tv Bloomberg Daybreak Asia Bloomberg May 4, 2022 7:00pm-9:00pm EDT
haidi: good morning, we are counting down to asia's major market open. shery: welcome to daybreak asia. the fed raises rates by 50 basis points and signals similar steps ahead. >> there is a broad sentence on the committee that this should be on the table at the next couple of meetings. haidi: asian stocks said to
follow wall street highs as investors take a sigh of relief that a supersized hike may be avoided. jamie dimon criticizes the fed, saying there is a 33% chance of avoiding a recession. shery: u.s. futures under pressure, this is after we saw the rally in the new york session. the best day since may 2020. after the statement, stocks struggled for direction. it was during the press conference that we saw moves higher with a nasdaq at 100. we also had the dollar index releasing the biggest drop in a month or so. this is as positions were cut after chair powell downplayed the idea of a 75 basis point hike. we are seeing crude prices peering back some of the early losses in the asian session. extending those gains anti-new
york, the best gain in three weeks, and only because the u.s. feel inventory fell to record lows but because the eu continues to threaten a ban on rush holt -- russian feel imports this year. the action is in the treasury space. we saw a two year yield, falling below the 260 level at one point. the 530 spreading steepening more than 10 basis points as that press conference by chair powell was taken by the markets as more dovish than expected. haidi: we are expecting the release rally to play out across the asian markets, rejoining trade today. futures are looking at .5% of gains as we get into the start of. cash trading. we saw the aussie dollar continuing to strengthen overnight. we are peering back some of the chains we did put on over 2%.
we saw the biggest intraday tumble since march night -- 9th. we heard from a governors saying that the fed was greatest to begin tightening before many of its peers and watching the currency from the qe dollar as well. a little bit of weakness as it continues to plow ahead with the strength. look at what we are seeing across fixed income. the global bond rebound is underway with australian bonds roaring back. some of the pressure we have seen from the five-day day slump, the 10 year dropping as much as 10 basis points. almost a surging 10 basis points in a week after the rba delivered the first rate increase since 2010. it is back under 3%, and went through the level for the first time in eight years.
we are seeing a bit of pressure coming off of the selling there as well after the 75 basis point was taken off of the table. shery: hong kong monetary authority raising the base rate to 1.25%. the rate move in lockstep with the fed increase given that the hong kong dollar is backed by the u.s. currency, the second hike this year following the federal reserve. the monetary authority raising the benchmark by 50 basis points. the base rate was increased as it follows the fed given that the hong kong dollar is tied to the u.s. currency. delving to the fed's most aggressive tightening campaign in decades and bring in our policy editor kathleen hays at our asia editor andrea. i mentioned earlier that at least when it came to the
market, it seems they took the presser as more dovish than they expected. what is your take on the hawkish this of this decision -- hawkishness of this decision? >> what they did to make the first 50 basis point rate hike in 22 years, the first since the year 2000 when jay powell made it clear there was going to be two more of them. still pretty hawkish. let us listen to what he said in answer to a question. >> 75 basis points is not something the committee is actively considering. assuming that financial conditions evolve in ways that are consistent with expectations, there is a broad sense that additional 50 basis increases should be on the table for the next couple of meetings. >> let us look at some other things he said.
the fomc said about five paragraphs about this is what they are careful about messaging, they said that the ongoing increases in rates will be appropriate, when jerome powell spoke about inflation he said it is much too high and the fed is going to move expeditiously to break it down. he is putting inflation over the economy at this point. he thinks the hot labor market could cool off a bit. if rates are above the neutral rate but i think the fed eifert says is about 2%-3%, more rate hikes are required. we will not hesitate to deliver them. he indicates he can see this is not a couple of 50 point rate hikes this is a steady path that they will be on. he thinks the economy can handle tighter policy and a chance for a soft landing. the bounce --
that message. haidi: markets felt a little bit over the 75 basis point expectation. how big is the relief rally we expect to see? >> a lot was riding on jerome powell's presser. markets went in at peak hawkishness. it was a myopic reaction, they latched onto the 75 basis and they ran with it. it was like throwing investors a breadcrumb. we see futures here in asia, coming off of this after those
gains. questions remain, some of the notes i am seeing this morning, investors are saying our markets are putting too much faith in the fed's ability to bring inflation under control to engineer a soft landing. questions that are coming in and out for investors. we are going to see a rally in asia, definitely not an invitation of what we are going to see in a week's time. there are a lot of uncertainties out there for investors. another thing we have, china reopening after that rake and there are a lot of questions about how the government is handling the lockdown. it will impact the growth there. >> all of the yields are
tracking those gains we have u.s. bonds last night. we are looking quite for the holiday in japan. we are noticing that the breakevens did not move last night and that is what investors are going to start focusing on. there are looking at those real yields, are they going to edge up, are they going to bring those inflation breakevens down? in itself it will ease pressure on inflationary expectations. have seen rate markets wine back those expectations -- wind back those expectations for a more aggressive rate increase. it does remain a very murky feature going forward. haidi: let us get to vonnie
quinn with the first word headlines. >> jamie dimon thinks that the fed should have moved faster in raising interest rates and he said the economy is strong and he sees a one third chance of the fed's action leading to a mild recession. >> business is in good shape and the has to raise rates. and they cannot, they're going to slow down the economy enough so that 8% comes down over time. i wish them the best. we are a little like. we had 15% unemployment and no vaccine. take a deep breath, give them a chance and i think the sooner that they move, the better. >> brazil central bank raised to a 2.75 percent. another hike may come next month .
