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

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♪ haidi: good morning, i'm haidi stroud-watts in sydney. shery: i'm shery and in new york. our top stories, further losses and fears over the growth out look intensified. the dollar is at a 2020 hi. fed chief pushes back against the 75 basis point hike, calling half-point moves already
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aggressive. haslinda: and i am haslinda reporting live from manila, where the philippines are set for a deeper drop. a landslide presidential election victory. and we start you off with breaking news out of south korea. we are getting the latest current account surplus numbers coming in at 6.729 billion dollars. widening from the previous month of february. we are seeing the goods trade rising. this is widening from the previous month of february. of course, we are watching current accounts closely as we have higher commodity prices. and also, the rate in terms of trade in south korea, which is pushing the korean lawn lower against the u.s. dollar -- the korean yuan. export numbers in south korea have really kept up with double digit growth in april, as well,
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so we continue to see that strength in the balance of goods, not to mention the current account surplus widening to $6.7 million, haidi. heidi: none of that is going to help the outlook when it comes to trading in asia. take a look at how we are shaking up after we saw u.s. stocks falling to the lowest in 13 months. concerns about the fed's ability to navigate a soft landing, the lockdowns continuing in china, the extended war in ukraine, all of this with asian stocks poised to match the longest losing streak since the pandemic panic of two years ago. selloffs and certainly sydney is not immune. we are seeing nasdaq futures down by 1.4%, the lowest since march 8. we could see it trading to the downside of 1.4% there as well. we are watching the drop in yields when it comes to australian and kiwi bonds. narrowing what we saw with treasury yields falling over
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night, but that happened within the curve steepening end of that gap between the 50 and 30 hitting the widest since march. seeing the most in the treasury yield curve. it taking a look at new zealand where were seeing one a half percent lower when it comes to the equities trading session. watching dollar yen even as shery mentioned, we have this extreme strength continuing when it comes to the u.s. dollar plumbing to the highest closing level in two years. -- climbingshery: the move towae havens with treasuries rallying. the 10 year yield though still above 3%. despite of course the pressure there. two year yield also falling below to 60 at this point, of course a big catalyst this week is the cpi numbers, so we will be watching for that. u.s. futures up three tons of 1% after the s&p 500 sank more than 3%, the lowest since march of
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2021. so we have negative feedback loop when it came to weakening equities with oil also under pressure. continues to be under pressure in the asian session moving to be 100 and two level. this of course as we see signs of demand cracking given of course disappointing chinese data. so perhaps filtering through what's happening in crystal -- cryptocurrencies. slightly higher and above the 31,000 dollar level. but immense volatility in this sector. in the past hour, we have seen it go from negative to positive. a theory him also at this point felt more than 11%. you can see the plunge there in new york. for more analysis and central-bank actions with our chief rates correspondent for asia garfield reynolds and are global economics and policy editor kathleen hays. garfield, let me start with you because we have this huge stock drop in the u.s.. close to a bear market.
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it down i think 17% since the december peak. what happens if we get there? garfield: what happens if we get there depends just a lot on the fed. that is the key question here. if you look at the previous bear markets, usually turned around a bunch of the fed subsidies. in many ways, i think the most instructive comparison is with what happens toward the end of 2018 when the fed was further into a tightening cycle. we are going to keep hiking regularly and runoff the balance sheet. and it was got to a bear market the s&p 500 down and the fed hiked at the end of 2018 by rapidly signaling that it looks like we might have gone too far. we can pause now and in fact, that ended up being the
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beginning of a series of rate cuts. now we've got a situation where the fed has locked itself into at least 50 basis points the next two meetings. and it cannot back away from that, so i think stocks could go a lot further than just an ordinary bear market. >> kathleen, we heard from rafael bostic saying even with the criticism that 75 should have been left on the table, he says that is unnecessary. kathleen: it's already aggressive. there has not been a 50 basis point rate hike since 1980. the difference between now and then is inflation is at 1%. it was not even close. that is the fed target. now the latest inflation number is eight and a half percent year-over-year. it comes down. it is going to be something like 6% year-over-year. there is no way that fed can stop hiking rates. it's got to keep hiking rates until it has the sense that inflation has peaked, that it is going to come lower. i do think it is -- of the
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economy falls apart that would be an issue. rafael bostic made it clear that he is in the middle ground. he's not dovish or hawkish. let's listen to what he said. rafael bostic: 50 basis points from over the last few years you know is pretty aggressive move. i don't think we need to be moving even more aggressively. i think we can stay at this pace in this cadence. and really see how the markets evolve. kathleen: he was us later at the atlanta fed's conference that they hold every year, that is where the interview took place with bloomberg television about the 75 basis points. they will not take it the table. take a look at the bloomberg chart from dan curtis and our bloomberg chart team. showing the s&p 500, you can see the white line. you see too far red lines. this is the fed's rate over the next year, where is it in terms of cuts and increases in traders excitations? two days in a row that has come lower probably by about 20 basis points.
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that might signal eight when he five basis point rate hike. still, markets are not giving up on the idea that the fed will have to hike more before they start making a difference in inflation. >> garfield, what does this mean for dollar strength? garfield: well, we have been in the scenario where the dollar usually goes up. by the way, overnight, it showed a lot of strength against risk currencies against the aussie, against the canadian. that was partially also because oil dropped so much and that's the equity outlook there. where as more sort of stable currencies, usually the euro and the yen, they did ok. they actually held up so i think that speaks to the current move being much about the fear factor in part of the fear factor being china and whether it's growth is going to slow down, because that
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is what is bringing oil and the lg down. so the next leg up in the dollar probably has to come from or their concerns on that otherwise we may get moderation, because what kathleen was pointing to has helped to bring down treasury yields. so that makes dollar strength at the moment more about fear than about greed, so to speak. >> and kathleen, it looks like part of the fear pulling lows up as well. what are we seeing from the are b.i. intervention and could they do more? kathleen: a person familiar told bloomberg news that yes, they could do more. they got $600 worth of foreign currency reserves, so they have plenty more ammunition. interesting that they did a surprise rate hike early last week. still, the dollar strength and the really has continue to fall. it fell a full percent against the dollar, the dollar getting up to 77.5 rupees. that is a very high level as you
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can see from that chart. and you know, the fundamental, this person familiar and said great, the economies are expanding. this should not have a weak currency but experts around the world including the national monetary fund and world bank two weeks ago at the spring meeting in washington once again putting out that warning that aggressive fate -- rate hikes are going to put pressure on emerging markets. you're going to push her old yet -- her own bond yields uprooted that will draw capital out of the emerging-market at a time when some of them are indebted right now. that creates risk. heidi: editor kathleen hays and chief asian rate correspondent true let's get you to vonnie quinn with the first word headlines. vonnie: president marco junior is poised for a landslide victim in elections. 36 years after his dictator father fled the country.
