tv Bloomberg Markets Asia Bloomberg May 10, 2022 10:00pm-11:00pm EDT
if inflation cannot be tamed. bid point back above $30,000, snapping a slide, but coinbase plunges on warnings of thin trading volume. >> the spice in there. the pboc. using the comeback for the oil price. down 8%. treasury yields, little changed. the dollar at the highest level since 2020. people looking at what loretta mester had to say, fed governor, john wayne's as well. that's is what is going on at the moment. -- john williams as well. that is what is going on at the moment. let's get back to that, we -- read we had half an hour ago.
>> we saw it down from the rate in march, but above estimates, 7.8%. the core inflation coming year on year, also above estimates. we were looking for 1.8%, up from 1.5% in the prior month, so still a lot of costs elevated. were seeing price pressures, concern about the war in ukraine in the china lockdowns, and complicating the picture for policymakers, as we hear this morning from who, should china be abandoning covid zero policy. >> we will come to that in a little while. all about cpi, consumer price index from the u.s. later on. it is arguably one of the most important reads on inflation,
the market on a knife edge. so what happens if it comes in hotter than anticipated? this is the question. what does it mean for fed policy? more and more fed officials talking about what they are comfortable with in terms of the cost of borrowing going ahead. >> we don't want that forever, right? 50, the cadence we are going seems about right. if we don't have inflation moving down in the second half of the year, we have to speed up. but if we see inflation and demand moving down more than we are predicting, we can adjust. rishaad: getting straight to kathleen hays. we have to ask, let's start with what we know, and that is certainly china.
what is behind the spicier read? >> it is interesting, isn't it? the cpi at 2.1% year-over-year, supposed to be 1.8%, but still low. what is interesting is the jump in food prices, up 1.9% in april, after dropping 1.5% in march. what happened? what happened was covid lockdown. now it is harder for people to get the kind of food they usually get. there is some talk they will look at food reserves and make sure there are more. if not for the fact that pork prices have been falling month after month after month, apparently it would've been much bigger. the other thing about a lot down, if you look at producer prices, the gains there, on the one hand, the lockdowns are hurting the supply chains, one
of the things that can put upward pressure on commodity prices, even at a time when energy prices are coming off the peak, some coming down, but fuel costs still very high in china, something that has not changed comes of those of the things the government is watching, and high commodity costs again is something the whole world is suffering with. in terms of what the government has been signaling, more stimulus, and most economists are saying the inflation numbers are not going to stop them. one of the big questions is what is interesting, remember the international monetary fund and the world bank met a couple of weeks ago? was of the biggest risks basalt of the global economy was a china slowdown. what we have to ask is, how bad can the slow down get? what can it mean for other countries in asia? maybe the fed won't look at 75, and if inflation comes down in
the u.s., we will look at 50, maybe 25? juliette: let's look to the u.s. inflation print. we heard loretta mester come the latest convert on the rate hike. how bad with the picture be? >> you will see presumably a .1% year-over-year gain in the headline cpi -- 8.1% year-over-year gain in the headline cpi. this is higher than the fed wants to see. the monthly increase is expected to fall just over 1% to 0.1%, because gasoline prices and durable goods prices are coming down. services prices continue to hold steady, and maybe in some cases increase, so that is something not giving relief. i think the whole point for the fed is yes, they do believe inflation will peak and start coming down, but loretta mester
said today also that she does not think the inflation numbers they are watching will get down to the 2% target by the end of this year or next year, 2023. the fed will slow down rate hikes when it sees a steady decline in inflation, but it will not be enough to get to get the 6% or 5%, probably not even 4%, those are the kind of signals we will be watching for very closely in these reports out now just hours from now basically. juliette: all right. kathleen hays. the markets are waiting for that. let's get more with mark cranfield in the studio. mark, were looking ahead to this u.s. inflation print. let's start with the reaction to what we saw with china and how that could complicate things. >> i don't think much. 2% inflation when the u.s. is running at 8% is not a huge deal for china. i think if they want to look