brazil has raised income costs by a total of 10.75 percentage points since march of 2021. india's central bank has a 40 basis point hike to fight inflation. the rpi raised the key rate to 4.4% from a record low. the central bank also raised the cash reserve ratio by 50 basis points. the governor said that inflation pressures is becoming more acute, particularly on food. european union is planning to ban russian crude over the next six months as part of a trial of sanctions aimed at moscow. in addition to phasing out russian oil, they're also discussing extending the ban to russian citizens and entities. hungry and slovakia could be granted a longer timeframe to move off of russian energy.
global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. haidi: still ahead, investment group says it is important to weigh all of the components before throwing in the towel on the u.s. economy. we discussed the federal reserve's rate hike with the fed president. this is bloomberg. ♪
>> inflation is much too high. he to see that our expectation is being -- we need to see that our expectation is being fulfilled. 75 basis point increase is not something the committee is actively considering. additional 50 basis point increases should be on the table at the next couple of meetings. if that happens to involve levels that are higher than estimates of neutral, we will not hesitate to go to those levels. if higher rates are required, will not hesitate to deliver them.
-- we will not hesitate to deliver them. haidi: let us bring up our policy editor who is standing by with our next guest. >> charles served eddie the california fed. he has had to deal with all of the questions. it is great to have you back. the market has reacted to this saying that we are not looking at his 75 basis point rate hike. on the other and they did a rate hike and saw two more at the next meeting. that is the year 2000. is this a hawkish fed? is it a fed that is on the right track? >> is not a hawkish fed. -- it is not a hawkish fed. this is a problem of their own making. i thought powell spoke very eloquently about the situation about the dangers of inflation and why the fed needed to act.
i do not know where that powell was 12 or 18 months ago when he said they did not need to worry about inflation from -- for at least 2-3 years. keep inflation at zero and not worry about inflation. i hope he is more accurate now than he was then. i think they didn't what everyone expected them to do. -- they did what everyone expected them to do. the question is is it enough? >> we just ran the soundbite from him saying that they are willing to move rates higher than needed. willing to go above the neutral rate, it is an estimate, 2%-3%. is that high enough even if they do go above neutral? >> people mean different things by neutral. the 2% and the press and do not think is high enough -- and 3% i
do not think is high enough. it is not going to be a 2% by the end of the year. you are looking at a 5% inflation rate at the end of the year. real interest rates are still 2%-3%. it will be -2%. that as very accommodating still and not very restrictive. i do not think that is enough. i do not think it will be enough. it is inflation, we have a reprieve. i think it is misleading to target mutual aid as of this is enough to bring inflation down. it will not be. >> 75 basis points are still feasible? >> i think they are and i think the fed, powell, a move that
markets are trying to see with this, do not think it should have taken 75% basis points off of the table as many people have interpreted. i think they need to be on the table. they are to have that option. -- they ought do have that option. >> how they got themselves a bigger hole in terms of market expectations? >> they may have. they had a big hole when they initiated the new strategy that inflation was not going to be a big problem and keep interest rates at 043 years. -- at zero for three years. they begin tapering their purchases and getting all of the rate increases.
they were not swapping margins at rate increases. step on the accelerator to boost the economy and only to have you slam on the brakes to stop inflation. that is the policy that is being practiced. >> is it possible for the federal reserve to slowly -- slow the economy? getting inflation down is challenging, there is a chance of a softer landing? can the fed achieve that or is the recession inevitable at this point? >> who knows. the fed cannot, i do not know the answer to that. it will take a lot of luck.
i think not just a policy decision, but luck in order to achieve that. there is no record of the fed raising rates to -2% and stopping inflation. >> balance sheet runoff, it is going up to $95 billion a month, 60 in treasury, 35 billion in mbs, it will take three months to get there. with us make a difference in how they have to raise rates -- will this make a difference in how they have to raise rates? what is your sense in how that is going to work? balance sheet runoff could augment the amount of rate hikes they plan to do right now? >> powell said he did not know. they do not know what the effect of the balance sheet runoff is in terms of rate hikes. they hope it works.