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election returns counted, the former senator one and 30.3 million votes or more than 56% of the total for president. vice president laredo. 14.4 million votes or 26.9%. sri lanka's prime minister has resigned in the wake of the plunging economy. demonstrators have been demanding that he and his brother, the country's president, quit. prices of everything from gasoline to medicine have been soaring. close to bankruptcy and resending payments on foreign debts. russian president vladimir putin has in folk russia's fight against germany and its invasion of ukraine. they had a parade in moscow's red square, marking the german defeat in 1945. vladimir putin made no major announcements, despite speculation he might formally declare war. he said ukraine and nato forced him. in kyiv, president zelenskyy rejected attempts to invoke
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world war ii. he issued a video statement trying to drive the occupiers out of our own land. bloomberg television earlier and said there is a critical need for more weapons. he said kyiv officials are ready to come to talks with vladimir putin. >> several times, we should have negotiations. once again, we seek nothing from vladimir putin himself to be part of these negotiations. global news, 24 hours a day. on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. haidi: still ahead, a hong kong businessman and lawmaker says the city's incoming chief executive may negotiate better with beijing then past leaders have. we will discuss why. plus, after the fed's hawkish
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turn, investment group says the risk of a recession is rising. that is just ahead. this is bloomberg. ♪
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>> stagflation is toxic. >> equities by themselves are not a safe place. >> not safe because you lock in a negative real yield. >> there is no safe haven in this marketplace. >> big struggle for investors. >> incredible levels. starting to fray at the edges. >> hard to get a handle on what
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exactly is going on. >> investors are looking for diversification. >> we are in a stagflationary environment. >> we are >> on the cusp of that. >>people are negative. >> the reality is there is little risk appetite. haidi: guest on bloomberg tv. our next guest is stock market valuations getting back to reasonable levels as long as earnings do not fall apart. he is the director of investments and chief investment strategist. chris, good to have you with us as always. let's take a look at one of the reasons were seeing this panic on the markets, which is this big high when it comes to real yield. we see of course a resiliently stronger dollar, liquidity conditions tightening further and those three squares that you see there are the financial crisis in 2008, 2013 attention and the last one that is happening right now. how much do earnings -- how much
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will earnings have to overcompensate to be able to make up for these conditions? chris: well, first of all, thank you for having me today. i think you has to a really provocative question -- i the queue asked a provocative question. yields are tied to stock market valuations. you can look at stocks as relatively long-duration assets and the more growth oriented equity is, the more tied to interest rates the valuation is going to be. i think you're bringing up the right dichotomy, right? that when real guilds go higher, that's going to pressure valuations and in fact, we have seen the s&p 500 that is gone from 22 and a half, where it started the year, to something under 18. that is a lot of multiple contraction given the fact that earnings have held up. so argue is that if earnings can continue to be relatively strong throughout 22, which is our best case scenario, that even if the multiple contracts a little bit more from here. let's call it 16, 17 times, you may have seen the worst of the
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equity pullback. now, the $60,000 question here is do we get a recession with this pullback? equity bear markets that are not -- by a recession tend to be's shallower. and the duration tends to be a lot less long. so that is the pertinent question here is are we going to see a recession in the next six to nine months? haidi: have investors adequately priced in the pace of tightening yet? chris: we have certainly gone a fair amount of the way towards bear. very rapid pace, look at just the market over the last three days since the fed announcement after a bit of euphoria, it has been absolutely nothing but red sins. and so i think the market is rapidly read pricing the idea that the federal reserve balance sheet is going to be contracting, tightening. but remember it's going to take four years at the current pace
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of liquidity training for all of the liquidity that was created over the last few years and quantitative easing to actually go away. so the fed balance sheet will need to get reduced, but not by asia maddock amount in the near term. the interest rate question i think is a bigger one because markets do not like the magnitude, the change in the rate of change that we have seen in interest rates. they are extrapolating worst-case scenario. shery: in the u.s. we continue to talk about the potential of a recession as you talked about, but in other parts of the global economy like some parts of asia, where travel is resuming, we are expecting growth to really accelerate. are there any overseas markets that would be more insulated from all of these uncertainties? chris: you know, honestly, i would place asia, particularly north asia is one of the areas that i think is most susceptible to seeing a recession in the near term. if you look at soft data in china, for instance, pmi readings that we see, these are
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well into contractionary territory. which concerns me. and of course, as asia goes -- excuse me, as china goes, the rest of asia tends to go economically. japan has had a more abundant economy and those are the two largest economies in asia. in terms of pockets of overseas that might be somewhat insulated from this, i think about some of the commodity areas. australia, canada, norway. these are countries whose economic fortunes wax and wane with the price of commodities. those might be on a relative basis more insulated than north asia. haidi: is that a sector that you like? chris: yes. absolutely, yeah. so we like energy, securities across the board. an hour longer dated was risk tolerant portfolios and do have international exposure in areas like canada and norway
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specifically, as well as areas of latin america, which of course is also tied into that commodity positive correlation. haidi: good to have you back. river run investment chief investment strategist. you can get a roundup of the stories that you need to know to get your day going in today's edition of daybreak. terminals of scrubbers go to dayb . this is bloomberg. ♪
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haidi: galaxy digital ceo expects damage ahead for cryptocurrencies. he told bloomberg the next three quarters will be volatile and difficult as crypto is tied to moves in u.s. equities. >> unfortunately, unlike most of the major sellouts we have seen, if it was the craziest for
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covid, 2008, 2009, the fed was able to really respond. the best response we are going to get here is hey, we are only going to hike 250. and they will not make that claim until they see inflation expectations come down. where ways away from that, so we are in for volatility and pain until there is an all clear on inflation. >> the correlation, because i think that was the main hope, the prayer, institution investors are coming to crypto. this is a non-correlated asset, but it is very correlated in large part because of institutional players have come in and they are having to battle. >> less correlation until there was free money forever, right? the correlation increased dramatically after covid because every central bank took a firehose of liquidity and sprayed it on the tarmac. you can look at the correlation of fine wines are baseball cards or any collectible for the
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nasdaq assets. and so, we are unwinding this era of free money. and so it is not surprising to me that bitcoin, which was ahead is selling off. i do think those correlations will break down or will lessen the moment we find some stability in the market. right now, if you are an investor, you've got 100 buyers to put out. because you have over committed to venture, you have enough liquidity to pay private commitments. i used to be at risk parity, that does not seem to be working at all anymore. so very few people want to put on new risk in a moment of tumult. i think once it stops, that is the word, tumbled. once the chaos starts -- stops, then you will see the allocators who are doing their homework. i just went across the country to a bunch of conferences. i am wildly convicted that there is infrastructure being put in place to bring lots of capital
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into this space. so again, it is surviving this unwind that investors have to manage. >> ceo mike nova gratz there. and here is a quick check of the latest business fresh headlines. goldman sachs is pulling out of the public. the wall street tried has been telling sponsors that it will be ending the involvement. bank of america scaling back work. the retreat follows new guidelines from the ftc that would expose underwriters to greater liability risk. twitter shares fell after the investments from hindenburg research that is seen as a significant risk as elon musk $44 billion proposal to buy the company will get repriced lower. the investment firm which focuses on activist shortselling's and multiple developments will begin twitter's position and are threatening the current dynamic.
