a lot of online shopping. releasing the recovery to major cities within australia. >> has there been a movement when we see that my comes to the supply chain issues. >> there's two different issues there, we have inflation, in the short-term, it is good for trans urban. inflation now high -- we have our interest rates a 99% hedge.
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in the year to year, inflation is good for us. in relation to supply chains, we are very conscious of that. we think there some short-term supply chain inflation which will play out over time. obviously longer-term inflation, we need to take that into account. we are a high-margin business, inflation in our costs isn't as big a cost -- issue is some of the others. >> so your well had struck him straight? and the rba is expected to raise rates for the first time in 12 years. how does that in affects the broader business. >> most people we see urban -- unemployment is at the lowest levels we seen in australia in history, below the 4% level. we expect it affects the growth. we still expect, even with
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inflation and rising interest rates, strong demand. >> [indiscernible] you do have a presence in north america. is there any chance -- it should be easier to do deals now that you can get on a plane. >> we've already had business in for -- in virginia as of march -- d.c. and marilyn. now montreal. it provides good opportunities for us. we look at our strategy, whether it is australia or north america, if it meets our opportunity. australia continues to be [indiscernible] we are focused on long-term on north american opportunities. >> what is the biggest change for australia and the economy need right now? >> migration.
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we look at that migrate -- the pipeline, to just -- delivered the pipeline to brisbane and the victoria programs that we need development, and we need to increase the skilled migration that we need across australia. to me, skilled migration. >> what is the biggest risk? >> something that keeps me up at night? the biggest risk i guess would be long-term growth. again, that is not -- [indiscernible] >> stockhausen, trans urban ceo. we do have mark from australia, we are on day one at the moment. this is bloomberg. ♪
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vonnie: and vonnie quinn with the first word headlines. india's perimeter director the government -- india's supreme court upheld the government's vaccine policy was suggesting it review restrictions on the unvaccinated. that means data on our past and future vaccine trials must be disclosed in the public. generally has plans to invade the indian prime minister to the g7 summit in june, part of an
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effort to grow global alliances against russia. chancellor scholz posted him for talks in berlin on monday. india's leader did not confirm his plans to attend. new zealand's government will raise its debt ceiling and set a target for budget surpluses allow for more investment in infrastructure. the country's finance minister said surpluses will be kept within a band of 0% to 2% of gdp over time. the budget is set to return to surplus by 2025, a year later than originally predicted. the european union will seek to step up cooperation with african countries to help replace imports of russian natural gas. and draft document seen by bloomberg news says countries like nigeria, senegal and ain't gonna let will offer largely untapped -- and ain't gonna let, offer largely -- nigeria, senegal and angola, offer and
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type potential for natural gas. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: let's look at european future is now trading in the asian session, we are seeing a downside for msci europe futures, down almost 2%. but euro stoxx 50 futures are up, endagerment stock futures also gaining ground. this after we saw stocks falling on the monday session. we had disappointing figures on academic activity in china -- economic activity in china, sanctions targeting russian oil weighing and risk appetite. not to mention the flash crash that we saw on swedish stocks, that lasted about five minutes. the starcom 30 index falling as much as 8% before. those glasses. we have more clarity from citi now saying that it was a trader error that was fixed in minutes. haidi: let's bring in our next
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guest, one of the speakers here at the macquarie australia conference. she runs the country's largest diversified property group, and with the rba largely expected to hike its rich today, we will discuss that. susan lloyd-hurwitz, so glad to have you with us. we are looking at the first round of tightening to begin in about 12 years for the rba. what do you see as the impact on your business? susan: our business is resilient. we have a very significant pipeline of commercial projects we are building. still at very low historical rates in the interest rate cycle, and i expect our business will be very resilient as we focus on the segments that are tried and true and deliver earnings for security holders. there is pressure in the housing market around the established housing market, and there is a