there is no way to be sure. the runoff that they are talking about will not be achieved for some time. interest rates go up, they have two more trillion dollars worth of mbs. sitting on the balance sheet. repayment and refinance is going to cut down the runoff of those securities which are all 30 year mortgages. what is going to happen is they are not going to achieve that $35 billion runoff. has a balance sheet is not to shrink as much -- the balance sheet is not what you trick as much as anticipated. subsidized, another problem they will have in terms of allocation problems. i think they need to be prepared to shell assets. both mbs and treasury.
shery: how much does that complicate the picture given that we continue to see the friendly market and despite mortgage rates rising, the lack of how the inventory is now cooling off? >> it is not. i can understand why they were buying mbs in the first place -- cannot understand why they were buying mbs in the first place. another problem that they have created for themselves about how they are unwinding themselves from this type of credit policy and barge balance sheets that they have created national large balance sheet that they have created. shery: great to have you with us. we appreciate your time with us today. you can get a roundup of the story to get your day going, the reaction to the fed. terminal subscribers can get caught up at jb go. this is bloomberg.
haidi: here is a check of the business headlines. the fastest growth in corporate loans since 2008, cash earnings climbed to 2.5 billion dollars in the month. it topped average estimates. the bank will pay a dividend of 73 australian cents per share. uber has a positive earnings outlook, capitalizing on robust right demand. focusing on product changes to curb driver shortages. this comes after first quarter revenue rose to $6.9 billion. earnings came in at 16 $9
million above the average estimate. -- 169 million dollars, above the average estimate. increased spending on driver incentive, shares are down 30% in new york, the average drop in a single session. the stock is down more than 70% from the record high. riverfront investment group has reduced its exposure to financials despite the rising rate environment. this is bloomberg. ♪
>> businesses are in good shape. the fed will have to raise rates. i wish them the best. they were a little late, but two years ago we had 15% unemployment, take a deep breath. the sooner they move the better. >> going back to the 1930's, we have never been able to reduce inflation by more than 2.5 percentage points without
inducing a recession. even if we don't get close to the target, it's likely there could be some kind of some economic slowdown. shery: guggenheim and jp morgan speaking exclusively to bloomberg. we will hear more in a few moments. let's discuss the rate hike implications on markets. senior market strategists, good to have you with us. give us your reaction to the fed decision on what sort of guidance in how the markets reacted. guest: thank you so much for having me. it was a collective sigh of relief across the board. we had expected they would announce the 50 basis point hike, everyone was concerned about the language, but chairman
powell seems measured, he did not seem to be hitting alarm buttons and shot away from that expectation that we might see a 75 basis hike. i think this was good news from the fed. shery: and yet, there are concerns the fed is behind the curve which is why we continue to hear about the potential recession coming very soon. we have heard consumer sentiment . does that affect our positioning? guest: not so far. we have seen up-and-down data but at the end of the day, and consumers are still spending money on goods and services, we are seeing a return to travel,
feeding out, sporting events. even though they are saying they are worried, pocketbooks are still open and they are still spending money which is very encouraging. that was one of the most encouraging pieces of last week's gdp number. haidi: does that give you for a buffer when it comes to stock investors? guest: it has been an unpleasant year for bond investors, seeing negative returns and not being used to that. we believe the worst is over. with fixed income, we have added a rising portfolio, and we believe we will start rethinking
more attractive asset classes. haidi: in terms of the worry over inflation, where are you finding some inflation hedges? does the rebound discern investors from taking cash off the sidelines? guest: i think it does. we are of the mind that long-term investors are probably best suited to staying in equities as a hedge against inflation, because you have the potential for price appreciation and dividend growth. we have seen a fair number of companies in the last few weeks, earnings season, increasing with dividends. shery: we have heard other investors talk about how smaller companies may be able to navigate the environment because
they are less exposed to global macro uncertainties. what do you think? guest: unfortunately what we are seeing -- we are watching closely, it's a huge part of private sector employment and they are having a difficult time. haidi: always great to have you with us. we will have more from our exclusive interview with jamie dimon. he says the federal reserve should have moved quicker to raise rates. >> a very strong u.s. economy.
consumers are in great shape, jobs are plentiful, wages are going up, those are good news. businesses are in very good shape. they're going to try to slow down the economy. two years ago, we have 15% unemployment. take a deep breath, the sooner they move the better. >> what could go wrong? you talked about storm clouds. what is the worst case scenario? >> this fiscal and monetary induced growth in the u.s., which was true around the world. we have never had that before. we never had qt before.
