tv Bloomberg Markets Asia Bloomberg May 12, 2022 10:00pm-11:00pm EDT
rishaad: 10:00 p.m. on wall street. 10:00 a.m. in hong kong and singapore. i am rishaad salamat. haslinda: asian stocks gain, signs of fed hawkish has, maybe near its limits, the dollar heading for its sixth weekly gain. china set to report the weakest economic indicators since the start of the pandemic, putting a rate cut on the radar as early as monday. plus, crypto market panic subsides, although janet yellen says it underscores the risks,
and new regulation is needed. rishaad: just looking at what's going on, federal reserve comments. we'll go to that in the minute. first, and up arrow story. of late stage rally on wall street pushing equities into positive terrain, just overall. nikkei 225, up. the dollar was stronger. we will come to that also in a second. hang seng 1.8% to the upside. positive news. singapore higher. as is australia. it is green on the screens for equities. commodities. copper. on the way back. weakness of late coming through right now insolvent bonds as you can see, the 10-year and the flattening also adding to this fairly benign and calm start to the trading day haslinda:.
-- day. haslinda: it is friday the 13th, so beware. inflation, signs just about everywhere. india coming up with the cpi data, coming in at the highest in about eight years. 7.8%, begging the question what will be rbi will do. there are expectations it will raise rates again following the surprise move last week. the governor himself says he will make inflation, containing inflation a priority. rishaad: absolutely. you know, we have fed speak again, the fed chief on a public radio station saying he was still using that language, which was misinterpreted. he said they would not be actively be looking at a 75 basis point hike, but said it
was off the table. but if things got worse, who knows? all bets are off. some more clarification coming through. jerome powell suggesting june and july would see 50 basis point moves as well. this is the dollar story. stronger now. one of the best weeks for a long time for the dollar. if we can look at the dollar index overall, it is up about 10% since the start of the year. emerging markets have felt the lately with the indian repeat at a record low -- currency at a record low, and strength against develop orchids with sterling at that level, and at one stage 103. the yen holding its on. we will see looking ahead with more weakness for the yen. right, garth of reynolds is here. -- garfield reynolds is here.
what does one make of those comments from the fed? it was a clarification, and on top of that, no news which could make you sell the dollar, is there? garfield: not really, rish. we saw abruptly the last day or so the dollar being sold against the yen, because there was a general risk off tone, and again started to act as a haven once more now that things have settled down, and also the dollar had become so elevated against the yen. one of the interesting things about the messaging from the fed and the way markets are responding, to some extent, it does seem to have calmed things down that jerome powell talked about just two 50-basis point hikes. that will be three 50-basis point hikes in a row, beyond
anything happening back to the 1990's, so you would expect them to take a little bit of a pause, but not to go too much further straight away, because you think of how different the global financial markets are now, to how they were in the 1990's, and you can imagine that you might get some accelerated turmoil, which we have had come across a whole range of assets, some of which like crypto did not exist in the, 1990's let alone have the influence they have got. so all of that coming back around to the dollar is signaling the fed will stick with the titan path, and pretty much whether -- tightening path, and pretty much whether that is continued is pretty much dollar positive. haslinda: how about the yuan, garfield? it continues to weaken, even
though the pboc has set the fix stronger for, i think, eight to nine days now. it does look like there is no support for the yuan. garfield: all of the pboc could do in one's to do is slow the pace of its decline -- wants to do is slow the pace of its decline. everything regarding the economic slowdown, about potential increases in unemployment, about the need to make policy easier, all of those feeds the idea that the yuan should decline, however yuan, they don't want the to decline to rapidly, again, because that causes turmoil and you could have an accelerated movement further down, even more than what would be justified by what i said are fairly dire fundamentals. haslinda: bloomberg's garfield
reynolds, thank you for your insights. breaking news out of china. shane hi does shanghai aiming to achieve no community spread in may. what might that entail? that's get perspective on how china and asia is looking with the head of treasury research and strategy of the oecd. it does seem like china insisting on its covid zero policy? >> it does. there is nuance. they are focusing on community spread, so if they ramp up testing and can quarantine the infected people rapidly and all the close contacts, then they could make progress towards having zero community spread in a couple of weeks. haslinda: even if it does contain the spread, the impact on the economy will persist long before covid is gone.
