tv Bloomberg Daybreak Asia Bloomberg May 16, 2022 7:00pm-9:00pm EDT
i am haidi stroud-watts incident. we are country and onto asia's market opens. kathleen: i am kathleen hays in new york. welcome to "daybreak: asia." investors are way new signs of economic weakness from the u.s. and from china. treasury yields retreating with the dollar. elon musk may seek a lower price after questioning the platform's stats on spam and fake accounts. and shanghai nears a target. could it lead to the easing of covid curbs, with one million still confined to their homes? haidi: will need some resilience from asian markets as we get into the tuesday session. we saw the big fall in u.s. tech in particular and that will be denting sentiment. also seeing the big fall in the agriculture sub index. seeing pressure when it comes to commodities. the biggest gains we saw in food prices in more than two months. wheat is a major story driving that side of the inflation
picture. take a look at asx futures. a gain of about 0.2% going to the start of trading. the 10-year yield is holding pretty steady but we are seeing stagflation or a risk -- stagflationary risks. this idea that perhaps yields have hit a peak and there is a role for government bonds play as a hedge against the risk from risk assets like equities. . new zealand is to the upside. west bank coming out with a call that we will see a hike from the rbnz in the next three meetings. taking that to 2% by their may meeting. dollar-yen starting to creep up a little more now, we are seeing that 1.30 level again. kathleen: now let's take a look at u.s. stocks.
you can see here, the s&p futures are showing him bounce. s&p futures were down 0.4% at the close. megacaps text like amazon and apple, including tesla, all helping to bring it down. the nasdaq closed 1.2% lower, it is also having a bounceback. maybe people figuring that we should take a breather here in the rapid selloff. there was a rally in bonds today , closing at 2.88%. new york crude, down from the best levels of $114.11 a barrel. it got over $114, the highest level since march. it is all about gasoline, gas futures going to four dollars a gallon. that is a record. it is the retail prices at the pump -- summer driving is coming. and that is increasing demand.
inventories are down and that is what drove the oil today, haidi. haidi: more volatility in markets, with investors weighing those fresh growth concerns within the u.s. and also china. let's get more with our cross asset a gene editor. in terms of the hr set up -- our cross asset asia editor. in terms of the setup, it looks really hard. >> it is hard for markets to catch a break. as you mentioned, we might see some stability in asia, but all those headwinds that we have seen recently are still there. and those china numbers yesterday were absolutely dismal. that has injected a fresh dose of cautiousness in the market. we also had soft numbers from the new york state last night with manufacturing unexpected contracting. all of this is playing into a
market that is incredibly skittish. now, we have had declines for a while. investors are of viscerally wondering when we will see a bottom. that may not happen for a little while yet. one analyst said this is quite complicated and complex. he actually looked at monetary policy around major market lows going back to 1954 and found that in almost all cases, you had to have rates going down, monetary policy easing, and bond yields going down prior to the markets finding a bottom. and it looks at this point that we are not quite. . kathleen: how about crypto. we saw a rebound in bitcoin. overall the bloomberg crypto index is down today. more volatility? andreea: yeah. crypto and bitcoin is trading along with risk assets.
for a while, the attractiveness of crypto-currencies was the fact that it was being touted as not being correlated. that you could find an asset class that could provide some certification. that is not proving to be true. as it becomes more mainstream, as it is being embraced by more institutional investors, it is facing the same set of challenges as every other asset, especially a risk asset, tied to monetary policy and tried to liquidity. remember, this is a highly volatile, speculative asset class. the issue here is that even with the recent decline, there is one trillion dollars tied in cryptocurrency and decentralized finance, so there repercussions for other asset classes if anything goes wrong in the crypto space is quite great.