when you look at qb, it's one of the greatest experiments ever done, they will be writing books for 50 years about it and we will have to reverse it. my view is rates will have to come up from here. new look at ukraine, they were great. the world is fine, ukraine results, but there is a chance this goes on for year and you radel global energy markets, commodity markets. the western world needs to be prepared and take every action today to be prepared that that can get really bad tomorrow. we don't have time. >> how do you handle that? what is your plan b? >> we will deal with it. >> how? >> in my view, the most important thing is american growth, i called the marshall plan for energy, that we do
anything we can, this doesn't violate climate change or long-term objectives, but everything we can to -- there are couple of problems, the national energy stuff, global energy is precarious. >> what is the role of europe? >> our economists a europe slow down to 2%, the problem is right now and economist would agree, we are looking at a static analysis that if things stay the way they are, things don't stay where they are. my view is there is a high view that oil will go higher. we should prepare for that today. i think the western world goes together. who would think putin against
this that working together part, we need to make permanent. >> going back to the european economy, how quickly could we see a recession? >> i don't know. i hate to guess the future. again, if you have, if ukraine gets worse, i assume europe would go to a recession. >> how do you see this ending? if you are president of the u.s., the commission, if you are the fed and you need to game theory and a can go either way, what do you do? >> i would play all three of them. i think it's a mistake to guess which one it would be. it should be all three of them. i think the cold war is back, the cold war -- now it is the most important thing. it should be the most important thing for the rest of our lives.
it's a permanent state of affairs, the cold war is back, not just from military but global, economic, strategic investments so we have a safe world. if we don't do that, with ukraine, you can see that all around the world. forms of chaos. shery: jamie dimon speaking exclusively to bloomberg. let's get to vonnie quinn. vonnie: new zealand's central bank governor has defended the decision to tighten monetary policy. the period before a committee, they said it took enormous courage to be one of the first countries in the world to start raising rates. they have faced criticism for being too slow. the sec has added to its broad list of chinese companies that faced delisting.
jd.com and billy billy joined those in the regulatory spotlight. the u.s. and china have been at odds over the policy for decades, and the sec is cracking down on firms that do not comply. antony blinken has postponed a key policy speech on china after testing positive for covid-19. we can, who is fully vaccinated and boosted will work from home. the department says blinken has not been in close contact with president biden for several days. sources say ndma restrict exports after severe heat wave damage crops. the hottest march on record hurt the harvest the world is relying on to alleviate a global shortage triggered by the barney graham. we are told officials are discussing the move and will recommend it to the prime minister who will make the final decision. 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?
turning to action after a three-day break. we could see the csi 300 falling further when it opens, the benchmark is to 60 points away from hitting a two-year low, has not had a lot to digest. we saw adrs gaining ground with a broad rally, game last week of a percent. we will see how the chinese markets price that in. we are watching the offshore yuan, because we saw that pop higher during the new york session after the dollar saw the biggest drop in about a month,
with chair powell downplaying the potential of 75 basis point hikes. we saw two sessions of gains holding steady, so we will be watching for that. haidi: let's get the latest from stephen engle. as traders returned from the holiday, and uneasy holiday across many parts of china. stephen: shery erupted up nicely. there are so many different headlines across the terminal since last friday's 2% rise for the csi 300, on the back of those stimulus comments saying they will lose victim to support the economy. another reiteration from the pboc saying they will support normalized supervision of
internet platform companies. over the weekend, five day holiday, the markets on holiday for three of those five days. pmi's were some of the worst readings and a couple of years. lockdown and shanghai. restricted movements for the people of beijing. goldman sachs says chinese cities accounting for 13% of gdp have some districts officially designated as high or medium risk for covid. we see the spillover effect. how will they stimulate out of that? when i say concrete, not infrastructure spending. what stimulus measures will work to overcome this sentiment?
the fed's hawkish move potentially limits the ability of the chinese authorities to ease their interest rates because of fears of more capital outflows. we just ran through it all. there's probably more. shery: every time we have a holiday we're thinking there must be some spending by these people who have a break. that's a problem in china when you have restrictions in place. stephen: authorities predicted the plane travel, train travel, movements would be down considerably. we're getting authorities saying torah spending was down. china has three main holiday
periods where people move and spend. the october holiday, lunar new year, than the five-day labor day holiday. pretty much nonexistent this time around. unnecessary travel is not supported whatsoever. the number of trips and china fell, shanghai still locked down. you see footage of the highways. very little activity. beijing is not in technical lockdown but limited movement for sure. haidi: this is a problem when you have people taking leave at specific times. as steve mentioned, shanghai is still locked down. 4319 local, ace some thematic cases. 261 confirmed cases.