through that, they are capable of doing so. the bigger issue for the central bank of china is it wants to target the property sector and other lending areas and provide very specific help in those ways. it seems to be backing away from the idea of a blanket rate change. that is a blunt instrument, and china does not want to use it. the cpi number will not change it for him in that respect. -- them in that respect. rishaad: let's talk about the figure later today, one of the most important reads in a long time. give us an idea of how anything hotter than expected could royal markets. >> certainly, an upside surprise will cause volatility especially in the bond market. so that would mean that positioning has altered slightly, and you could get a
decent selloff in the bond market. the more serious thing is probably the fact we are now talking more about the risk of the u.s. seeing a recession, probably as early as next year, you have even seen one fed speaker say they might have to make the job markets worse to help the economy in the long run. that's not something investors want to hear from us of whether the cpi number is a hit or miss, it's not such a huge matter. what were trying to get to is the fact that how long will we have to go to the stagnation situation? how long will -- stagnation situation? -- the slowing of the china economy is not fully factored in to the global situation. people do not realize how that will take away from global growth this year. they are only just beginning to come to terms with that, so
there is still a lot to chew through. it will not take days. it will take months. markets will be in a difficult situation well into the third quarter. juliette: you've been looking at the next catalysts as you look to the new leader in hong kong, what are we expecting? >> there is an opportunity if china wants to make tweaks to a policy to help hong kong. you have a new person in charge. we may see some changes after the first of july. juliette: mark cranfield with us in singapore. breaking news. rishaad: yep, the house of representatives and congress, and aid package for ukraine worth $40 billion, now being sent to the senate to be approved. that is a bit of news coming through for kyiv. with that in mind, let's look at first word news. >> the w.h.o.'s urging china to
rethink its covid zero strategy, saying the approach is unsustainable. the director general the w.h.o. says it no longer makes sense given the behavior of the virus, a rare instance of's the chief challenging a member state domestic policies -- instance of the chief challenging a member of state's domestic policies. >> when you talk about the zero covid strategy, we do not think it is sustainable, and now in the future, transitioning to another strategy would be important. >> house democrats plan devote soon. we just heard that, on the 40 billion monday -- $40 billion ukraine bill, which if it passes in the senate, it will go to to president biden's desk. it includes $8 billion in economic support, $4 million --
$4 billion for humanitarian aid. as we have seen, it appears to have bipartisan support in both chambers. u.s. lawmakers are pressing jp morgan and goldman sachs on trading russian debt. letters were sent to the ceos of both banks, focusing on debt as the war broke out in february, whether it benefits vladimir putin. janet yellen says the u.s. economy would suffer if the supreme court significantly limits the access to abortion for women. she told lawmakers during a senate banking committee limiting rights to abortion services would set women's rights back decades. >> i believe eliminating the right of women to make decisions about when and whether to have children would have very damaging effects on the economy
and would set women back decades. >> 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. rishaad: thanks. ok. a bit more on what she was talking about, the u.s. house of representatives passing the $40 billion ukraine aid package, now being sent to the senate, larger than the $33 billion outlined by president biden last month. it had enough support in the end to clear the house. the senate next week will have to vote on this, including $19.7 billion for the defense department, three billion dollars above with the biden administration was looking for. we also have $8.7 billion to replenish weapons stocks from the pentagon to ukraine. there we go.