>> repercussions indeed. cross asset a gene editor, andreea papuc, thinking. now to the latest on the ongoing drama surrounding elon musk's takeover of twitter. he is saying he would like to renegotiate the deal at a lower price. for more, let's bring in bloomberg's kurt wagner who joins us from san francisco. kurt, he thinks it is not out of the question. i just wonder, if anybody who works at twitter and was offered financing for this, what they are thinking. >> the idea of him reneging on this deal that he already agreed to is not as easy as doing what he did today at which is to say, i am open to that. because twitter already agreed to this price, they have signed a contract at this price, so i don't think it is that simple. at the same time, he has proven that he is willing to make things difficult. i don't think twitter has a lot of other options right now. whereas they could try to force him to buy this company for the
amount he already said, unfortunately, they don't have anything else besides that option on the table at the moment. haidi: is there some dispute when it comes to what the twitter ceo is saying, regarding the approach and the numbers we are seeing when it comes to spam accounts? kurt: so musk's big issue the last couple of days has been that twitter might be representing how many of its users are bots. . the company says it is less than 5% of total users. elon musk said it might be as much as 20%. he jokingly said it could be as high as 90%, sort of throwing that out there. so clearly there is a discrepancy. that twitter ceo did a thread today that basically said here is how we calculated this number. and elon musk's response was to treat the -- to tweet the poop emojis back at him. [laughter] [laughter] he does not seem very happy with
the methodology that twitter has been using to calculate spam robotic accounts. haidi: yeah, some very high-level, sophisticated negotiations going on. [laughter] kurt wagner with the latest on elon musk. investors will be paying close attention to the latest news out of china, after that very week data rocked sentiment. our chief north asia correspondent stephen engle will be at the jp morgan china summit in hong kong throughout the course of the day. we have got to start with that horrible set of activity numbers yesterday. stephen: that's right. the guest lineup we have from the summit is kind of emblematic of the big issues that we will be talking about. shanghai of course, the lockdowns, the potential third consecutive day of no local community transmissions, and the impact that will have an opening up of the chinese economy, and
of course, the improvement in the horrible numbers we got yesterday. we will be speaking with the american chamber of commerce president in china, to get a look at how american companies doing business in shanghai are feeling, during this almost nearly two months long lockdown in shanghai. but those numbers, we will talk about the greater jp morgan strategy for china. last year jp morgan got the approval for its securities venture in china. and then, of course, all hell broke loose at the beginning of this year, in the first six months of that approval of the securities venture. the chinese economy has ground to a halt. the asia-pacific ceo of jp morgan will be speaking to us about the outlook for china and the greater region later this morning. and then wendy, the jp morgan chief asia and china equity strategist, we all know about the controversial call that was
scrubbed from the research books at jp morgan, about chinese tech being uninvestable? well, yesterday we got a bit of a reversal from the equities analyst team at jp morgan, upgrading a number of titles, including alibaba, netease to overweight from underweight. we will get some justification and the overall outlook from chinese equities from wendy lou. lots on the table. haidi: i really want to know more about that. bloomberg stephen engle will get us those answers. let's get a closer look at the big guests coming to the summit, including the presidents of amcham china and shanghai, this as the city is getting ready to ease the covid curves. and the jp morgan asia-pacific ceo of will also join us in a few hours time. let's get a vonnie quinn in the meantime with the first word headlines. vonnie: new york city says it could mandate masks in public this is again if the covid alert
level is raised to high. health officials on monday strongly recommended that people use medical grade masks in public as infections rise again. mayor adams says that city is preparing to enter a high alert level in the coming days, it was moved from low to medium in -- -- earlier this month. russian president putin has issued a warning to finland and sweden over their plan to join nato. he says their decision will produce a response over moscow. mineral, ukraine's foreign minister has ruled out potential concessions to russia. he says that you forces moral failure if he does not approve ukraine's candidacy for membership. >> this is really the moment for europe to take itself to the next level, to launch the reform, to grant ukraine, to legally anchor ukraine in its e.u. integration project by granting the candidacy status. vonnie: this token lost its 1-1 pegged to the dollar becoming
the latest failure of an algorithmic stablecoin. the team behind the token says it is working to restore the peg. it's a director told bloomberg that the collapse of popular stablecoin shows that they are not ready for use as payments. the teenage gunman accused of killing 10 people in buffalo, new york over the weekend, had spoken specifically of his plans on the chat up discord. a review of his posts show explicit plans for a rampage fueled by his white supremacist beliefs. this court has expressed regrets for their families, saying hate has no place on its platform. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. kathleen: still ahead, with energy security in focus more than ever around the world we speak to one ceo of about how his company uses gravity to store large amounts of power.
ahead of that, rising inflation across the globe is taking a toll on emerging market bonds. we will discuss investment strategy with alliancebernstein. this is bloomberg. ♪ gs the way you want—your team, ours or a mix of both. with the nation's largest ip network. from the most innovative company. bring on today with unbeatable business solutions from comcast business. powering possibilities™.
>> we are seeing a lot of headwinds>>. >> really huge woodwinds. >> we will see frustratingly high inflation. >> the very intelligent growth inflation rates. >> stagflation unfortunately is the baseline. >> stagflation is toxic for traditional assets. >> is it a soft landing, recession, is it stagflation? >> it started out as the inflation scare. >> the biggest concern is inflation. >> then it begin a growth scare. >> whether we get something worse depends on the soft landing debate for the fed. >> the fed is effectively trying to thread a needle wearing open.