i am just wondering how you play china at this point in time and how are you looking at the yuan? selena: market sentiment in china is weak at this juncture. the spillover will show up in april and the second quarter in particular. were looking for gdp growth for the second quarter to slow down. we could see a sequential contraction quarter and quarter. it could be below 2% on the year, so it is a weak performance, but with the market was to see in terms of a step up or a halfhearted type of intervention or stimulus, or for the data ship -- to show bottoming, and we are not there yet. rishaad: we just got the jakarta stock index has actually moved 10% down from its highs. we have the market in correction. how do you think the central bank will be looking at this? there is this fear that a lot more of these banks regionally
speaking will get more hawkish as we see what is going on in washington. selena: definitely, because with the fed on this tightening path, you know, fears are portfolio capital outflows from the region, in particular for central banks , we sawrbi the and other banks r start --bi -- rbi and the other banks start their own liftoff. looking for it to potentially hike rather than does sooner rather than later, and could see 75 to 100 basis points by the end of the year to maintain some semblance of a yield differential against the dollar itself, or else it will really face upward pressure. if you recall, the central bank is only obliged to buy
government bonds until the end of this year, so we are reaching a point where towards the end of the year there will be a lot of questions about who will be the next buyers of the indonesian government bonds into 2023. rishaad: ok, of course there are implications about what the fed is doing in terms of its frontline monetary policy, but as we get $90 billion worth of debt being sold, bought, coming off the balance sheet, i should say. 3 trillion in the next three years will take liquidity out of the system. how does it affect what you do in terms of strategy and research? selena: we are defensive because we see inflation made not have completely peaked yet. there is a concern and it is dependent on the inflation trajectory flapping out in the
next couple of months. one thing to watch would be the impact of qt. the withdrawal of liquidity will come as a shock. if you remember, it did not go quite well for financial markets and risk assets in this region before, so there is a fair bit of anxiety about with this time around it can achieve a soft landing, and what it would mean for asia and the philippine markets as a whole. haslinda: talk about anxiety, the bond markets have lost 10%. why not just dump bonds? selena: in the run-up prior to this week was equity markets were down, because people were noticing on frontloading policy to fight the inflation. as recession fears start to climb, people are focusing on the growth part of the equation.
, giving bond support, bonds coming back, the incoming back a little bit, but we will have to see whether it is sustainable from here. i think the jury is still out. haslinda: yes, almost 2%. the jury is still out. here is first word news with vonnie quinn. >> thank you. fed chair jerome powell has reiterated the central bank is likely to raise interest rates by 50 basis points at each of its next two meetings. he said the fed is preparing to do more to control inflation, though achieving a soft landing would be quite challenging. he won senate confirmation with an overwhelmingly bipartisan vote. beijing denies the city will be locked down, while urging people not to hoard food. the municipal government says it will conduct three rounds of
mass testing over the weekend. it's total affections since april are nearly 1000. germany accuses russia of using energy as a weapon as gas prices dropped. it is suggested because is over the war in ukraine. germany's minister says that amounts to only 3% of gas imports. south korea, japan, and the u.s. have condemned the latest weapons test by north korea, three short range ballistic missiles, on thursday. south korea inaugurated its new president and joe biden will visit the region incoming today's. meanwhile, the explosive spread of an unknown fever has been announced in north korea after a lockdown. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more
rishaad: the headlines at the moment coming through from that city, which is a lockdown, as you can see by the lack of traffic near the television tower. the vice mayor aiming to achieve no community covid spread in mid-may. we are nearly there now. this is on the back of the shanghai daily reporting to 27
confirmed cases -- 227 confirmed cases. also, crypto news. terra, this is part of the blockchain network behind this. they have officially halted the blockchain, which means the network has been halted. this is just coming through. where are seeing more roiling of the cryptocurrency space. getting back to shanghai and this came to have no community covid spread in mid-may, let's get to our chief north asian correspondent -- asia correspondent, stephen engle. what do we know about this? cases are dwindling. it's nearly mid-may now. >> it's quite a target to have. that target is important because you need to have three consecutive days of zero local community transmission, meaning outside of quarantine.