as we continue to see these numbers trend lower, the exit from lockdown is delayed. the hard-line strategy is continuing when it comes to isolating. we continue to see these restrictions in place and shanghai. we see extended restrictions in beijing, as well. shery: the case of a fallen billionaire investor has led to a rise in federal probes leading to questionable trading practices. we get the details next. this is bloomberg. ♪
the number of investigations going on, the speed of the investigation, the prosecutors were highlighting the press conference that they were going after individuals. this marks a change. haidi: how is the biden administration dealing with white-collar crime? reporter: the idea of going after the individual. if you look at the history of the justice department, since the enron disaster, there has been a real aversion to charging individuals, it is easier to charge corporations. there is a whole book written about this. when prosecutors are willing to go after tough cases. what the biden administration has said is that they want to
bring individuals to justice, not just have corporations. haidi: let's get you a quick check of the headlines. a life insurance corporation in india sold 70% of its ipo on day one, attracting injured. the long-awaited ipo is expected to be india's largest and fetch $2.7 billion. retail investors will be allotted 35% of the shares. more client outflows in the first quarter, investors pulling $12 billion from the struggling asset manager which takes its three 282 three quarters. the firm missed estimates for revenue and adjusted profits leading shares to drop 8% in new york. finance -- binance is boosting
european expansion plans. if -- it is the first major approval from a g-7 nation. shery: the head of the open and sydney. the national australian bank is in focusk';? after better-than-expected results. a vote could change ground rules for copper mines. watch india as they consider limits on exporting grain. coming up, dark clouds are gathering over oil demand admit inflation, supply chaos and the ripple effect of the ukraine work. our next guest tells us more. a slide in china tech firms is rattling stock markets. we are looking ahead.
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haidi: asian stocks are set to follow wall street higher. plus, china's markets are set to reopen in a test of beijing's resolved. shery: we are watching the japanese yen which is still under pressure after we saw strength in the previous sessions, but interesting we see weakness given we are also seeing a weaker dollar which fell by the most, downplaying the 75 point hike. we saw those positions on the dollar, the japanese yen continues to weaken after nine weeks of losses. the boj doubling down and it's
ultra easy monetary policy, rate differential being played in. take a look at treasuries. we are now seeing treasury yields actually fall in the new york session, and the curve is steepening. you can see that at the end of this chart. we are a lot of fluctuations after that. this is as we saw the two year yield dipping below to 60 at one point, and now the 530 is steepening by more than 10 basis points in today's session. haidi: we are getting the latest numbers out of beijing when it comes to covid. we see it holding pretty steady, 50 local covid cases from a fourth, the trend is continuing to fall for cases and shanghai,
over 4000 cases into 61 confirmed. this is as we continue to see, restrictions being extended. lots of negative news headlines as traders get back to work after the elongated holiday from china. let's take a look. here in australia, we are seeing a good start to the session, we're seeing some gains from materials in particular as we see the 10 year yield and three year yield showing less pressure. we're just sitting below that.
the move is ahead of the curve than its global peers, and we are seeing the kiwi dollar hold and come under some pressure. we're seeing the biggest intraday tumble since the start of march. seeing a pullback when it comes to futures, questions about the sustainability and whether the markets will found another way to fret. some analysts are saying the nasdaq 100 futures are looking tepid. more sanctions on russian energy.
we are seeing new york crude above $100, brent above $110. haidi: regardless, the fed delivered its biggest rate hike since 1990. it was the tabling of 75 basis points that move the markets the most. let's get on on the most impressive tightening in decades. it is interesting that you get to rank this on the scale of dovish to hawkish. kathleen: it's like if you promise your child this fancy bicycle and your kids is geared up and you get them a nice one, they are disappointed. kind of how the markets are today, a 50 basis point rate hike.
many people said it will be out of control. they are not saying they will never do it, but they will not do it for the next two meetings. look at powell's description. you get that sense of urgency that he and his colleagues feel. as for the neutral rate, he says it's an estimate, not written in stone. they said they will not hesitate to deliver. he said we are a long way away and is acknowledging it, they are ready to do it. interesting, he is the former president of the federal reserve bank and he was on with us just in the last hour, uploaded powell for speaking
aggressively, but he did not think this message was especially hawkish. >> they put themselves in a position where they had to do this. he spoke eloquently about inflation. i don't know where he was 12 or 18 months ago. kathleen: i want to underscore, i spoke to charlie in december and he was already saying they are going to slowly, getting behind the curve. this framework is getting in their way. they would end up having to hike more aggressively. we have to give him credit. he was early on that. look at the worries. interesting to hear from him.