>> mists and blindfolded. >> it's a very strong needle -- trying to thread a needle, wearing oven mitts, and blindfolded. haidi: global fixed income assets have repriced aggressively this year. our next guest says investment grade corporate credits are getting interesting. let's discuss with jenny zeng, head of asia-pacific fixed income at alliancebernstein. it seems across the breadth of debt markets, whether you are talking government bonds or corporate debt, that we are getting to a level where yields and opportunities are starting to look more enticing. absolutely right. the investment community has > been complaining about yields being too low for too long, for 18 months. now they have risen. the spread has widened, so fixed income assets have repriced aggressively year-to-date. that is starting to emerge in fixed-income assets.
it can be quite tempting. let me take asia for example. if we look at the investment grade, asia investment grade, asia investment-grade corporate yields, up five point 1%. that is 270 basis points higher than just 18 months ago. investments are currently at a much better starting point now versus 18 months ago. there is more price risk now. haidi: is there any update for china credit, or would you need to see significant signals to suggest that we are past the peak of the pessimism? jenny: the very weak data that we saw yesterday should not be much of a surprise to the market because resources have been very tight to countering covid. . mobility and activity have been restricted in major economic zones in china. now, the near-term growth remains challenging.
sentiment is likely to remain quite fragile. but we are approaching peak china pessimism for three reasons -- number one, the latest covid wave appears to have peaked. we have seen this in hong kong, two months after that we peak and remove on. this could pave the way our lockdown easing in the coming weeks. monetary policy, secondly, remains moderate. fiscal policies are likely becoming more aggressive. the high-frequency data right now show early signs of improvement in infrastructure spending and investment in the supply chain. for example, aluminum output is at record highs. the blasting furnace at china is at high capacity. and three, property. we see that more and more property easing policies are coming to the market, reaching a critical mass. so we don't need to be too pessimistic here. kathleen: i guess it depends on what kind of corporation you
are, whether you have depressed consumer sentiment after these lockdowns. we see how weak the retail sales were, consumer sentiment, how that will play out. is there any area you are especially worried about? what are you looking for to say, take that off the list? jenny: you are right, defaults have been rising. you can see that when there is a headline, there is another default headline. the market seems to be aloof about it. sentiment remains very weak. it seems as if the market is stuck here, without direction, trying to find direction. as for the market moving forward, i think we need to watch, one, how that restructurings are proposed, what the recovering values are like, and the difference between onshore and offshore trading, and whether there is a recovery. kathleen: ok. besides china, what other
developing nation credit markets do you see as good picks? jenny: if we are talking about asia here, i think wx-china high-yield --ex-china high-yield, india, philippines, indonesia, they are very attractive. they actually used to trade higher than u.s. high-yield in the past. now they offer almost 300 basis pickup over u.s. high-yield. they are really high quality corporates with a very strong balance sheet. kathleen: so, in terms of central banks and global central banks, is this all about the federal reserve's in your mind, or when you look to the reserve bank of australia, when you look to the bank of korea, the new chief saying he could see a50-basis-point rate hike. how does that enter into the
picture for asia credit markets more broadly? jenny: asia has been playing catch up for the fed lately led mainly by north asian countries again, ex-china. conditions will soften, but we think domestic demand will help to fill the gap because most asian economies are in the need cycle in terms recovery cycle. china is a different story. i think we will see more normalization in terms of policy across asia affects. kathleen: jenny, thank you so much, co-head of asia-pacific fixed income at alliancebernstein. more to come. keep it here. this is bloomberg. ♪
haidi: lots of question marks still over bitcoin, in this theory of the uncorrelated crypto assets. take a look at the correlation between bitcoin and tech stocks. . both have dropped in tandem since the beginning of the year. we will continue to see if that relationship continues to hold. headwinds are looming for both assets. certainly the price action calling into question whether crypto more broadly can be considered an uncorrelated asset, or even a haven. we have seen bitcoin behaving as a haven within that very volatile space, given that it is the main cryptocurrency. juliette: we will keep that in mind as we watch these volatile
markets and as the market stabilizes after the collapse of tara luna there has been no comment from mike no regrets, a big high-profile number of crypto. there has also been another stablecoin falling. novo gratz, conspicuously quiet. there is a bloomberg's figure 2.0 with emily chang of bloomberg technology, he made me want to buy crypto. su: well, he is relatively quiet right now. he is viewed as a king in the crypto world. he himself, a billionaire and a wall street veteran, he has described himself as the forrest gump of his coin. he recently infected got a tattoo of a wolf, howling at the moon, with the word "luna," in order to what was the hot new algorithmic stablecoin. but it just had this past week a spectacular collapse. many will come to the defense of the coin, it was considered a top 10 coin, they will say it
was an important and noble and innovative experiment but it was a mission that went awry. you are looking at the galaxy crypto index, mike nova gratz' fund. it was set to report earnings on friday, which may be another indication where we are not hearing from him. the company is bracing for a 300 million dollar hit this quarter. you are looking at the chart of the recent crash in crypto. anyone who bought after 2020, including funds that periodically purchase, are on the losing side of the equation or below the water line. what's interesting is, galaxy made it clear that it does not have any of these algorithmic stablecoin in its treasury, in other words, no lunana, no -- no luna terra, so it would not have suffered any losses.