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volunteer technologies plummeted as much as 22% after reporting widening losses and revenue growth. $270 million from doing our peter thiel's bank in the company. haidi: dollar dominance in the -- for the greenback as they say continues to dominate the narrative when it comes to fx. the dollar index still sitting at levels that we have not seen in about two years. we set a closing level the highest in two years. we see inversely, the aussie is sitting under that key asset level, dropping to the lowest since july 2020. that is a 22 month low. we have falling energy prices weighing in, concerns that the china slowdown, as well as sales will slow levels. downside pressure when it comes to the yuan as well. coming up next, are covers of the philippines presidential election continues.
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looks set to win by a landslide. will be live in manila next. this is bloomberg. ♪ this? this is supersonic wifi from xfinity. it's fast. like, ready-for- major-gig-speeds fast. like riding-a-cheetah fast. isn't that right, girl? whoa! it can connect hundreds of devices at once. [ in unison ] that's powerful. couldn't have said it better myself. and with three times the bandwidth, the gaming never has to end. slaying is our business. and business is good. unbeatable internet from xfinity. made to do anything so you can do anything. so many people are overweight now, and asking themselves, "why can't i lose weight?" for most, the reason is insulin resistance, and they don't even know they have it. conventional starvation diets don't address insulin resistance. that's why they don't work. now there's release from golo.
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haidi: let's take a look at what working across the bloomberg when it comes to japan. how about spending numbers falling 2.2% year on year for the month of march? we have been expecting a slow recovery given that we have a pretty difficult base when it comes to that listing of lockdown conditions as well as compared to what was on the previous year, but were seeing how their tracking. slightly better than expectations of contraction of
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3.3% there. this is what were watching when it comes to really that recovery in spending and retail sentiment, compared to february. you had that because i state of emergency being lifted by mid-march. bloomberg economics does expect spending to pick up in april, that will be the first full month of data that we have after the most recent virus was listed. still looking at that jump in inflation, consumer inflation to around 2%. we will expect that some of these higher prices for things like food and energy may limit the rebound in the second quarter when it comes to household spending. let's get to vonnie quinn who has the first word headlines now. bonnie: worsening you crudity across key financial markets amid rising risks from the war in ukraine, monetary tightening and higher in nation. in its annual financial stability event, the risk of deterioration was higher than normal. seen in commodity markets caused by fallout from the war in ukraine.
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sources tell bloomberg india's central bank is intervening in all foreign exchange markets to defend the ruby after a record on monday. were told the are efa is targeting the federal reserve profile, where it runs 600 billion dollars and is prepared to do more. as the are b.i. rate hike will actually not be able to self currencies decline inflation. shanghai's strict covid currents are affecting new york. shortage of mechanical imaging tests. it's an example of how chinese lockdown is affecting global supply chains. new york hospital association once the stock may be curtailed by as much as 18% over two months despite the resumption of production. not be attending the opening of the u.k. parliament on tuesday due to episodic mobility problems. it means the 96-year-old will miss the speech in which she she
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sets government agenda for the parliamentary session. prince charles will take her place for the first time. global news, 24 hours a day. on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn created this is bloomberg. shery: and the latest from manila now, where according to official results, marcos junior has won by a landslide, bringing his family back to the presidential palace. 36 years after his dictator father fled the country. >> if we are fortunate, i will expect that your elbow not wayne, your trust will not win, because we have a lot of things to do in the times ahead. shery: our chief international correspondent for southeast asia haslinda on it is in manila. what is the latest? haslinda: well, shery, the people have spoken. they have given marcus a resounding victory, pushing back what is deemed as a dysfunctional democracy.
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of course, they are also pushing back on what has happened to them. the rising inequality and believing his platform of unity that he will help the philippines rise again. in terms of those numbers, the vote count continues. more than 90% of votes have been counted in the preliminary counting, by the way. he is accrued more than 40 million votes. it is massive, it is a huge margin. to put in perspective, that is more than double what is closest rival had secured, i.e. vice president. it is also higher than what they achieved at the last election. and as you know, it is the most popular, if not the most popular president that the philippines have seen. in terms of margins, it is the widest margin since the 90's i.e. since his father was ousted. what remains to be seen will be his policies.
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doing great so far, but the sense out there is that he will continue policies adopted. that means you will push through that recovery from the pandemic. he will push through to build that program that they embarked on and has yet to complete. the days ahead, perhaps will give us more clarity on where he is headed. haidi: a bit more clarity as to how the market will be taking in this result. haslinda: well, not surprisingly, philippine assets have been under pressure. at three year low. we have the stock market here down about 6%, among the worst performers in southeast asia. i think what markets are waiting to see, like you said, clarity in terms of policy, but what the philippines has going for it is growth. six and a half percent growth as projected by the imf.