a couple of days ago we had a day with no community infection, but the net was broken the next day, and the latest numbers for thursday four is four 2096 total cases, and were community transmissions, so that sets the clock to zero. the vice mayor is actually quite well-known. he is the former chairman of the shanghai stock exchange and is a person with a reputation for speaking with a level head. you have to take his comments pretty seriously. when he says they are aiming for local community spread of zero, we are already there this month, so very soon, and that would be a precursor to easing this lockdown which is already into seven weeks. haslinda: meanwhile, what about
the rumors about a lot of pain -- a lockdown in beijing? >> there are rumors about everything in beijing. it is the political capital of china. these rumors of an impending lockdown swept through social media yesterday before being scrubbed, then having local officials with an impromptu press conference, saying we are not doing a lockdown. we will not have these quiet periods that shanghai is having, basically a euphemism for targeted letdowns were people cannot leave their home and they cannot have deliveries to their home. whatever you want to call it, they tried to crush that speculation, you saw the run on foods and supplies, because once the rumor mill starts cranking in beijing, let's face it,
let's start with the pause and it's tied to the big losing bets on technology by masayoshi son. >> is. money-losing rockstar -- yes. money-losing rockstar tech companies. book at the losses. a stunning reversal. look at that green. one year ago, softbank set a record for the highest quarterly profit in japanese history. they invest principally in private companies, startups, but it is the public companies that have crushed the portfolio. you are looking at the one your losses for those three companies. these were once the main drivers of growth. they are now the biggest drag on the fund.
it has rallied, and now the most since november 9, again, on the optimism of a possible share buyback. there were positive comments about the arm ipo, but the losses have caused softbank to scale back investments, just $2.5 billion, down from $10 billion a year earlier, and far from the peak of 30 begin dollars in 2018 comes up times of clearly changed. -- $30 billion in 2018, so clearly times have changed. it is bleak overall, but the reducing exposure to china. masayoshi son admitted he had perhaps been a bit optimistic in so many of his wagers on tech. he says that when it starts to rain, it is time to open the umbrella. he is clearly being much more
cautious going forward. concerns about china include covid lockdowns, rising inflation, the beijing crackdown on internet, and alibaba has plunged in value, so you layer on the weakness in the global stock markets overall, and there is more caution in the way, defensive driving is the term he used, the way they are going forward. when a citigroup analyst said they really thought that softbank was raising the caution flag and they see a tough investment environment for the next two years. haslinda: thank you. land rover sees the semiconductor shortages persisting into 2023, after an unexpected quarterly loss of $130 million. it says inflation issues and sourcing chips of the biggest concerns for tata motors and
it's trying to limit the fallout on its bottom line. hsbc has been said to have begun a review to spin off its asian operations. it has drafted goldman sachs to examine the case for a breakup after its biggest shareholder pushed for a split on the business to improve returns. hsbc executives are against a spinoff. twitter has announced a hiring freeze in cost-cutting efforts, reflecting the uncertainty while it awaits takeover. the company will not hire new employees and may rescind offers party out, with some exceptions for roles considered to be business-critical. rishaad: we are looking at markets as we head towards the japanese lunch break. this is the jakarta composite
rishaad: 11:29 a.m. on a raining day in tokyo. right now, looking at what is going on. the broader market moving to the upside. further yen weakness coming through after it had been holding its own while the dollar had been strong and they would go, the biggest gain or there, softbank driving the market higher. hopes of a share buyback and other reasons despite a huge loss, off the most in six months. haslinda: that's right. the nikkei 25 jumping more than two 5% on the back of those losses. a 2% loss, which we saw yesterday, the biggest increase we have seen since march 23. we have the yen at 129. of course, the yen seen as reading -- as being really undervalued. now we had to first word news with vonnie quinn in new york.