but this is a bit of a blackeye. haidi: su keenan with the latest on crypto. we are getting an update when it comes to the cvc capital partners being for brambles. doesn't look like it is going ahead. we are hearing in terms of communication to the securities exchange that cvc will not be proposing for brambles. brambles will continue to explother options. cvc will not be making a bid sock due to market volatility. c
ukraine, the lockdowns in shanghai, producer prices going up 11%. all of this is in the supply chain equation. >> food is a big concern. ukraine has food in store but it cannot get out at the moment. and the finance minister of ukraine is optimistic about crop planting but they have to wait it out. >> we are watching for the executive -- we were hearing from the executive director from the port of los angeles in the foreign minister of ukraine. we are tracking the fallout of the global supply chain crunch. chip giant gs mc is raising
prices of lockdowns and the war continue increase in production costs. not a single car was sold in shanghai in april, showing how tight the lockdowns have been. adding to concerns of grain and wheat shortages, u.s. farmers are behind schedules because of the weather. farmers say it will be hard to rebound from this setback. haidi: and we see the boom when it comes to commodity prices rising again. looking at oil, worries about summertime supplies are building prices higher. oil rallying above $114 per barrel level, this highest since late march. gasoline topping four dollars a gallon. retail prices rising as well. in metals, the terrible data
coming out of china but mortgage cut move fueling advances we are seeing across copper, aluminum rising the most in that space. investors weighing in to support the property sector. aluminum futures for june giving back gains but major base metals except for nickel climbed more broadly after the pboc cut interest rates in new mortgages over the weekend. a market slump. commerce bank is expecting the rise in metal prices suggesting things will improve in the chinese market space -- property space. you can read more about this on the bloomberg.
shanghai is on the brink of meeting the goal of three days without community transmission of covid. this is a condition or authorities require before easing virus curbs. let's get more. i feel like we are jinxing this. if we get three days of zero transmission in the community, what can we expect? >> authorities have laid it out as a condition for them embarking on a more meaningful easing of lockdown. we have seen steps towards easing and making it easy for factories to get back online but we could potentially see a reopening across six markets and people able to move around more freely if we get a third day, which would show they are on a good trajectory when it comes to nailing covid in the community.
so a positive short-term outlook for shanghai. kathleen: short-term, mainly in the community for now. this is a big country in the virus could spread to other parts. and there are new variants. is there any sense the government realizes they will have to slowly take steps away from this very strict policy? >> not at the moment. they are focused on their rhetoric and action in maintaining covid zero. the focus is on stability, not on exiting pandemic curbs like other parts of the world are. and you are right, showing hey -- shanghai might have eliminated spread, but for how long? and beijing has a small but
persistent outbreak. they are reacting forcefully with restrictions. people are ordered to work from home. you need a covid test to even go to the park. so the outlook medium-term is for more restriction, disruption, and further lockdown. kathleen: the covid situation will dominate discussions of the jp morgan china submit where we will speak with jp morgan asia pacific ceo. you will not want to miss this fascinating conversation. let's get to vonnie quinn for the headlines. >> north korea says they are deploying army to get medicines from the pharmacies made covid. state media says more hundred
more -- more than 259 thousand new cases were reported monday. tim young own blames officials for not -- kim young own blames officials for not properly following his orders. export but charles -- export controls. >> stable coins are something all regulators are looking at. most stable coin use is perspective to in and out of cryptocurrency and people wonder if it will be one they use for consumer payment. many think it is not ready. >> biden has authorized the u.s. military to send troops back to somalia. u.s. officials say biden has
given authority to specifically target some leaders in somalia. heat waves could ease further in india. temperatures soared to 49 degrees celsius over the weekend. it put crops and power supply at risk. 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. kathleen: ukraine calling on european leaders to prove candidacy after germany dampened hopes last week for an assumption. -- ascension. >> the point is that in the last
two months we have heard all across europe, ukraine, you inspire us. you belong to our family. we admire you. now it is time to make the next move and give legal and political recognition in words and in fact. candace cc -- candidacy stages for you cree -- fort ukraine in the eu. this is the moment. this is the point. four weeks from now. we are on a good track with the european union union. we are fighting the war but we also have the best relationship with the eu ever on all counts. we are part of one. ukraine, postwar ukraine will
make the eu stronger. >> you make it clear you want to join the eu. when you look at a country like hungary that is a member of the eu, do you ever think, it is unfair that we are out and they are in? >> if i was eating popcorn and watching the news, perhaps i could allow myself to think this way. [laughter] but i believe the current state of affairs in the eu sends a simple message. nothing is set in stone. every day you have to fight for freedom, for democracy, for peace, for respect of human rights, for prosperity. this is a fact. once some countries who did not meet entry criteria, at the moment they were allowed in, became members of the eu because