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that is the fastest growth in this part of the world. there is also a sense that investors will be signed lined until they are comfortable putting their money in again. the question is what will foreign investors do. will contracts be honored by the marcos president? that is a big present -- question that needs to be addressed. haidi: our chief north asia correspondent haslinda. we have an alert. the chinese leader reiterating the dynamic covid zero policy, according to shanghai news, we continue to see covid restrictions across the country. we have word from the premier warning of a complicated and grave employment situation because of this restriction. but already, chinese leaders have warned against protecting the covid zero policy implemented by beijing. we are hearing reiteration of
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the dynamic covid zero policy, according to shanghai. haidi: hong kong's incoming leader will have challenges including how they look at this post-covid restriction era. bolstering national security and exhilarating mainland china. a near unanimous election by a beijing controlled committee. let's head over to hong kong. our chief asian correspondent stephen engle is our next guest. stephen: our guest is michael, a hong kong lawmaker as well as the deputy to china's national people's congress as well as the founder of the baltic retail chain. michael, good to have you on board today after that election. on sunday that saw lee run unopposed and unanimously become the next chief executive of hong kong, replacing carrie lam on july 1. now in the nomination process,
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you did not support john lee, but you changed your tune as you are on the election committee. you voted for john lee on sunday. we know you changed your tune because he finally posted his manifesto and it appealed to your concerns about the lack of upward mobility for the youth in hong kong. but doesn't this debate, if you will, demonstrate that hong kong essentially needs more than one candidate? we have heard the criticisms from the eu, from the g7, that democracy, the principles of democracy are being violated here. how do you respond to those criticisms i do think there should be more than one candidate? michael: traditional hong kong standpoint, we are used to choices. so you could say that most people in hong kong would prefer to have a trust -- a choice, which is what beijing gave us in 2015 with the universal suffrage package, where the nominating
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committee would note two candidates for every one to cast their vote based on one man one vote. fortunately, -- unfortunately, and i am angry about this, the pandemic threw it out the window. so then, back to the 1300 basically all having close ties with beijing. people still prefer probably to have two candidates, including myself. because then you can still have a choice. but anyway, the central government decided that they would lean more toward the mainland, which has always been a single candidate. so then you ask yourself the question why do you call it an election? that single candidate still has to gather more than half the votes. and actually, everybody knows that in this kind of system, getting more than half the votes
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is not the problem. the problem is how many dissenting votes you get. on the mainland, if you get more than 10% dissenting votes, you basically lose your credibility. so if you look at john lee this time, he got eight out of 1416, which is what -- i don't know, i have not done the percentages, which is quite low. which i am surprised, because i do believe we have a secret ballot. i do believe we have a secret ballot, so that means that really, the majority of the 1500 decided to give him a chance. not because they feared that people would find out how they would vote. stephen: so michael, very quickly, you know, you and i have the baited -- debated the law. the ultimate aim is for universal suffrage from a chief executive. do you see that we have taken that step backwards. is it going to be one candidate
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for the foreseeable future? john lee might be there for 10 years, we don't know. but when kennedy pendulum switch back to that ultimate goal of an verso suffrage, if at all? michael: that is a million dollar question, stephen. beijing gave us a chance to have a system different from the mainland. by having choices, we threw it out. god knows how long it would take for us to be able to look at that again. the august 31 framework. in 2015. whether it would go on forever or whether it would eventually at least first open up to the 1500 having to choices and then eventually going to the public, since it is written in the basic law, i hope and assume eventually it will happen. but i doubt if it will be the next -- maybe after two terms.
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everything remains to be seen. law & order is everything. and now back to efficiency and likelihood, rather than political bickering. it remains to be seen, how the hong kong situation develops during this particular term. i expected that even though i wanted a choice this time, i expected that probably right after the tradition bill causing so much divisiveness, that it most likely would not get to contesting rates. haidi: one of the policy priorities is open borders. how optimistic are you that hong kong can return to some semblance of its former self when it comes to being a
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thriving and active business and financial hub? michael: that is a very good question. john lee gave people and impression that -- of course he is a security minister and he put the relationship with the mainland as top priority, and since the mainland has repeatedly emphasized the importance of continuing with zero covid, to the extent of having such big turmoil in shanghai and still the top leadership just now, today, the photo dedication of the policy, i don't know. i hope not, whether john lim will start aiming towards it will zero covid for hong kong and start typing the social distancing measures, including
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-- start tightening the social distancing measures including a circuit breaker system handl ing commuting to hong kong. that's the one thing i am most interested to see when he takes office. whether he will make any changes to the current policy because carrie lam's policy at this point is opening up. trying to balance. stephen: michael, do you see -- i think everybody in the business district here, they want to know, is there room? yes, he can go to beijing and say we would like to exercise our advantage of one country, to systems, and not do strict zero covid. but do you think there is political room for john lee to get beijing to agree to allow home quarantine critic to remove flight bands. all steps that are keeping business from happening and
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confidence from rising again in international business can in hong kong? michael: q asked multiple questions. -- you asked multiple questions. the basic definition of continuing with zero covid in theory is that you must have quarantine of some sort, whether you narrow it down from seven days to three days or two days. having home quarantine does not count as adopting the policy. and the other issue is if you test positive, you should be isolated. these are two fundamentals of china's policy. however, you can water it down to many, many versions. i'm sure joining in this discussion with the liaison office about what he expected hong kong people or the international community would want. and i think because of the lack of understanding and trust about