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big differential between the price of new-build apartments and houses. we expect house prices will moderate but there is low supply. haidi: when we see it'll percent decline in property prices in sydney, you see that as being in the established housing secondary markets that we see? susan: what we in the data is rep. price: growth -- very strong price growth in the upper percentile of established housing. when you see in the interest rate cycle, when it turns, the submarkets will behave differently. haidi: do you worry about inflationary pressures as well as rate hikes and households? susan: households are very well buffered at the moment. billions of dollars saved in australia throughout the pandemic. so household net worth is very strong, in the sense of how much savings households have to draw down on, and to lean on in these
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times. certainly, the efficient number was surprising for many people, but i think the buffer will have households in good stead. haidi: another incident he has been the return to office. there is still that period of adjustment with a lot of companies looking at permanent co-working practices, a couple of days in the office within five. does that impact the way your business is being run and the decisions you make when it comes to investment? susan: it is a very interesting area. we are finding that robert fuller has picked up. we are seeing the evidence of people taking smaller footprint. we are seeing people either keeping their footprint or taking up more space as they are thinking through what their workplace needs to do for them. clearly, we can do tasks from anywhere, but everybody understands the importance of being together for collaboration, training, osmosis learning, building new culture, onboarding. others are much more difficult
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to do. at mirvac we have flexibility embedded in how we worked even before covid. 75% had some form of flexibility in their working arrangement. so it is very familiar to us. we are working with our customers as they are thinking through what their workplace needs to be to be fit for the future. haidi: there has been a lull in activity in property asset managers. our acquisitions and those sorts of deals something that you will's consider to expand the fund's asset management arm? susan: we are an asset creator and curator. we develop an we go on to own. we will often bring in a capital partner, a major global institution or investor to sit alongside us in the developments we bring to market. that is what has grown our a um from capitol building to $10 billion in the past six years. with the pipeline we have in front of us, which is the largest in our 50 year history,
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that is the potential for another $5 billion of third-party assets under management coming from our secured projects. that is the way we have been growing our asset management arm . haidi: there has been the dueling complicated factors of supply chain logistics, as well as rising costs. how has that played out for your company? susan: the integrated model is very resilient limited our guidance of growth of 7.1% minimum for the financial year last week. we have costs under control. because we are our own builder, we have a very robust risk management and ability to control costs in a raising environment. so the model is very resilient and performing very well. haidi: what is the biggest risk for your business at the moment if the assumption is that the return to a pre-pandemic norm post-pandemic, is going to be largely the same? susan: the thing that i worry about most of the time is people. the culture and the business,
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keeping the right talent in the business with a skilled migration at very low levels that it has been the last couple of years. we have a shortage of labor in australia. so it is a very hard labor market. we have been able to retain a 93% of our key talent over the last year, that i spend a great amount of time thinking about people, thinking about culture, thinking about how we get the right capabilities in the organization to support people's growth through their careers. haidi: scott charlton give the exact same answer, what keeps him up at night is skilled migration, or the lack thereof. we are a few days away from the federal election. with the new government, what is on your wish list? where do you think are the biggest changes needed? susan: i will leave policy to the bureaucrats and the politicians, but the resumption of skilled migration is important. this has always been a country fueled by migration. that is a key area that we need to be focusing on, and housing
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supply is a up there on my list, but that is more a state issue than a federal issue. but making sure that as we get migration back in this country, that we are actually building enough homes for the population. haidi: susan lloyd-hurwitz, great to have you with us. we really appreciate your time and insights with us. the mirvac ceo and managing director, susan lloyd-hurwitz. shery: take a look at how markets are trading across asia. we are seeing the kospi regrouping earlier losses, to gain about 0.2%. this is a tech-heavy index. the rest of the equity space across asia is still under pressure, the asx 200 down 0.25%. kiwi stocks down 0.1%. japanese equity markets are away on holiday, but the japanese is holding at 130. that is near the list in 20 years ago to the u.s. dollar.