there was a clear political will to make the members because they are one of us. all european integration is based on one question. is he or she one of us? if the answer is paul -- is positive, everything else is technicality. ? kathleen: up next, with energy and focus around the world, we speak with robert caponi about a company that can store large amounts of power. this is bloomberg. ♪
haidi: the election in australia has become a battleground over climate change. the country has been grappling with cutting admission without sacrificing power. let's bring in lenny kwong. we are one week away, a few days. we talk about this being a battleground. major parties are hardly talking about it. >> the climate wars have been ranging in camera for the past 20 years but reached a crescendo at the last election in 2019 when the labour party ran on a
ambitious privacy platform. they lost what was considered to be unusable. they have softened their stance considerably. over the same time, the party has been squeezing key electorates where climate action has become a vital voter issues in the suburbs. new carbon targets including australia reaching net zero by 2050. so climate action is still a out of in australian politics but in the lead up to this election the gap between the two parties has never been narrower. kathleen: what could this mean for future climate policy in australia? >> if we look at the targets proposed by the major parties, the ruling party says if reelected they will not ratchet up the ambitions.
they hope to overachieve but it will not be a firm commitment. the opposition labour party promises a 43% reduction by 2030 but it is the policies themselves that lead a lot -- leave a lot to be desired. there are few promised changes. either is promising to enact legislation that would mandate a reduction in carbon emission. we both promise to spend on an existing platform, a roadmap that promises to expand 20 billion australian dollars in the years ahead. the labour party has not indicated they would do away with it and promised additional spending of their own in infrastructure. electricity networks.
in the hopes it would support future renewable energy capacity. haidi: high profile independents are running on the platform of climate policy. depending on the outcome this weekend, what should we watch after the election? >> right. this election more than others, the role of independence could be crucial in dictating what climate action policy looks like in the future. a handful of representatives unified by a strong climate platform could force the hand of future governments. in rural australian heartland if the voters are important in serving up a future government it could deliver a parliament that mandates to sideline meaningful climate action in australia and with 2030 targets looming it remains to be seen if
australia can survive another cycle with climate action on the sidelines. kathleen: our next guest is overseeing a company that has sustainable energy solutions. they reported revenue of $43 million in the first earnings report since first listing in february. they use a system of motors on large blocks to store electricity designed to facilitate the efficient use of power. we are joined by the cofounder, ceo and chairman of energy bought. great to have you. how much does your system reduce costs for companies that want a more efficient greener way to do it? or does it cost more but the reason to do it is because you
will have a greener system? >> that's a great question and the way we think about it is taking renewable energy, wind, solar and adding in energy storage to compare to the cost of fossil fuels. the way we think about taking the cost out for them is combining our storage with renewable energy and to be competitive for the first time with existing coal plants. that is how we drive economics and stop the emission. kathleen: how important is this business relationship you have developed with china? you will provide storage there. one of the biggest producers of greenhouse gases in the world. what does that mean for you
financially and for china in terms of cleaning up the environment? >> there are a few facets. it is significant for us and our partners, china, and the world. it started with an engagement announced in february where atlas renewable and a local environmental service and recycling company in china committed first $50 million into our ipo and another $50 million in payment for a license for the rights to deploy this technology. so we really focused on leaving politics aside and coming up with an agreement we felt would protect the ip and introduce a new technology into china concurrent with other continents and result immediately in a
project. so we also announced an addition with the license agreement was a royalty agreement that started with a 100 megawatt project. it broke ground in march. it's significant because china is the largest producer of greenhouse gases. they have to manage more than most countries. just because of the number of people. so we are excited to help them deal with this. haidi: how easily scalable as the technology? you say these composite blocks can be made from different materials, including recycled. is there anything that prevents this from being rolled out in a widespread way? >> it is scalable to whatever the customer would like.
we have a new project that is a modular system that can be built out in whatever power duration the customer wants. it is just infrastructure. it's just a building. this is the first, the rotating tower. we have a new system that looks like a building of vertical freight elevators. it can be built out. i'm lamentably -- unlimited scalability. anywhere you can build a 20 story building. looking at utility scale storage that does not degrade, we build out next to solar and wind or coal or industrial plants so typically -- we use gravity. it is not a problem. haidi: fascinating.