shery: of these for today, we saw the markets rally. kathleen hays. u.s. stocks soared, powell pushing back on the more aggressive policy tightening. let's get some analysis on how markets will react, but also given that china is set to reopen after a three-day break. how will they come back? good to have you with us. if you markets are so closed and away on holiday, but will we see a more positive reception to what was perceived as a more dovish chair powell? guest: i think the asian markets will take the news very well. we have had very tight monetary and financial conditions over the course of the last week, strong dollar, widening credits
reds for corporate's and sovereigns, the potential for a much higher rate hike has given a nice backdrop for equity markets, because much of that reverse very quickly in the last 12 hours. asian forces will take the news very well, and financial conditions were looking very difficult 24 hours ago. haidi: where is it headed now? what will affect its course? guest: that is pertinent for our markets. the dollar became very overbought, and paradoxically, almost as strong as it was during the deflation scare of march 2020. in many respects, the asian currency should take some good news from the fact they have been able to withstand a strong dollar. most of the dollar weakness will come from a more major yen, euro
and pound, because they are cheap at the moment. in all respects, asian currencies have held up well and probably means risk assets do well over the next 24 and 36 hours. haidi: what about china as an emerging markets anchor? what sort of impact the to see? the news flow just continues to be so bad. guest: in some sense, china is running on a different set of factors determining its losses at the moment. paradoxically, the worse the economic news gets, the more the authorities are willing to do u-turns. the symposium with the internet platforms probably is another sign authorities do not want to change rates or do massive fiscal stimulus, but are willing
to do reforms. that provides a nice backdrop, possibly after the congress for the csi 300, and hopefully for the hsi as well. paradoxically, the market may get things that are not necessarily interest rate sensitive or currency sensitive, but more on the reform agenda which is good for equities. haidi: learning to live with this elongated risk as we see the invasion of ukraine by russia just continuing. where does that leave the player like china? guest: one of the interesting aspects for china was talking about u-turns, foreign minister went on a flight to a series of countries that have abstained, one of them was india.
in terms of getting a cohesive force, china was quick to establish it wasn't the only one that had interests with russia. longer-term, i suspect the markets are already dividing the world up, and in that respect, not only trade relationships would be difficult, but capital flow relationships. that is the underlying concern with most fund managers, the risk of potential sanctions, the risk that their portfolios being changed, the benchmark is being changed. it's a more longer-term capital flow question for investors rather than perhaps worries about russia and ukraine. haidi: always great to chat with
you. let's get you to vonnie quinn with the first word headlines. vonnie: the jp morgan ceo says the fed should have moved faster. he said the u.s. economy is very strong and he sees a one third chance of a soft landing, and also sees the same chance for a recession. >> business is in good shape and the fed will have to raise rates. they will have to slow down the economy so 8% comes down. i wish them the best. we are a little late, but two years ago we had 15% unemployment and no vaccine. take a deep breath, the sooner they move the better. vonnie: india's central bank surprised markets in his first unscheduled move since the pandemic began and raised their key rate to 4.4%.
they raise the cash reserve ratio by 50 basis points. the governor said inflation pressures are becoming more acute. the u.s. planning to ban russian crude as part of the sixth round of sanctions aimed at moscow. in addition, the members are extending the swift man to more banks and banning property transactions. sources say hungary and slovakia could be granted a longer timeframe. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: still ahead, dark clouds are gathering over global oil demand. we will discuss more. plus, the reserve bank of india stuns markets with a rate hike ahead of the fed. more on that next. this is bloomberg.
equities and bond markets breathing a sigh of relief as the fed moves. we saw european equities falling as investors has some jitters ahead of the key fed meeting. europe looking a little bit lower, we are the boe. we said yields topping the covid p. 1.7%. the fed tightening cycle will put the spotlight on central banks. when you think about divergent policies, unlikely to change
anytime soon. >> we are seeing that in investor flow, part of that was reflecting the fed divergence story. the yuan fell off, there are other factona, downs. it does take away the role of some of the yuan as a stabilizing anchor during times of stress. japan is a similar story. the yen is at a 20 year low, raising questions about its role as a safe haven currency. there are japanese factors, question marks over the economy, the boj going in one direction and the fed in the opposite. we have seen divergence but it's very stark and playing out in the world's number two and
number three economies. shery: the yen continues to lose grounds, long positions being cut on the dollar. where is the greenback headed? guest: i think it's headed up over the short term. positioning got over it skis going into the fed meeting. a lot of positions has to be closed out. bond yields closed at their highest 2019.
when you have wages data tonight and tomorrow, we could be just a few hours from the mixed inflationary shock that puts us back into reversal. haidi: what is the impact across fx if we continue downside pressure? guest: what the rbis did and but the brazilian central bank is doing, those are two clues. the have to risk going faster than the fed. if they failed to be affected enough.
they have to risk going harder and faster. that is why the we saw the rbi move yesterday. shery: can you tell us more about the central bank decision? i was stunned. we were expecting them to end this cycle of aggressive tightening, it seems they won't. reporter: exactly. u.s. interest rates still have a long way to go. that means emerging economies have a lot of work to do on their side, we're seeing that over the past few months and there is more to come. india was a surprise example of that. others will follow.
the big challenge is going to be, at what point to they focus on tackling inflation and interest rates? at the same time, exports slow down. the world economy is losing momentum. there is a sense of tension for emerging economies, it's one thing to jack up interest rates but on the other side, they will have bad debt, slowing growth. i think that's where we are in asia at the moment. they do have to tackle inflation. haidi: it's not over yet. there is a real cost-of-living prices. how do policymakers balance it? reporter: exactly.