that is a look at this bill which has passed the house. $40 billion of aid going to ukraine. juliette: still ahead, the international finance corporation joins us to talk about how it's helping emerging markets to recover from the pandemic. that is at 10:40 am hong kong and singapore time. this is bloomberg. ♪
up from 1.5%. core cpi, excluding food and energy prices, lockdown, .91%, compared to march. gains coming through on the csi 300 and china. let's bring in our guest to discuss all of this. your take on what we saw with the inflation figures, in particular the impact of these lockdowns on price pressures? >> yeah, i think you are absolutely right. the focus should be on the core cpi. it decelerated further. that shows domestically that demand is very weak, especially on the consumption server-side, and that was heavily affected by the lockdown and omicron wave, right? so that is another signal how week the w -- weak growth
will be. juliette: -- >> and 2022, chinese policymakers face a dilemma. they had three goals. they had growth targets. they want to maintain zero covid and financial stability, but we think we cannot get off of them, so they have to prioritize. it looks like they will maintain the zero covid policy for the rest of the year, and the only way they can achieve that in the 5% growth target is through additional aggressive policy easing, infrastructure investment will help, but that is not enough. they have to do more. juliette: what does that more look like, particularly when we
hear support from the politburo and words, but not concrete action? what kind of support would you like to see? >> on the monetary policy side, they have to do more. i think the inflation picture gives them room to do more, but i think there is limited -- room, but room for the other things are quite limited, so we could see a cut. that is modest. the focus has shifted to credit policy, infrastructure policy, but they have to work on the real estate policy, leverage the real estate sector to reach that growth target.
rishaad: we are facing a trile ma. they are trying to achieve growth on one side, then you have financial stability, and on top of that, maintain zero covid policy. all three of those are difficult to do the same time. what is going to give? >> well, for the zero covid policy, there has been a lot of debate. from an economist's perspective, we have to balance those things. policymakers have other considerations, social stability, and they want to keep that zero covid policy, but the question is do you want to stick to the growth target? if you're going to stick to the growth target, you may have to
sacrifice some of the stability considerations. you have to leverage up the policy in the sector, but that could help you to bring you to the 5% growth. that is our forecast on the lower side of the growth target. however, the financial stability in the medium-term, the exacerbated income inequality and wealth inequality as well. rishaad: talking about china, but china has one eye on the u.s. and a lot of fed commentators comfortable with 50 basis point rate hikes, how does that play out in china and asia as well? what pressure is on central banks as a consequence of that? >> yeah, i think the biggest take away from the fed meeting,
speeches, is that it is very clear they want to prioritize price stability, right? so if that means bringing the rate to restrictive territory or risk a fed-induced recession, they are willing to do that, if that is what it takes to bring inflation back to target, so given that, that is something, something they can take away from that. i think tightening the global financial conditions and putting some pressure for the rest of the world, and now in asia, most central banks have been pivoting to tightening party. we had the numbers with the pricing hike, and other central banks are pivoting to tightening as well, right?
inflation was nonexistent last year, but this year, we are seeing inflation pressures going up. so, globally, you are seeing that central banks are pivoting towards more tightening. juliette: thank you so much for joining us. i know those headwinds you mentioned leading to you being quite cautious on the outlook for asian trade and manufacturing. plenty more ahead. stay with a spirit -- stay with us. this is bloomberg. ♪
despite declining to provide annual guidance. it says russia's war is amplifying risks from china's economic slowdown. it posted a record business profit of $7.2 billion and outlined plans to spend $2 billion to build a new steel plant. apollo global management is said to be in talks in deferred financing for the buyout of twitter by elon musk. it will exceed $1 billion, arranged by morgan stanley, and may include other farms. shares of twitter lower as there is skepticism elon musk will compete -- complete the purchase. li auto disappointed after net loss. it expects sales of 920 megan dollars in the current quarter, well below average estimates. li blame supply chain snarls and
shortages. the largest used cryptocurrency exchange, coinbase, which earns the bulk of its income from trading fees, warned the quarter will be lower, but kept its outlook largely unchanged. it is down more than 70% since it went public one year ago. rishaad: let's look at the market action. this is what it looks like for tech stocks in hong kong. alibaba on the way down. others on the way out. we did have the nasdaq golden dragon index rising for the first time in four days. up 3.4%. it is currently seeing li auto and another as best performers,
rishaad: 11:39 am in tokyo with the lunch break. we have headlines coming through the cabinet secretary. he is speaking in tokyo and he will be speaking about how the japanese companies are likely to be supported. those ones which art in china because of the zero covid policy. looking up stocks overall, we have earnings at the four -- fore.