haidi: a quick check of the headlines. -- is in talks and will bid -- the total value of the deal could be $2 billion. for the indian online start up education on the buyers, they could make an offer in the coming weeks. mcdonald's has a sale of the portfolio following the invasion in ukraine. the move will cost them 1.4 billion dollars and follows the suspension of other popular american brands in russia. the world's wealthiest investors made big asset shifts this year.
airbnb and starbucks included. [indiscernible] and added to its already large decision. kathleen: looking at stocks and focus ahead of the major asia opens, we are watching food producers after wheat prices surged following india's move to restrict export. asian chipmakers like samsung and lg are being watched after rival tsmc announced plans to raise prices further due to inflationary concerns. haidi: let's look at some of these numbers when it comes to shanghai. a third day of no new covid cases outside of quarantine. that's the threshold authorities are looking for. three days without local
community transmission in order to start using lockdowns still in place across the city. today is the third day and there are no new covid cases so we will watch to see what policy reaction we get as we have seen a lot of optimism that potentially this is the beginning of some easing of restrict live limitations on movement and retail and business across shanghai. market open is next. this is bloomberg. ♪
i'm kathleen hays. haidi: asia's major markets have just open for trade. asian stocks -- treasury yields are retreating with the dollar. fresh volatility for crypto markets. bitcoin is selling at the 30,000 level. shanghai meets a target that could lead to the easing of strict covid curbs with one million people still confined to their homes. >> i'm at the jp morgan global summit in hong kong. covid lockdowns are a key focus. later i will ask for views on the disruption to business and supply chains. kathleen: investors around the world are watching china and the economy after yesterday's terrible numbers that are not
stopping the nikkei from moving higher. it is unchanged now but the nasdaq and s&p 500, text stocks hit hard and it pulled on the indexes but it looks like that is feeding over now into the nikkei. topix is holding up better. the dollar yen rate is weakening. yen is getting a little stronger. there is sense among currency traders that is china's economy has a prolonged slow down it could slow down the global economy. this might be a haven place. then the japanese bond showing green on the screen but that is what happened to that u.s. bonds today. the kospi is up a bit.
yesterday was a bit harder after the new head of the bank of korea said he would rule out the 50 basis point rate hikes but today a bounceback. hard to say why. the wand continues to weaken. -- the yuan continues to weaken. haidi: a rebound in materials and we are at the start of the trading section -- session in sydney. industrials offsetting most gains. a flat start to trading. 10-year yield watching a pullback amid the question of if we have hit global peak yields and if there is more demand for government debt to hedge the other risk. kiwi stocks down a bit, 2/10 of
1%. watching the kiwi dollar and aussie dollar. seeing more momentum but aussie still sitting under 70. we saw a blow when it comes to exposure to china on the back of a horrible set of domestic activity numbers yesterday. u.s. futures, the decline was led lower by tesla. nasdaq a tiny gain. 10-year yield stabilizing. oil pulling back a bit but still above $114. demand for fuel for the summer continues to drive sentiment higher for crude.
one stop we are watching in sydney is brown boards confirming they would not put forward a proposal or seek to conduct due diligence at this time citing market volatility. so the engagement we reported, they had planned to make an offer for another business and that appears to be over. our next guest has downgraded asian equities to neutral. the director of investment strategy joins us. within the downgrade, where are you looking for opportunity? >> we are viewing china as a medium long-term. they are facing a lot of headwinds but looking at the
valuation for china, it is depressed. bad news has been priced in. [indiscernible] but value is starting to emerge in china and you have to be an investor with an appetite for extreme volatility because this is not a trading market. haidi: we have had a turnaround from jp morgan to getting a big change in optimism within two months. >> that is a sector to watch by investors but in the short-term,
the sectors that offer good dividend yields but long-term china could spend a lot more on construction and renewable energy and these are some areas where investors can look for opportunities. you have to take a long-term view because china is not the market for quick gain. kathleen: is there any risk to this outlook? is it possible, use a long-term, do you mean a year, three year? many people figure this recovery for china's economy could take a while. >> it definitely will. it will not happen overnight. markets move ahead of actual recovery. this will not be in the next year. at least three to five years is
medium-term. or more when it comes to china because valuations are very depressed. it's a leap of faith that the chinese government will come through. they have been very coy. [indiscernible] but we could see more action in the coming months. we could see more action for the mpc meeting at the end of the year. it could happen in the coming months. kathleen: what does it mean for the rest of asia? if china's economy is growing and they start building, manufacturing, it helps a lot of their neighbors. how big of a signal is this for them? >> a good signal. if china starts easing there lockdown, [indiscernible]
they will alter policy but it will be targeted and gradual. so if the chinese economy improves it could be good for the rest of asia. the other market we like is singapore. partly because of the dividend [indiscernible] economy in singapore and economy elsewhere reopen. haidi: we talk a lot about capitulation in the markets and you see signs of it in equities and broader as it classes like crypto. to you what is stockmarket capitulation and does it signature there is a bottom when it comes to sentiment and fear? >> that is tough.