bonnie: thank you. a veteran lawmaker returning to the role of sri lankan prime minister for ace asked time. he was named premier days after the president and his brother resigned in the face of violent protests. his selection as an attempt to restore credibility as the government considers a bailout package. argentina trying to keep up with an inflationary spike that has triggered street test. argentina's consumer prices rose 6% in april 2 the highest annual level since 1982. the central bank says it expects gradual inflation deceleration. tether briefly lost its dollar peg.
its chief technology officer assured investors. the recent collapse of rival stable coin has triggered volatility in the crypto markets. bloomberg has learned that elon musk wants to stop the margin loan linked to tesla shares he was going to use to help by twitter. instead, musk is in talks to raise equity and encourage financing for the proposed buyout. shares in tesla have fallen 25% since he announced he wanted to buy the social media platform. scientists have released the first image of the supermassive black hole at the center of the milky way galaxy. sagittarius a is about 27,000 light-years from earth and is considered supermassive because it has a mass more than 4 million times that of the earth's sun. it is only the second time visual evidence of a black hole has been captured. global news 24 hours a day on
air and on bloomberg quicktake powered by more than 2700 journalists and analysts in more than 27 country -- more than 120 countries. haslinda: prices stabilizing, and we had bitcoin rising 6% at one stage, but still, investors wondering where crypto will go from here. we have the likes of janet yellen weighing in saying what happened and the chaos that ensued showed the chaos of cryptocurrency, and she is urging for more regulation. she says the treasury is looking at a paper focusing specifically on that. rishaad: we heard vonnie just now talking about tether, seen as the foremost stable coin. it has dollar assets underneath it, so it actually has got something behind it at the moment. the cfo saying the pegs that they have, one on one with the dollar itself, is not broken,
though it did fall back to $.94 at one stage before recovering, but terror is the story making headlines right now -- tether is the story making headlines right now. this is all coming through from the company itself. halting the network as they plan to reconstitute. let's bring in the chief executive of bgc markets. what did you make of it? >> thanks very much for having me. i think what we are seeing is probably a case of terrible timing more widely for the crypto market, given what we are seeing with macro trends. the issue was flagged as a sort of canary in the coal mine within the crypto community. six months ago, there were people calling out issues with projects as to what could
potentially happen and it seemed it began the question of some timing. they have been comparing it to the george soros attack on the bank of england back in 1992. we look at some of the tactics that were deployed to bring down the price, and there are definite overlaps. however, to compare in terms of significance wednesday and the price with sterling versus what we have seen with cryptocurrency is probably taking it a stretch too far. it is not the only player in that space, and i think what we can take from this is that there will be a significant number of lessons learned, and unfortunately, many investors have been left holding the bag, as they say.
rishaad: is this perhaps a case of there being too many digital tokens and cryptocurrencies that we need to shakeup ultimately? >> at one stage, we were looking at 18,000 for the next 20,000 cryptocurrency tokens, which is a surprising number given the relative immaturity of cryptocurrency itself. we would not want that to crimp the innovation and the pace of change coming through with these projects, but there perhaps should be some additional education and caveats for investors coming into these projects, particularly those that do not have a long track record behind it. we predominantly trade in bitcoin and i theory him, the
two biggest large caps in the crypto markets, and certainly what we have seen is that trading has been very robust over the last 24 hours or so. haslinda: when crypto coins get dumped for cash, it is worrying, isn't it? we had some warning from janet yellen saying that it shows the dangers of cryptocurrencies, and she is calling for regulation. >> i think danger is probably a very loaded term. i certainly would push back on that. no one is suggesting that gdpr the euro is in danger, so i think that kind of rhetoric is not very helpful. however, here in australia, the industry itself has been actively pushing, actively lobbying for regulation around that sector. we ourselves are very keenly aware of some of the risks around the sector due to lack of
any real oversight structure or framework. we have been lobbying over the last 18 months, two years for exactly that, so we wait to see the outcome of the election here locally. certainly it is in the cards here locally. haslinda: what else in the system might be on shaky ground? quest -- >> it is very hard to tell. we know that bitcoin took a battering tied with what we saw with the nasdaq, so that has created a contagion across the rest of the market, but looking at the exchange board, i can see and a lot of green written across the board. the buy signal is back for i think a large number of investors.