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john, because he's basically a newcomer, beijing would probably give him that attitude. stephen: michael, hong kong legislate of councilmember, thank you for joining us on bloomberg television. john lee will take over as chief executive of hong kong on july 1. back to you guys. haidi: stephen engle in hong kong. we do have breaking news comes to the $7 billion bid for halting indian businesses. that is according to reporting from the financial times. energy conglomerates, j of w group, is looking to make a bid for india. this as crypto is seeking to divest from international assets. we do have lots more to come on daybreak asia. this is bloomberg. this is bloomberg ♪
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haidi: future trading tumbled the most since march and what were seeing the ati stabilize in asian trading around the $102 level, there is a lot of pressure. bloomberg's see keenan -- su keenan joins us with the latest. one of the precious is the negative impact move. su: clearly sold off with stocks, but there is pressure coming in from all sides. just one of the issues is that
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the eu, which recently had proposed a tough ban on russian oil has softened that proposal to appeal to some of the eastern european members and it has brought the -- taking russian oil to other buyers. you're looking at the latest trades in west texas as a shery mentioned. it's above 102. but we saw in the regular session was west texas having over six dollars a barrel. brent dropping by almost the same amount, the biggest drop since march. excuse me. i'm sorry. shery: i've been in that position. su keenan here with the latest on oil. that is the pressure that were seeing initially with that negative feedback loop from the equities space. bloomberg's su keenan here trying to get us the latest on the oil. we will have her back with the latest. but first to japan. g-7 countries, haidi, and
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committing with that ban on russian oil imports will be extremely difficult because of the nation's reliance on energy purchases from overseas. in march, russia accounted for 3.6% of japan's oil imports with a band threatening to add to already surging gasoline cost and power issues. but bring in bloomberg head of japan and research david kohn. david, what does this mean for japan's energy imports and how could this impact the power market more broadly? david: you just mentioned russian oil, 3% in japan's oil imports in 2021. so it is certainly feasible. to reduce its reliance with other g7 countries, for example, germany or france, made the same commitments. or relied much heavily on russian oil, particularly fuel oil. but given that japan announced a
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phasing out of oil and coal imports from russia, this could lead to higher reliance on generation, which could put further upward pressure on it japan's stock prices. shery: does this impact the energy transition pays for japan? david: yes. certainly. we think this could accelerate the government's efforts to increase the share of nuclear and renewable energy, at the expense of fossil fuels. if we look at japan's price energy mix, fossil fuels accounts for over 70% of total power generation. russia imports made up around 11% of that gas supplied. around 9% of the supply and 3% of oil supply last year. it's a reducing this reliance will require faster restart of nuclear reactors. and also accelerated employment of renewable energy, like wind and solar. if the current sort of slow pace of nuclear restart continues, we
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think only around 10 reactors could come online by 2030, which is not enough to meet the government's target of around 20 reactors. so we may see a stronger push from the g7 administration to speed this up. haidi: bloomberg and ef head of japan and south korean research there. the show continues on bloomberg radio, more from the newsmakers pretty can get in-depth analysis from our daybreak team. from our studio in hong kong. listen by apple radio plus on bloomberg's lots more ahead. this is bloomberg. ♪
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vonnie: a quick check of the business flash headlines. china's corporation has signed a 600 $90 million deal for an iron or mining company. the new contracts which can produce 10 million pounds of ore each year. they first expressed interest in the project a decade ago and the deal comes amid a push to cut chinese reliance on australian and brazilian oil. -- or. bp is about to require a stake in a 36 billion dollar green hydrogen project in western australia. sources and australian newspapers say it will become the development operator. the project known as the asian renewable energy hub is hoping
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to produce about 1.8 million pounds of hydrogen fuel a year, while exports as soon as 2027. rivian automotive plunged more than 20% after the stoxx lock up. the lifting of restrictions came from -- gave stake holders a chance to sell shares. they will also reduce positions pretty rivian is down almost 90% from its november high. shery: we have breaking news out of china. were getting the latest beijing covid cases coming in at 74 local infections from may 9. shanghai also adding 3014 local covid-19 cases. shanghai's death numbers easing, adding six covid deaths for the past 24 hours. as we continue to watch some of those stocks across japan, we will be watching including sony, of course, they have just reopened partially their shanghai plant on sunday.
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they will gradually increase output there. we are also watching olympus, offers from carlisle. we do have the market open it sydney, seoul, in tokyo next. this is bloomberg. this is bloomberg ♪
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shery: welcome to daybreak asia from new york. haidi: and i'm in sydney. asia's major markets have just open for trade. the dollar sitting at a 2020 high. more than half of experts say
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lockdowns will hit more of china . reporter: and marcos jr is headed for a landslide presidential victory in the philippines. shery: topix is leading declines. and the japanese yen is holding around a 20 year low around the u.s. dollar. jgb has been under pressure, especially the long end because they were out of the scope of boj control. the treasury rally continues in the u.s.. kospi, we already had five sessions of losses in korean equities and we continue to lose ground. equity outflow has pressured the
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korean won which continues to weaken, 1275 is the level, lows we have not seen in two years or so. haidi: take a look at the open in australia. up 6/10 of 1%, materials, utilities down almost 2% in the first few seconds of trading. asian stocks are poised to match the longest losing streak in two years. australian stocks extending the slide on inflation concerns and overall downside across energy demand and commodities. australian 10 year yield continuing to drop, mirroring what we saw with treasury yield falling overnight. kiwi stocks down 1.7%.