to me from a valuation perspective, i would want to see the ms ci trade on a forward price differential [indiscernible] we are one standard deviation below target efforts now. during covid the index fell by more than 10% and it took two standard deviations down and now we are at one. i would want the fed to change their signal to something more dovish. kathleen: capitulation might take a while. thank you for joining us.
taking a look at the latest virus numbers out of beijing because they seem to be not where authorities would want. the latest number is 52. that is up from 39 on monday. down from 54 on sunday. this refers to a group of students at a university in china that were protesting lockdown requirements, are giving the measures are poorly communicated and unfair. the longer this this lasts, the more difficult it might be for the government to continue. let's get to vonnie quinn for the headlines. >> vladimir putin issued a warning to finland and sweden over joining nato. ukraine's foreign minister rolled out potential contentions to russia and says the you --
says the eu faces moral failure if they do not approve ukraine for membership. higher fines, recognition of wrongdoing when companies allocate outside trials. exports are playing a bigger role of policy. new york city says they could mandate mask wearing in public if the covid alert level is raised to high. health officials strongly recommend public wears masks in public. the alert level had been moved from low to medium earlier this month. and the latest failure of an algorithm coin.
consumer financial protection -- the collapse of the popular coin. >> stable coins are something all regulators are looking at. most stable coin use now is for speculative trading to go in and out of cryptocurrencies and people wonder if it will be one day use for consumer payments. and many are thinking it is not ready yet. >> 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. haidi: still ahead, u.s. firms reporting a dire future when it comes to china. we will talk from the sidelines of the jp morgan global summit. but first, easing covid curbs. an update, straight ahead. this is bloomberg.
haidi: china's economic outlook is the major theme. there are implications that there is the prospect of easing restrictions across major cities. we are joined by stephen engle and david. three days without community transmission and policymakers say it's the lock .4 easing of curbs. >> will be interesting to see if we get immediate reaction. shanghai officials usually talk
to the media around 10:00 local time. easing of curbs would allow people to shop and go out and we are checking with companies to see if they could accept some closed loops in the bubble arrangements they set up in terms of being able to operate during the lockdown and basically head towards normalcy once the key milestone basically eliminating covid in the community is reached. kathleen: what other hurdles are we anticipating? >> covid could come back. you could easily find a case in the community. but i think that is more of a reckoning to the covid zero strategy overall and definitely something we will see and are seeing other parts of china.
but i think you could see some issues with overzealous government officials who are not quite ready to ease things and dial things back, knowing the risk is still there so it could take a little bit of time for things to normalize and shanghai. and they have said things won't be fully back to normal until june. haidi: a day after the horrible domestic activity, some positivity going into the jp morgan china summit. what is on the agenda? >> the path out of the lockdowns in shanghai and the future of the restrictions in beijing. and as just said, the reason a lot of economists say this time around the chinese economy is unlikely to see the recovery we saw following the initial lockdowns at the beginning of
the pandemic because of the prospect of omicron or other variants popping up and the respective policy response. so there could be more lockdowns and other cities that will affect the supply chain and production. for industrial production for april, it was off the cliff. down 2.9%. we had been expecting a slight gain. going back to 1990 we had not seen a contraction year-over-year on the monthly basis and industrial production only once before come in march of 2020. so the fact that production has been impacted and retail sales down 11.1%. people are not out shopping and consumer sentiment is low. so getting the economy cranking again when there is a prospect for more lockdowns has a dampening effect.
we will be talking about this at the summit that starts today. kathleen: to the markets. jp morgan's analysts behind the on investable call had a change of heart may be driven by self interest? >> that is difficult to put those together. but what i know is on one hand i have a 150 page report out of jp morgan. on the other, we know the report was made may 16 and the conference is may 17. i will just leave it there for now. it takes time to write 150 pages. but two months after they basically said it won't be for another six to 12 months, the underlying conditions have changed. we are entering stage two. the regulatory temperature has
come down substantially since putting out the first note. they have upgraded several. we will see what happens with the markets. they are basically saying the dawn is coming earlier because we have regulatory risk and geopolitical risk. they have come down substantially in now we can look at it from a more fundamental perspective in terms of where stocks should go. whether it is connected to the fact that they have a conference on china starting today, i will not answer that question, i only have a 150 page report dated yesterday and the conference begins today. kathleen: if nothing else, this can just be a cautionary note for investors.