people are taking this as a sign to come back in, but as it is, as it will be with any other market that looks for savior, looking forward to the large-cap , will probably be that move into bitcoin and theory him as the two largest, most stable, most developed projects. haslinda: one more question before you go -- bitcoin struggling to hang on to 27,000. i'm just wondering, what is the next support level? >> i think we are all kind of waiting to see where that goes from here. we have seen that initial uptick again this morning come through during australian trading, so we will see how that plays off across global numbers. there is always a slight misstep due to the fact that it has traded globally between different prices that you may see, but i think we did not expect to see a return of consolidation around these
prices we are seeing at the moment. we are not seeing extended selling now that we are seeing that base return, so we will wait and see how it pans out across the weekend in particular. rishaad: thank you so much. coming up, we are looking at the biden administration's cybersecurity's are, going to be joining us to discuss the russian recent cybersecurity attacks and america's cyber agenda -- the bonded administration's cybersecurity czar going to be joining us. this is bloomberg. ♪
haslinda: welcome back. the u.s. and its allies say russia has been responsible for a series of cyberattacks. they say moscow has been targeting commercial communications companies in ukraine since just before the invasion. chris english and vices president biden on cybersecurity policy. good to have you with us, and welcome to singapore.
>> i think we are seeing what we expected. we have clearly seen cyber as a tool in the russian playbook for quite some time along with disinformation, and we have seen them exercise that in this particular campaign. what i would credit as the difference maker is the defense mounted by ukraine has been impressive. haslinda: russia's cyber arm has not been as destructive or as effective as one would have anticipated. >> i think the ukrainians have played a role in diminishing the effectiveness of the russian attacks. i think it is also hard to mount a campaign and the russians have shown they are not perhaps as competent as they might have imagined both in the physical world and the cyber world, but at the end of the day, i would credit the ukrainians with mounting a very effective defense. haslinda: are you expecting a
boost of cybertek going forward? >> for as long as russia persists in this egregious behavior, i would think cyber would be in their playbook, so i would think this would continue apace. rishaad: it has been suggested that world war iii would be a cyberwar in some ways. >> i don't think those who have studied the space have said that cyber would constitute a world war iii. we have always known cyber is an institute -- an instrument of power that can be used in these purposes. oftentimes we have found that cyber is used below what i would call a use of force, but it is a tool used in combination with other tools, and therefore i don't think you should think of it as cyber on cyber or therefore to think of it as something that changes at the end of the day the outcomes that one nation can achieve against another. rishaad: let's just move it along here, how does it work in
other words? when we look at elections, how do you protect yourself against a cyber attack during elections? we all know the stories of things like brexit being influenced by cyber disinformation and the like. give us a sense of how it will work and the protections in place now. >> that's a great question. at the end of the day, it is not so mysterious. it is the old-fashioned way, an ounce of prevention is worth a pound of cure. you take some care to understand what you depend on digital infrastructure to do and take care and invest in our own defense. you style passwords, use of encryption, make sure you understand what you have laced in the internet and what expectations you have from it, and then a collective defense of what results.
essentially, a private/public collaboration is what we are arguing for, that we treat this as we do any other domain of interest, which is if you have resilience and collective defense on top of that, you can navigate this to achieve your aspirations. we should not be intimidated by threats in this space. haslinda: in the end, there's cyber security standards. we had one former pentagon chief who said -- has improvement been made and how have you been looking at it? >> there have been significant improvements made, but they are not enough. just about every country that i'm aware of has taken a look at the automobile and highway systems and improved the resilience by design of automobiles. they need growth systems to make sure they are safe to drive, but at the end of the day, people need to thoughtfully use those devices to ensure that they defensively drive.