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kiwi dollar up to percent overnight and the aussie dollar is seeing downside pressure where it dropped to the lowest since july 2020 amid falling energy prices and the pullback when it comes to risk. treasury situation, it yields falling in the gap hitting the widest since march. continuing to see volatility play out in bond and stock markets and across the array of asset classes. s&p futures looking a little firmer but still down 16% this year. brent crude, oil growth in terms of saudi cutting prices in asia and demand from china as the softening of some curbs on russian crude playing into the downside. shery: let's bring in our guest
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who prefers southeast over northeast asian equities. david chow, a strategist at invesco. we have seen a dichotomy between value stocks and growth stocks but this chart shows the value has not done that much better than the em growth. can we count on the valuation plays, especially when the dollar is so strong and we know what it does to markets across asia? >> i think em value versus growth, a lot of it is dependent on investor risk appetite for emerging markets and given the rise of yields in the u.s. that could potentially delay some rotation to emerging markets, but i feel like southeast asia stock has a higher growth rate for this year and cheaper valuation and i think this could
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be a second-half story as the economy begins to rebound and things reopen. shery: southeast asian countries are dependent on what happens with the chinese economy. where do you think the economy and markets will go in china and how will it reverberate in the region? >> all eyes on if china will prevent or transition pandemic policy. i think they will stick to the zero covid policy well into the fall of this year. that has significant implications on the supply chain and tourism in china. haidi: where do you look in
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terms of the positive exposure to china? >> it's a good question. chinese equities have taken a because of a lot of variables impacting china and i think chinese equities are starting to look more [indiscernible] we were a big fan of chinese gdb's given the yield differential last year but that has collapsed and that trade in investment is not as attractive. looking at chinese equities longer-term, this could be a buying opportunity. haidi: how problematic is the continuation of the king dollar? >> we are seeing investors tried to grapple at which asset looks grew lucrative and attractive
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given the headwinds going on now and the u.s. dollar continues to be a safe haven asset given geopolitical uncertainty and growth challenges we see but i think dollar strength has been a long play already and investors are starting to pivot to see what other assets are attractive. haidi: david chow with us, we appreciate your time. let's get to vonnie quinn in new york. >> the fed has warned worsening liquidity conditions amid risk from the war in ukraine, and high inflation. in their report they said risks of deterioration were higher than normal. caused by the fallout of the war in ukraine. she seven foreign ministers have
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expressed concern over hong kong's electoral process. the new chief executive -- authorities in china and hong kong have moved away from the aim of basic law. carrie lam will be replaced july 1. marcos jr is set for a landslide in winning the presidential election in the philippines. this will bring his family back after 30 years. his opponent has only 27% of the vote. >> if we are fortunate, i expect that your trust will not win because we have a lot to do in the times ahead. 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. this is bloomberg. shery: we will have more
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analysis on the philippines presidential election later in the show and will discuss what a marco victory would mean for the business outlook. a new survey shows more than half of u.s. companies in china sea lockdowns hitting revenue. details ahead. this is bloomberg. ♪
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haidi: raphael bostic has pushed back on calls for a 75 basis point hike. >> when i think about our policy, the first thing on my mind is inflation is too high and we need to act purposefully
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to get that under control. if you look at what we have done so far in the last two meetings, we have started that process. for me, 50 basis points over the last 20 years, you already know it is an aggressive move. i do not think we need to move more aggressively. i think we can stay at this pace and see how markets evolve. my expectation and hope is that as we move closer to neutral levels and far away from the accommodative stance, we will start to see the tightness and tension when we start to moderate and that will then give us options and choices for what to do after that point. reporter: how far do you go? where do you think you will be by the end of the year or in 2023? >> good question. i think we need to get into the
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neutral range. different people have different ideas about what that looks like. for me, between 2% and 2.5% as the neutral range. let's wait and see what happens. in the intro of the segment, a lot of discussions about the uncertainty with seth carpenter, he will be here and i am really excited about it i'm saying that there was a lot of volatility and a lot will play out so once we get to the neutral level i think that will be fine. in my view, we will move a couple of times, two or three times a month see what happens, see how the economy responds, see if inflation continues to move closer to the 2% target, and then we can really pause and look at how things are going. reporter: pausing, does that mean not move at a meeting? or would this just be a rolling decision as you go? >> for me, all options are on the table every meeting. depending on how the economy is
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responding, it could be that it is finally strong enough that we do not have to do anything. it could be that the economy is responding less strong so we might move to 25 basis points, or you -- or we might stay at 50. i'm going to keep my mind open and observe what happens in the economy and then my idea will adjust about what appropriate policy will look like based on that knowledge. shery: the fed president rafael bostic exclusively with bloomberg. in china, pboc has reiterated that pledge to be proactive as a new survey shows more than half american businesses in china will see revenue hits from stringent lockdowns. is it safe to assume u.s. businesses are worried about the covid zero strategy being insisted upon by beijing? >> absolutely.
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we are seeing this flow to tech and corporate confidence in china. this survey makes the point that businesses see revenue hurting, they are talking about peering back investment plans and they are either struggling to find staff or they are losing staff as people leave china. this is because the ongoing lockdowns are having quite the impact on this sector. but it is also interesting for what it means for fdi into china. last year increased by one third. but now we are seeing the movement coming out of the american companies demonstrating how much of an impact covid lockdowns have and when you look at the european chamber making similar points, saying they do not expect lockdowns to end
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soon, he raises questions over the fbi story for china this year -- it raises questions over the fbi story for china this year and next year. this goes back to covid lockdowns. pboc says they will do more for small and medium-sized businesses and this has been a consistent theme from them on the part of the economy they are targeting but it's also interesting that they recognize what is going on in the property sector and that there is a need for relief because of the crackdown that has been going on. the pboc has been restrained and how they are approaching this economically but it speaks to the fact that authorities are coming to the rescue of the economy, not necessarily with stimulus.
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but they are pulling levers now. they want to underscore what is happening. shery: we continue to see anxiety play out across risk assets. bitcoin continuing to fluctuate widely. at one point it fell below the $30,000 mark. more than 50% loss when it comes to bitcoin price from the november height. this as we see it drop below the 30,000 level for the first time since july of 2021 and really the broader crypto asset sphere down to percent. ether lost more than 11% at one point. this as we continue to see the narrative of what happens with tightening monetary policy in order to combat inflation and what happens to liquidity and
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investors really moving away from speculative asset across global markets. solana has fallen more than 20% in the new york session. bitcoin has been fluctuating between gains and losses in the asian session but we continue to see accelerating losses not only in crypto but also u.s. futures down .5%. haidi: yes and we continue to see how the rug is being pulled out when it comes to investors relying on said support and easing monetary policy conditions, the quick and brutal repricing we see across so many asset classes, including former pandemics. you can get the roundup on tv and on the bloomberg anywhere app. you can customize settings so you only get news on what
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matters to you. this is bloomberg. ♪
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>> many countries did not want to listen to us. [indiscernible] >> my president is very focused on negotiations. but we do not see putin wanting to be part of negotiations. haidi: that was vladimir putin
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speaking at the victory parade and and aid of volodymyr zelenskyy. there was a passionate indication of nazi-ism and a previous guest said that makes it sound like -- >> there were high expectations moving into the speech. there were plenty of references to nazi-ism and the cold war. what was not there is a declaration of victory, may be
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for the various obvious reason that russia is not winning. he did not declare an all-out out war and call for mass mobilization. it was a low-key short speech and tones down compared to previous addresses. shery: how much does that have to do with the fact that we continue to see a change when it comes to vladimir putin's endgame? >> a lot. russia has not been clear about what victory looks like from the beginning. they have been able to retreat without being told they are losing or unable to defend themselves. but when it comes to declaring victory, you have to define what
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that is and what success looks like. at the moment, that is difficult to do. haidi: you have desperate holdouts, which leads to the question of how much support remains in this effort for zelenskyy. does that tell you why -- does that tell you a compromise won't be easy? >> it tells you ukraine will resistant has very little incentive at this point to find any common ground with russia by ceding territory. i think on putin's part even if there is a cease-fire because the fighting force is so decimated, it might not be lasting.