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we also have the malaysia pmi numbers turning positive to 51.6, pretty positive as well. shery: there is more evidence china is putting pressure on its economy. stephen engle in hong kong. stephen: we knew it would be bad, even state authorities warned train travel, spending would be down. shanghai is essentially in total lockdown, beijing residents have been urged not to travel, only necessary travel is around. the overall strategies limiting,
we have the holiday in october. january and february. it was pretty muted this time. that according to the governors yesterday, the trips were tallied. more pressure. haidi: chinese officials have not given any indication they are going to ease up, but what signs are we looking for? stephen: that's a good question. aside from the tea leaves.
if there is a shift in rhetoric, you have to listen to state media, living with the virus as wrongful thinking. toning down of that rhetoric would be a clear sign until after the party congress when the political risk is lower. as well as the legal status, keep in mind, covid his lungs into the same category as other infectious diseases such as hiv, rabies and other diseases that required by law a stiff response. any downgrade or re-categorization of covid would be a clear sign they are leaning towards relaxing some covid
curves. the elderly and china are not highly vaccinated in march, only half, that needs to get up to 80%. the proliferation of antivirals or china's homegrown mrna vexing , if that's approved in china, that would be an indication china is moving forward. haidi: stephen engle with the latest. let's get you to vonnie quinn. vonnie: the sec has added to the list of chinese companies that faced delisting in the united states. it's because of beijing's refusal to access financial
audits. they have been at odds for a decade. the sec is cracking down on firms. antony blinken has postponed a policy speech after testing positive for covid. he is fully vaccinated and boosted and experiencing mild symptoms and will work from home. the state department says he has not been in close contact with president biden for several days. results central bank raises interest rates by a full percentage points. it also signals another hike may come next month. brazil has raised borrowing costs since march of 2021. bloomberg sources say india may restrict wheat exports. its hottest march on record hurt the harvest.
we're told top officials the prime minister will make the final decision. 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. haidi: let's take a look at australian bonds. roaring back in the morning session, tracking what we saw in u.s. treasuries and the broad recovery across goal local -- global bond markets. it's unwound some of what we saw caused by the slump, a softer than expected outlook from the fed reserve, looking to be taken off the table, the perceived sigh of relief playing out not just across the stock market investors but bond markets as well. below 3%.
the first time we have seen a past that level in about eight years. 10 year seeing some best buy, a similar picture when it comes to new zealand sovereigns. currency wise, the aussie dollar is holding on to most of its strength. the kiwi dollar is seeing a little bit of gains as we heard from the rbn governor talking about the courageous and this of policymakers to be one of the first to move aggressively. jamie dimon says the fed should have moved quicker to raise rates as inflation spikes. he also told us exclusively the central bank's actions leave the 33% chance of a soft landing. >> a very strong u.s. economy. the consumer is in great shape, lots of money, spending money, jobs are plentiful. everything's distorted but that's good news. business is in good shape. the fed is going to have to
raise rates. if they can, they will have to slow down the economy enough so 8% comes down. i wish them the best, we're a little late, two years ago we had 15% unemployment and no vaccine. take a deep breath, give them a chance. the sooner they move the better. >> what could go wrong? you talk about strong clouds. >> i hate the word unprecedented. but the unbelievable growth in the u.s. is abnormal. we have never quite had that before. we never had qt. she look a q. week, it's one of the greatest experiments ever done. we're going to have to reverse it. my own view is rates go up from
here. then you have ukraine. obviously, the wishful thinking is you have a slowdown, the world is fine. there is a chance this goes on for years and you completely rattled the global energy markets, wheat markets, commodity markets. the western world needs to be prepared for that and need to take every action to be prepared that could be bad. you don't have time. >> how do you handle that. what is your plan b? >> we will deal with it. that is life. in my view, the most important thing is american growth, the plan for energy, that we do everything we can and it doesn't violate climate change or change long-term and -- investments, but you get oil and gas into the hands of the europeans.
you've a couple of problems out there. the national energy, global energy is precarious. >> could europe see a recession? >> absolutely. our economists say they will slow down to 2%. we're looking at a static analysis. if things stay the way they are. things don't stay the way they are. my view is, there is a high chance it will go higher, it takes one million barrels or 2 million barrels that can drive prices up, so we should prepare for that today. i think it's great the western world has gotten together. who would've thought sweden, germany, switzerland, working together, we need to make permanent. global security. >> how quickly could we see a recession and how deeply to be? >> i don't know.