a lot to talk about as we go into those earnings. david ingles is our coanchor. david: that is my side job. i will not tell you guys what the other one is. a lot of earnings coming through the companies. you can keep them between you and me. as far as toyota is concerned, we try to charge the value of inventory, but certainly given trip -- chips and logistics disruptions, we are at a record as of the end of last year so that is something we will be tracking very closely when the company reports later today. as far as markets go, we change as much as we can. are we going to get enough guidance from the japanese companies that later last -- next week we will be getting the likings of tencent and jd.com.
when you look at the actual number, quite some key equity gets right here. they are trading at more than 12 times earnings. this is to the lowest level since the pandemic hit prices back then and we granted lower on the back of higher rates. this is the key question for many investors. juliette: one of the things that royal markets yesterday was blackrock. now we have a call through from goldman sachs and morgan stanley today. david: let me start with the goldman call. they're removing taiwan and taiwan is underweight on market rates. within the aussie market they are talking about things like metals. they are keeping the risk in china, indonesia, and singapore overweight. this is what they are saying that is behind the rationale. when he percent upside is what
they are expecting on the -- 20% upside is what they are expecting on the msci asia specific. -- asia-pacific. i'm going to make this simple. they are seeing a delay in the final leg of this bear market and to see for china. this might be the final leg of the bear market. they end on the price target for june of next year. that has upside for varying degrees of tightening digits from crib -- for crypto. juliette: let's get the first word news with vonnie quinn. >> consumer prices in china climbed again. pti was up 8% from a year earlier, above the estimate.
consumer prices accelerated 2.1 percent as covid lockdowns go full cost higher. china risks of tsunami of coronavirus infections with a potential 1.6 million deaths if the government abandons its long-held covid zero policy. researchers at shanghai university found that it would not be a good sign for the wave to hit health care capacity. cleveland fed president loretta mester has opened the gates again for a 75 basis point rate hike did -- rate hike. she would support a bigger move later if inflation does not ease by the second half of the year. >> we do not have 75 forever.
the case we are going right now seems to be the rate today for the second half of the year. we might have inflation speed up, but if we see demand moving down, then we can adjust at that point. vonnie: sri lankan security forces have been given shoot on sight orders after government protests. some protesters were forcing buildings and vehicles. this is after the president's brother resigned as prime minister. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. rishaad: we have the inflation numbers hotter than expected. we also have the stimulus program out of china that is not likely posed to be able to wake
the economy from its doldrums like it did before after the great financial crisis. beijing persisting with lockdowns in pursuit of it zero covid policy. let's put it together with enda curran. how do you get a picture of what is happening? it looks inflationary but if you strip out energy and food, it is a lot more than anticipated. enda: when you consider what is happening globally, we have a synchronized global slowdown, central banks are spending, but china is supporting their economy and on paper it might be going for the rest of the world, but this time it is different for two reasons. first of all, it has turned -- 4 trillion plus on the unlimited bank credit back then, but there was also 20 where china slowed
down compared to the rest of the world. rishaad: it is bigger than the other thing, which is that the stimulus is less than they had before. enda: this time around, quite currently not spending as much because they want to keep an eye on the total death story there. they are also pushing against the stream because they have aggressive lockdowns going on. our analysts are saying it is more about what -- whether china can even get its own country on the base for what is happening on that front. juliette: when we look at the inflation picture from today, our mliv team have written an interesting point where this could provide a sizable stimulus as we see stimulus for the covid-19 slow down. is that reasonable? enda: on paper, both consumer
and producer prices ticked up a bit. there is no doubt that the lockdowns are having an impact on logistics so that means would prices are more expensive just by virtue of being harder to get that means core raw materials for factories are more expensive. of course externally, you have the story of higher energy prices coming from russia's invasion of ukraine, but nonetheless, when it is an energy story and you strip back the lockdown effect, there is ill soggy demand in the china economy. this is especially in shanghai. the authorities are warning about rising unemployment. they are doing more to support their economy and they're looking at small to medium-sized businesses. when you have rising inflation, might be more scope than