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we continue to see that boj doubling down on its altar easing policy. we are watching the rba's great decision today, not to mention what the bok might do later this month given that cpi numbers out of south korea today came in at the fastest pace since october of 2000 eight. next, the new zealand tourism minister says the country back on the map for international tourists and travelers as the country opens up. stuart nash joins us next. this is bloomberg. ♪
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haidi: let's look at how we are setting up the asian market session. we are awaiting the rba's decision in a couple hours time. we are seeing the asx 200 falling, dragged lower by the banks and the miners. we also have that information story playing out, the poultry producer, saying they are seriously impacted by higher feed costs as a result of the pandemic. we continue to see austin barnes dropping. investors anticipate the rba -- we go to the sea australian -- we continue to see australian bonds dropping. investors anticipate the rba
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will raise rates. the 10 jump into the highest since november of 2014. treasury futures holding steady. shery: and new zealand has reopened its borders for international visitors, after being closed for more than two years. but tourism operators are not expecting a rapid return to the old normal. the government is also wanting to move away from the massive tourism that damages the country's environment. during this is stuart nash, the new zealand minister for tourism. -- joining us now is stuart nash. congratulations on opening your border. there seems to be a shift away from the mass tourism in the past. how specifically will you achieve this? stewart: good afternoon. -- the ability to market is a lot easier with social media and other tools than it was in the past. we are more targeting the high-quality tourists, over the
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-- over the masked. . worst but everyone will get a warm welcome and be able to experience everything new zealand has to offer. shery: what exactly does that need, the high-quality to worst? does that mean people try to keep them away from the key tourist attractions? stuart: please don't confuse high-quality with high network. high-quality means they come for the experience, they engage with the local culture, sample our cuisine and hour wind, take tours and engage in tourism. it is those who come over here and reengage. there is a buzzword in global tourism that we embrace, called regenerative tourism. sustainable tourism, having no impact on the surrounding ecosystem. tourists who actually add value to communities in terms of the
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ecosystem. haidi: what does that mean in terms of payments? what does it need to have visitors made their way when it comes to foreign arrivals? stuart: there is a lot you can do. we have natural parks, conservation, places where you can see everything that is growing, experience everything the ec on the marketing posters around the world. but what we're saying is that at this point in time, there is a lot you can do in this country, which you will pay to experience as you do all around the world. but we have a differential for international tourists, domestic kiwis, and the way it is going at the moment, it is a cheap place to come to. so i would encourage your viewers to get online, go to and see what is wonderful about this fantastic country --
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haidi: tourism is to be the biggest export earner for new zealand, even more than dairy. be wanted to be the biggest export earner again? stuart: i have these arguments with the ministry of agriculture, who is my very good friend. tourism is an important part. we are a tourist nation. we got places like queenstown fantastic resorts, that th ebays, they will always be an important part of our economy. during the lockdown, we locked down for two years. the economy has actually done really well. but i do see -- we would love to welcome back all your viewers into this country. we do love tourists. you will get a warm kiwi welcome the matter what you do. but we are open to business. we are keen to have you come and visit. some book that ticket and will see you in new zealand. haidi: does that mean welcoming
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that 3.9 million per annum as per the usual numbers that we would see? does that undermine the reset? stuart: it will take a while to get back to 3.9. in the meantime, between now and what we do, is forecast three to five years to get back there, there is a lot of work. infrastructure in their tourist destinations. one example, there is a very famous area called milford sound, just a fantastic fjord. there are waterfalls, the serenity, what we want to do is really deliver on the expectations that we have set. and the expectations actually that global tourists have. so there is a lot of work on developing infrastructure, but also looking at our workforce. we are telling people that we are inviting about how they can be. a better investment for new zealand. but you will still get a warm
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welcome. shery: during the pandemic, lots of people lost their jobs in the hospitality and service industries because there was no business. how challenging will it be to rehire all of these people, and will you even have to, given you are changing strategically on what types of travelers you are getting? stuart: you are right, a lot of people in the industry, even though we have an unemployment rate of below 4% at the moment, we have to entice workers back to the old jobs they had pre-pandemic. a number have stayed in the industry but at reduced rates. we had something called a wage subsidy which supplemented people's incomes, paid for by the government. it survived in some way, shape, or form, and is left down for two years so there is still engagement within the industry. we have something at the moment called an industry transformation play, working with local unions, local maori, to say, how can we deliver innovated exceeds the service
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expectations -- how can we deliver in a way that exceeds the service expectations of those flying from around the world. it will increase the service of they get in any place around the country. haidi: minister, great to have you with us. stuart nash, new zealand minister for tourism, economic and regional development. next, the hong kong market is set to open in the holiday. we are looking ahead to the lowest gdp readings, and more. this is bloomberg. ♪
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haidi: quick check of the latest headlines. musk is said to be in talks with more individuals about taking on more financing for his purchase of twitter. he is viewing the likes of apollo and aries in an attempt to spare some of his own wealth. he must offer teslas shares. australia's energy company says it remains committed to progressing a proponent de merger, even as its largest shareholder says it opposes the plan.