cyberspace is no different. we can build robustness in, but there is still a people component that is very important. haslinda: the private sector, though, is still voluntary. >> what you see emerging across the world in various nations is a combination of market forces and voluntary activity and increasingly governments stepping in to say there are some nondiscretionary features just like we have with airplanes, on mobiles, drugs, and therapeutics. i think that is what you will see play out in this space as well. rishaad: what is going on with ransom attacks these days? again, how do you perhaps block them and take punitive measures? >> ransomware attacks are certainly still a force in the world. criminal activities still are ongoing and to the extent that individuals, organizations have
taken some efforts to improve their resilience and robustness, we have seen in some cases a continuation of that, but it is still ongoing. we conducted at the white house a meeting of many nations last october to try to collectively address the underpinning issues that are associated with this. sanctuaries granted to criminals and free activities in cyberspace that allow for the acquisition and transfer of resources and to some extent, a failure to invest in the resilience and robustness, just having a backup system for an organization or individual can defeat the endgame purpose of the ransomware attack, so it is a system and we have to address that system by addressing all of the facets that weaken it. haslinda: before we let you go, the u.s. than in huawei has to do with intelligence and data. when you're on, what have you learned and what is the way forward? >> i think this is less about huawei than it is about nations having confidence in the vendors
who populate the critical infrastructure of their systems. we need to look not just about the economics of the situation but the performance of those vendors, the security and where with all of those vendors and the rule of law that pertains to the conduct of those vendors. each nation needs to make a choice based upon that variety of factors. haslinda: great to have you with us. thanks for joining us. plenty more ahead. keep it here with us. this is bloomberg. ♪
rishaad: this is bloomberg markets. soft bank may have had a big earnings hit, but arm is preparing for an ipo saying a revenue surge last year reflects the spread of the company's products into new areas. the chief executive spoke to bloomberg about supply chain issues and the future of the company. >> the supply issues i do think are going to stay with us for a while. everything involved with semiconductors is complex. you have more and more complex packages, which mean some straits, you have different
packaging techniques. the layer on top of it, automobiles, for example, which require significant semiconductor content but other areas that need to be shipped in a car, supply chains will be stressed in a way we have not seen before with the pandemic, and i think that will make the world really complex, at least for the next year or so. emily: when do we see the end of these shortages? how long does this go on for? >> if i had a crystal ball, i think i would be in a different industry, but i think they will be with us for a while. when you think about what's required to bring a -- to build a five millimeter or three nanometer the, the chips take longer to build and are longer to manufacture, which means predict ability gets harder and increasingly in some of these products, you have more and more content and it is not just one to that is not available. if you have one product that is all manufactured and you don't have a power diode that can go in the car, the car cannot ship. again, i think going forward, we
got to get our arms around what this new world is teaching us relative to supply, and i think it will take a little while. emily: there's a report softbank plans to keep a majority stake in arm after you spin it off. what conversations have you had about this? >> i cannot say too much specifically. they have said publicly they intend to have a controlling interest going forward. i think what that says is they think the long-term prospect for holding arm is really good. emily: how soon could an ipo happen? >> i cannot really say. hard for me to go forward on that area, but as we said before, we are preparing to make that happen. emily: how are you evaluating this guitar, and could that delay or influence your plans? >> obviously, market timing
dictates a lot of things. emily: let's talk about another part of the arm business, and that his arm china. you and i have talked about some of the turmoil you have seen in that particular part of the business. are you fully in control of the joint venture right now? how is it doing financially, and what can you tell us about its future? >> it seems that just 90 days ago you and i were talking about that. i'm happy to say that chapter is now behind us. we have resolved the issue. we have a new management structure in place. we worked with the board of directors, local stakeholders, chinese government. the new management is in place and we are operating normally. we have been able to complete customer contracts, sign licenses, so we do have operational control back under the leadership team and are now moving forward. haslinda: arm's ceo speaking with emily chang. some stability returning to the
markets here in asia after the selloff yesterday. the markets session overnight in the u.s., we have the asia pacific index in positive territory, but we are seeing some losses. not looking pretty for jakarta. rishaad: absolutely. looking at currency trades, it is so close to the upper limit at the moment. 7.8499 as we did see intervention with the hong kong boosting to really defend that take. this is the crypto space, and this is bloomberg. ♪
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