authorities have, but at the moment, are they doing what they need to do to support the economy? juliette: and what are economist telling you about the effect of the lockdowns and the stimulus canceling each other out? enda: this is the whole issue. point is on paper, china talked about extra spending, tax cuts, and along the government to borrow and spend more on infrastructure. this is taking pressure off of the housing sector and it is also takings depth to help smaller businesses -- taking steps to help smaller businesses, but if it is not the lockdown, these are continued measures on the virus front. this is disrupting consumers, producers. we are writing in are reporting every day from our colleagues in
beijing is how can you be stimulating the economy when you have all of these counter prevailing forces pushing hard to contain the virus? we didn't even have a reference to the economy and it was all about containing covid. rishaad: and we are discussing the ppi figures. how does today inform us about future cpi, which is something you get in developed nations? enda: the correlation between china's ppi and cpi has been there for some years. they have factories absorbs the upstream costs and that has been the commentary. nonetheless, factories are containing net rising costs and what they do do is they increase their prices for exports. one china's factories are raising prices, it does not mean they are -- it means that goods around the world are more
expensive the exchange rates have rolled up in the conversation around trading partners have rolled up about on paper there is no doubt that china's producers stock up a lot of the inflation pains. rishaad: enda curran there, our chief beijing economics correspondent. coming up, we speak to the ifc executive managing director on how they are recovering from the pandemic and also the property this has created. that is next. this is bloomberg. ♪
juliette: you are watching "bloomberg markets: asia" as we look at the markets in asia, particularly as we hear from the cleveland fed president opening up of the debate again for bigger rate hikes. loretta mester told bloomberg she supported half a percentage rate hike for now. she sees a 75 basis point hike later if inflation does not ease for the second half of this year. >> i think 50, the case we are going now seems right to me.
we are going to have a sense whether inflation is actually moving down and we will be able to get more information after we do a couple of those things. both supply and demand are moving over time, so the aim is we need to use our tools to do what we can to get demand in better alignment with that constrained supply. i don't want to rule anything out when we get to that point in the second half of the year. if we don't have inflation moving down, we may have to speed up, but if we see inflation moving up, we might be predicting we can adjust at that point. we need to be committed in being resolute to get inflation down and that is both the balance sheet, we have announced that will start in june, and also with the policy rates. >> john williams today said that he expects unemployment to rise because that is what you do when you raise interest rates.
are you on board with that? that the economy is going to slow because we need to do that? >> we have excess demand in the product and labor markets so we can raise our interest rate and slow that excess demand. but this is not going to be smooth. there are going to be bumps and the unemployment rate may have to rise. that has to happen in order to get inflation down. we are tightening financial conditions and we are going to continue doing that until we see inflation moving back down to our 2% goal. >> you get two orders -- corridors of negative -- >> how much is demand slowing? if you look at the first quarter, there was a negative read on gdp if you're looking at what is happening on the consumer spending side of that
and the business side of that report. that is strong. there is a lot of demand from that report. the government trade was a big negative for growth in the first quarter and also that inventory. there is still a high level of inventory, just not as high as it was is in the fourth quarter. we are going to look at those reports and we might see some of that happening over time, but again our goal is to bring nation under control and have it start moving -- bring inflation under control and have it start moving down. i do not see this as a trade-off right now. in order to make sure labor markets are sustainably healthy and that we get sustained maximum unemployment, we need to get inflation under control. >> if you get inflation down, down to where is acceptable? have we changed inflation dynamics? >> we are aiming for a long run goal of 2%.
if the question is will it take some time to get down to that level, yes, because we know that inflation can be persistent and we have supply constraints that even though everyone hoped they would be easing, they are not easing and there is upward risk to inflation. i don't expect we will get inflation down to 2% this year or even by the end of next year, but we need to be those monthly numbers moving down in a convincing way. i would have to see compelling evidence that that is happening before i would want to say that we can ease up on what we are doing with policies. rishaad: loretta mester speaking exclusively with bloomberg's michael. for the crypto space, a lot of volatility at the moment. bitcoin in a session is just at snapping of a five-day side and it is -- five-day slide.