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haidi: let's look the futures in europe. we continue seeing losses in asia and a drop in market sentiment we saw overnight. european stocks slumping to the lowest in two months and it doesn't look like a better picture in the tuesday session. take a look at the chart. down 3%. the dax is looking like modest losses. we saw a retreat by almost 3% by the close of london trading. travel leisure led some declines and tech stocks seeing the biggest dips. nasdaq 100 extending the drop. that expects to be a major trading theme in asia today. the euro holdings study but
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we've seen headwinds for global equities, particularly in europe there is concerns about hawkish central banks and the position of the boe and the stark warning from the boe governor last week. so much of this is not helped by the dollar strength we continue to see. shery: dollar index holding onto gains. we continue to see weakness in offshore yuan and the 18 month low, the weakest we have seen it since november 2020 and disappointing economic numbers out of china did not help overnight. we are waiting for the indian rupee and that fell to a record low and dollar strength continuing to pressure that currency and the philippine peso
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which already lost 3% to see more pressure given that marco jr. is poised for a landside victory in the elections there. haidi: let's get you the latest headlines. goldman sachs is pulling out of working -- they have been telling sponsors of the blank check vehicle they will and their involvement. bank of america has scaled back. new guidelines from fcc exposed to greater liability risk. hindenburg research says they see significant risk of elon musk's proposal to buy twitter will be replaced lower. -- repriced lower.
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still ahead, g-7 nations expressing concerns over hong kong election process. this is bloomberg. ♪
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haidi: g-7 foreign ministers are expressing concern over hong kong's election process is the chief executive. let's bring in stephen engle in hong kong. what is the global reaction? >> there is also a local reaction. i spoke with a hong kong lawmaker and deputy to the
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national people's congress in beijing and he says the question is, is this the way forward on the way it will be? one candidate appointed by a, take it or leave it? -- appointed by beijing, take it or leave it? he said that ultimate aim is universal suffrage but that would be step-by-step and i think we are a long way away from that in hong kong and that is because of the unrest we saw in 2019. g7 foreign ministers made a statement about the election of john lee. he was unopposed and got more than 99% of the vote in this select election committee. they voice grave concern and called it an assault on the fundamental freedom of the former british land.
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they say, we are deeply concerned about the steady erosion of political and civil rights in hong kong. john lee himself yesterday addressed the concerns. he said, i think people are adopting a double standard and added the improved electoral system has benefited the people of hong kong. a spokesperson in beijing blasted critics as supporters of false democracy and rampant black violence we saw in hong kong. this follows the statement from the eu the day before. sunday they voiced concerns, saying they regret the violation of democratic principles and it's another step in the dismantling of the one country,
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two systems principal. this debate will continue and john lee will assume the chief executive position july 1 from carrie lam. he will be the fifth since 1997. shery: what should investors look out for in the political landscape after the inauguration? >> we will have to see how policy from beijing dictates what they will do. legislative council has been revamped under the electoral reform last year and many pro-democracy camps have been charged or face prosecution. essentially what has happened since the unrest in 20 is beijing asserted more authority on hong kong and that trickled down to all different policies, including covid zero policy,
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which as we have seen in the last few months during the fifth wave of omicron, more restrictive policies in hong kong. hong kong adopting similar strategies to contain the virus as mainland china. haidi: let's get to vonnie quinn with the headlines. >> three lincoln's prime minister has resigned in the wake of protests over the economy. demonstrators demand the incumbent president quit. prices of everything have been soaring. so think like it is close to bankruptcy. sources tell us india's bank is intervening to defend the rupee after it slid to a record low monday. the rpi is targeting speculators at a stockpile. a rate hike of rpi amid wider
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concerns of inflation. shanghai's covid restrictions are disrupting health care in new york. the five-week lockdown is snarling global supply chains. they warn stop might be curtailed as much as 80% despite resumption of production for the next few months. queen elizabeth will not attend opening of u.k. parliament because of mobility problems. prince charles will make the queen's speech. this will be the first time he takes her place at the podium. 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. this is bloomberg. shery: let's look at crypto assets.