i hate to guess the future. if ukraine gets worse, i would assume europe goes to recession. >> how do you see this ending? it's a three-way system. so what do you do? >> it's a mistake. it should be all three. the cold war is back. the whole world knew that national security is the most important thing. that was the most important thing. it should be the most important thing for the rest of their lives. we learned that is a permanent state of affairs. the cold war is back. not just for military purposes but global economic, strategic investment purposes.
shery: take a look at commodities. gold is extending gains and rebounding. chair powell downplayed the possibility of the basis point high, we saw treasury yields falling from the 2018 high. copper gaining ground as we are seeing a little bit of a mixed actor out there, the weaker dollar did help but we continue to see concerns about the demand outlook given covid restrictions continue. we is higher by 8/10 of 1%, extending gains after india is set to be considering wheat export bans given it has a heat
wave and damaged crops. crude oil prices, paring back some earlier losses, we saw and the new york session it jump the most in about three weeks, not only because fuel fell to record lows, but we continue to see the eu ban fuel imports given the ongoing war in ukraine. haidi: our next guest is talking about dark clouds as economies decelerate. let's bring in the founder, always great to have you. you talk about the complications involved when it comes to crude. how does the situation play out if we get more sanctions on russian energy?
guest: good morning. it's getting increasingly difficult for russian oil to make its way into the market. the u.s. has already banned russian imports and the eu is discussing a phased in bad for russian crude and imports by the end of this year. the one relief valve is in the event more and more oil gets rejected, it finds its way into asia. it's mostly india and china, major importers of crude. the eu is increasingly moving to what one could call extraterritorial sanctions, an impact on trade globally for russian oil. the eu is looking -- russian shipping, the ban on the
european shipping companies from having to do anything, and that will make it very difficult for russia to reroute oil flows. haidi: it's going to make it difficult for opec-plus to stick to its production output plans. guest: consumers should one opec to increase and they have been saying that from last year. we have seen opec-plus has stuck firmly to its plan of the moderate increase in monthly targets. i emphasize targets.
another target hike. opec is falling short of delivering that. bloomberg figures for april, opec was supposed to increase by 274,000 barrels but delivered a hike of just $10,000 -- 10,000 barrels per day. it is twofold. opec is not veering from its chartered course and falling way short of delivering. shery: how does that influence the markets over the next year? guest: right now, let's look quickly at the short-term. right now you see brent at about
$110 a barrel. even if it's not phased-in, you are seeing more and more rerouting of flows. whatever is capable of being shifted away. these things that have been established over decades is driven by economics more often than not. geopolitics is not a good force to change flows. economics don't go in favor of russia being able to send oil to india and this going to be difficult. next year is too far away. right now, the supply is hinged on ukraine, what trajectory the
shery: just over half an hour away from chinese markets returning to action. stocks could be coming under pressure given the losses we saw in hong kong. the reversal of last week's rally, that helped but then a completely reversed. the latest headlines they came out over the holiday were not promising either. we saw the weakest factory output into years and a delay from the five-week lockdown. beijing announcing stricter restrictions, we will get data later. for more on what to watch, let's bring in david ingles. it will be an exciting day. david: can't way. what a time to be alive. the reopen is coming up. seeing how large the economists
had overshot the estimates, we are expecting in the 40's. pmi numbers came out, this is a weird confluence of data because of the timing, it's backward looking so certainly pmi numbers are in focus. haidi: the risk-reward balance. what does that look like? david: who knows. shery laid out quite nicely the price action we have seen. the frito -- i would be inclined to see more pressure at the open. when you look at the drop in yields, falling cases and shanghai, stable in beijing. that indicates more support as
far as risk appetite is concerned. it will be interesting what happens intact. pboc talking about normalizing policy as it pertains to its happening. then you have the news on the sec and you have falling yields this morning. compared to this time yesterday, may more support. back to you. haidi: let's take a look at some stocks we are watching as we get the reopen. looking at the names of companies forced to do list, jd.com, billy billy, ne-yo.
essentially coming under more pressure. shery: this is interesting because we have the golden dragon china index gaining ground, more than 2% given the broader rally we saw. this is after an 8% gain last week, but interesting that these names are under pressure given the uncertainty over the crackdown in the u.s., not to mention in china, the revelatory crackdown. -- regulatory crackdown. haidi: as you have been saying, just the headlines of negativity, the bad news continues to come through for china. watching this reopening after the break we saw from trading, what to expect on these tech stocks facing possible delisting in the u.s.. will be talking about the fed.
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