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they have just acquired it more than 11% stake in the energy company. citigroup acknowledged one of its trading desks was handed a flash crash in europe which sent shares tumbled across the continent. the bank as a staff member made an error when putting in a transaction, which was identified and corrected within minutes. it caused equities in sweden to plunge 8%, which prompted the main european index to lose as much as 3%. shery: hong kong's cash market reopens in just over 30 minutes. we are joined by our markets go anchored david ingles. david, we sat there in the hang seng index at more than 4% in the previous question. but the big question is how long will the rally last? david: absolutely, because we have not seen it last more than a couple of days. when you go of the way back to mid-march, that is when we first came out with the promise to support markets. but there seems to be more
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mustard on this. it wasn't just friday, look at the hstech index, it was up 10% friday. it has been a while since we have had a double-digit gain. in fact we are up four days. we will see whether we see a follow-through today. we will be watching closely the volumes. you had a massive move up in volumes in the afternoon session on friday. saturday that will be indicative of whether there is lasting power, sustained power in this rally today. haidi: the yuan has of the sleeping on the weakening trend. are there any key levels we are watching for? david: if you like nice round numbers, it is 670. we just put together a basic chart for our viewers. it is the first time since 2020 where you are looking to see the 50-day moving average cross above the 200-day moving average, a massive leg up.
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it has done enough to take the average of the way back up. it's just a matter of time before we actually get there. what will be curious to see today is we don't have the mainland markets running, they reopen on thursday. we don't really have a fix for today as a guiding star. analysts have said that the path of least resistance is still higher for dollar-china here. shery: what about hong kong's gdp data are today, what are we expecting to see? david: that is going to be interesting. it is backward-looking, yes. we all know the damage to the economy without even looking at the forecast. for the most part, the food and beverage sector is a good example, it was virtually shot for the first part of the quarter. the consensus is that we will get a contraction to varying degrees, of course. the most bearish case is -7.5%. this is context. the fed's decisions this week
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they will be raising rates likely, and hong kong will simply import that monetary policy, and these numbers will show you, where hong kong is perhaps not in a good position for higher rates. back to you. shery: of our go anchored david ingles. we will be looking forward to that open in hong kong. an alert on the bloomberg, the supreme court could be set to strike down abortion rights. this is according to a report by political, saying that the u.s. super court is set to strike down the landmark roe v. wade decision protecting a woman's right to abortion. that is based on a majority opinion circulated within the court. it was signed by justice samuel alito. remember, conservative legislators are passing a raft of controversial laws restricting abortions. if this proves to be true, we could see the overturning of that landmark 1973 opinion that found the federal constitutional right to abortion.
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haidi: and we have heard reporting that potentially that could lead to a nationwide antiabortion movement if that decision is rolled back by the supreme court. that's more to come bloomberg. ♪
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david: good morning from hong kong. it is 9:00 a.m. can be cheating and type a. -- it is 9:00 a.m. in beijing and taipei. yvonne: the u.s. 10-year yield touching 3% for the first time in three years, as investors are the biggest rate hike since 2000. before that, the rba takes centerstage, with some


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