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bitcoin falling below the 30,000 level at one point. if the lowest since july of 2021. we already had five sessions of losses and continue to see decline from the november record high when we were at $69,000. even michael move a graph saying we could see things worse before they get better. ethereum fell almost 11% at one point in the last session. take a look at the crypto stocks we will be watching in the asian trading session. microstrategy seeing the worst day since 2017. we will follow mo next, already losing ground in this broad market selloff. haidi: and we continue to watch the outlook when it comes to cryptocurrency, given we have seen this type correlation with
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u.s. equities. we expected perhaps more of a spike when it comes to alternative asset classes but we see pandemic darlings being badly hit. galaxy digital ceo expecting more damage ahead when it comes to the crypto space and told bloomberg the volatility in the next few quarters will continue as crypto remains tight -- remains tied to moves in u.s. stocks. >> unlit most of the major selloffs we have seen -- unlike most of the major selloffs we have seen, the fed was able to respond to the crises. the best respond we will see here is, we are only going to hike 250. and they will not make that claim until they see inflation expectations come down and we are ways away from that. we are in for volatility and
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pain until a later inflation. >> is there a correlation? this is a non-correlated asset, but so far this is highly correlated. >> it had less correlation until there was free money forever. correlation increased dramatically after covid because every central bank took a firehose of liquidity and sprayed it on the tarmac. you can see the correlation of fine wine or baseball cards or any collectible to the nasdaq and assets. so we are unwinding this era of free money so it is not surprising to me that bitcoin is selling off. i think the correlations will lessen and we will find some stability in the market. but right now if you are an
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investor, you have 100 fires to put out as you overcommit your venture, i used to be in risk parity and that is not working anymore. very few people want to put on new risk in a moment of this kind of tumult. so i think once that tumult stops, once the chaos stops, once -- then you will see allocators who have been doing their homework. i just went around the country to a bunch of conferences and infrastructure is being put in place to bring lots of capital into the space. so it is surviving this unwind that investors have to manage. haidi: that was galaxy digital ceo. and this image of marilyn monroe
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is iconic. it is a silkscreen work. it just sold at christie's. -- sold at christie's auction house. it is one of the most coveted paintings of our time. proceeds will go to a foundation in zürich that is devoted to health care. over the past few years we have seen volatility in the warhol market in particular and it is interesting it did not get near the $200 million being bandied about. christie's did not have a guarantee for this painting. but it seems like a buyer was found at $170 million. shery: we have seen the warhol
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market saga from time to time. -- sag from time to time. it did see there was president although $200 million was a tall order. although we have seen other paintings go above that. we will continue to watch that field. right now we are getting the latest that the marilyn monroe portrait sold for 190 $5 million, the most ever for a u.s. artist -- $195 million, the most ever for a u.s. artist. coming up, we are live in manila as marcos jr brings his family back to the presidential palace. he will speak with political -- we will speak with political analysts about control risks
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next. this is bloomberg. ♪
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haidi: we are watching to see how the philippine markets will react to the election results. dollar strength is affecting all em currencies. uncertainty over marcos jr policies will add to economic headwinds. the currency at the second
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highest since the onset of the pandemic. the stock market resumes trading today. philippine stock closed earlier amid the broader market selloff across global markets. let's get to manila. haslinda is standing by with our next guest. haslinda: as far as it goes, we have seen a massive endorsement for marcos. how did he do it? let's get insight from a senior analyst at control risk. talk to us. how are you making sense of the massive victory? is it about a pushback on what is deemed as dysfunctional democracy? what boosted his support? >> i think ultimately people
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voted for continuity of the politics and governance. the endorsement made a big difference for marcos. everyone shifted to marco and he became the front runner and ultimately that got him the presidency. haslinda: you talk about how he represents continuity of chinese policies, but people want change. >> right. he has shied away from participating in public debates for strategic reasons. he just wants to harp on the
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message of unity which worked well. he is on track to double what he got in the last election and the strategy worked well. reporter: how destructive will the transition be compared to [indiscernible] coming to power for investors in the country? >> foreign investors in the country will wait and see. they have concerns over what policies would come from the administration but i think we expect marcos to be risk averse and seek consensus from the political coalition that made him president, including other parts of the government and past
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administrations. i think that will constrain temptations for access and in some ways that will be encouraging for foreign investors. also i think he would react positively to the fact that this was a clear cut when him. there was no dispute. it was not a close election. so i think markets will react positively to that. i think the direction is set and the markets will follow what comes next. >> a lessening when it comes to the disruption is something businesses can come to from. where might we see dislocation from the existing landscape? >> i think in many ways markets
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won't be as -- marcos will not be as disruptive. at one point warned thugs threatens to sever ties with the u.s. and that sent shockwaves through the business community. i think marcos won't follow that lead. he will be hands off and lead economic management to the expert, up point rep give -- a point reputable people in his team. >> the gps come -- the gdp ratio has been escalating. how do you see his government dealing with that? >> rising national debt which
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reached high this year will be a huge limit to his ambition. at the onset i think because of market concerns he will announce economic recovery package, increase state spending, tax breaks, but they are would be long term consequences and that will be a major constraint in the next six years. >> we appreciate your time. counting of votes continues but all indications show a resounding majority for marcos jr. shery: coming up, we will have ongoing analysis of the philippine election including interviews with the head of the philippine national bank and stock exchange.
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next come at preview of the starting of chaining and mainland china. this is bloomberg. ♪
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shery: bp is reportedly about to acquire stake in the green the
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green hydrogen project in western australia. the newspaper said they will become the development operator. the asian renewable energy hub hopes to produce 1.8 million tons of hydrogen fuel a year as soon as 2027. automotive plunged more than 20% after the lock up and did. lifting restrictions gave early stakeholders the first chance to sell shares on monday. investors were watching if prominent bankers with lower predictions, down almost 90% from the november high. china final fuel corporation signed a deal for an iron ore mine in cameroon. a 50 year contract to mind the site that could produce millions of tons of ore each year. this deal comes amid a push to
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cut chinese reliance. markets are opening in the next hour, let's get a preview with david. hong kong is coming back online and it will not be pretty. >> it will be extremely ugly. markets will need to play catch up today. and it is a falling knife when you look at equities across the region. 1.5 percent declines. levels to watch, hang seng index is just above 20,000. say goodbye to that level. we are still 8% from the low from march. not to say we will get there, be prepared to see steep loss in the next few minutes. initial indications of pricing,
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down 20% on the golden dragon index. let's look at currency. looking extreme on the chinese yuan. whether they will fix it stronger. haidi: south east asia, key market is philippines open today. how do we feel about this? >> it will be hard to disentangle the overall route we are seeing from what is happening politically. looking at the bloomberg story, we expect this to trade sideways. it's not like the last couple months has been a surprise looking at how far out bond markets were leading. but parts of the market look extended and primed. credit default swaps are moving up.
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it is hard to disentangle that with what is happening, all the dollar strength we are seeing, we will pick up this year's low and watch it closely as far as singapore and other markets in southeast asia are concerned. we might just be testing things this week. haidi: focusing again on the philippines, when they open and just a half an hour, some heavily traded names we are watching on the index, we could see a lot of movement from foreign portfolio investors adjusting to what they see with election results. sm property giant of all the land will be in focus. medical world is up there as well. as well as urc. shery: plenty to watch out for. markets coverage continues, we
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look at the start of trade in hong kong, shanghai, and southeast asia. standby for bloomberg markets china open. this is bloomberg. ♪
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♪ david: good morning. it's 9 a.m. in hong kong and beijing and manila. welcome to the china open could i'm david and was pretty let's get to your top stories today.


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