we have rebounds that are arguably tentative. it has been a volatile session so far today. in this part of the world. >> we saw bitcoin rising in singapore and then it was back near the 30,000 mark fighting its way higher. it is a rebound nonetheless. there are some that are concerned that cryptocurrency took a median in the recent selloff. what you can see is that the volatility in the stock market is now exceeding that of what we eat in cryptocurrencies -- we see in cryptocurrencies. we are seeing a bit of green on the screen as we speak. it is the bitcoin trade that is really jaw-dropping for some veteran bitcoin traders. they are used big swings but
this was a big drop in stocks and they fell. we saw bitcoin go briefly before 30,000. you could expect a lot of pain and difficulty going forward getting back to those highs and we are down from 50% from those highs of almost 70,000 back in november. it will be a long road indeed. there was a big issue with table coin. -- stable coin. it is at parity with the dollar and it fell below that. there were big questions about the algorithmic methodology there and even the fed raised consumptions -- raised some concerns that there would be more scrutiny. there are steps that they take to get stable coin on more stable footing.
this is a big question mark for the cryptocurrencies about whether they will be getting more regulatory lockdowns. juliette: a dramatic curve when you look at that chart. coin boyce named its earnings to take a tumble there on the outlook. su: they were off on the revenue and the number of transactions and they warned that the lower trading volume will continue in the current quarter. that slashed the stocks and it was down as much as 16% in extending -- extended trading. it makes sense that bitcoin is down more than 50%. it has put a lot of retail traders up the sidelines and analysts have said that basically you can continue to see weaker trading going forward as long as we are in this unstable environment. a rough ride for coinbase.
juliette: su keenan with us in new york. now we are looking at the pandemic recovery from emerging markets and that has been challenged by rising interest rates and inflation. this is a heavy burden on the most vulnerable. rishaad: our next guest is the men director of the international finance corporation. -- managing director of the international finance corporation, makhtar diop. thank you for joining us. how bad the pandemic make inequality? makhtar: it increased the number of people going into poverty and all of the cases we have made in the past, poverty has been partially erased by this crisis. people have lost their jobs, inflation is rising, and manufacturing is pausing.
the price of goods has increased significantly. in countries like india you have 6% inflation last quarter and you have the likes of sri lanka. these crises have been impacting the economies and it has slowed down significant investment. rishaad: you outline capital from the private sector. it is not so much the money but getting the money in the right place. give us the idea of the challenges you are facing. can you hear me? makhtar: yes, i can hear you. rishaad: perfect. i was just saying, you raised money from private companies and private investors.
it is also a raising of the money that is a challenge, but the other challenges adding it to the right places and the right people. makhtar: absolutely. we have been doing is that the challenge we are facing with climate change is something we are looking at we will need to look up the economy. we will take the nominee -- money to where it needs to go and the biggest instance on climate change, we have been able to issue bonds in thailand. we have been working on the city havens there. we ensure that for the climate change. we said that we would launch it at cop26 in glasgow. we have the markets as the authority of the region and we
have the authority to be financing all internal activities for the sector and also supports that industrial will be able to breathe on our planet. juliette: as well as the pandemic we know that the war in ukraine has emerged a food security problem as well. how much help are you getting from external investors to limit the cost of what we are seeing in terms of this food security problem across the globe? makhtar: where working in response to the crisis in ukraine. we had a meeting with the president zelenskyy and our partners doing our research and in this meeting we showed where we stand on the markets. in the private sector we have supporting companies.
we have finance companies which have been on the distribution in ukraine in the midst of the war. we are supporting companies which are supporting food production around kyiv and we are increasing our trade financing properties. we are mobilizing with our partners and working very closely with partners like india and europe to not only support ukraine but also support the surrounding countries that would be facing important challenges. juliette: ifc managing director, makhtar diop. thank you for joining us. a quick check on market action this hour. we had seven days of losses and we are seeing a reversal of the games coming through on the msci
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