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dax futures are 8/10 of 1%. tech and construction among the biggest declines. utilities where the outperformer's. european stocks under pressure even though by and large we have seen profits holding up but concerns over the geopolitical situation, the war in ukraine continuing to pose a risk when it comes to inflation. ukraine calling on european leaders. the eu summit last month. the foreign minister is in brussels to meet his counterpart and spoke with bloomberg today. >> the point here is in the last two months we have been hearing all across europe that ukraine,
we admire you. you inspire us. you belong to our family. now it is time to make the next move and move this from political recognition in words to fact. candidacy stages of eu for ukraine to be granted at the eu summit in late june. this is the moment. this is the point. weeks from now. but we have a good track with the european union. we are fighting the war but also have the best relationship with the european union you -- european union ever. we are part of one. postwar ukraine will make you stronger. reporter: you make it clear you
want to join eu. when you look at hungry, a member of the eu, do you wonder if that is fair that we are out and they are in? >> if i was eating popcorn and watching the news, perhaps i could allow myself to think this way but i believe the current state of affairs in the eu sends a simple message. nothing is set in stone. every day you have to fight for freedom, for democracy, for peace come up for prosperity. this is a fact. once some countries who do not meet entry criteria when they were allowed in became members of the european union because there was clear political will to make the members. all european integration is
based on one question. is he or she one of us? if the answer is positive, everything else is a technicality. kathleen: ukrainian foreign minister speaking exclusively to bloomberg. , foreign enterprises in china report waning -- up next, foreign enterprises in china report waning confidence. this is bloomberg. ♪ xfinity mobile runs on america's most reliable 5g network, but for up to half the price of verizon so you have more money for more stuff. this phone? fewer groceries. this phone? more groceries! this phone? fewer concert tickets. this phone? more concert tickets. and not just for my shows. switch to xfinity mobile for half the price of verizon.
3.3% month on month, a bigger than expected contraction of just over 2%. the rise we see year on year of 6.4% missing expectations of 6.5%. exports of electronics rising 12.8%. volatility when it comes to pharmaceuticals. it looks like month on month, it has a bigger fall than expected for pro-dex. weakness in singapore currency for a month and we will continue to watch given that data part -- data point missed expectations with inflation again a concern for singapore as the trade reliance economy there. modest upside in trade with the
state of sentiment for risk around the region. slightly stronger gains for trading in korea. asx in sydney up half a percent. a jump in metals overnight and energy being supported by the continued upside in crude prices. new zealand up 3/10 of 1%. across asia, modest gaetz, -- modest gains. confidence in sentiment looking fragile. >> shanghai reported no new covid infections in the broader community for a third consecutive day. a crucial milestone authorities said would allow them to start unwinding lockdowns. 823 infections monday down from
938 sunday. government officials previously set a target for the milestone by may 20. north korea says they are deploying their people's army for medicines amid an outbreak of fever related to covid. more than 259,000 new cases and six deaths were reported monday. earlier the leader blamed officials who he said failed to execute his orders. biden has authorized the military to send special forces troops to somalia. u.s. officials say biden gave authority to target 1000 suspected leaders of the somalian al qaeda affiliate. a takeover of chelsea sc has hit a snag.
agreements are merging over russia's $2 billion in debt owed to the current owner. russia has been sanctioned over this. he vows to give the money to charity but details have not been told. 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. kathleen: jp morgan's virtual global china summit begins today, bringing top executives and investors. in hong kong, stephen engle is standing by with our next guest. stephen: a lot on top this morning. we have the asia-pacific ceo of jp morgan later but first, the president of mgm's shanghai -- and chang shanghai.
the numbers we just got, second day in a row that we have fewer than 1000 new infections in shanghai but three consecutive days of no community spread outside of quarantine. that is good news for businesses in shanghai. what is the mood of american companies in shanghai? >> good morning. american companies are looking forward to resuming operations as soon as possible. since mid april the local government has released some lists and our companies are on it so they are allowed to gradually resume operations under certain conditions in a closed loop system.
so we are still trying to get back to work. some major companies, major automakers are getting back to work but there are still a lot of challenges to overcome like the closed loop system. stephen: the closed loop allows companies to keep producing. but the supply chain issues. you can only make so many widgets if you cannot get the supplies in and out of the factories. so how have the supply chain directly affected the companies? >> take automakers as an example. you -- if you need 100 parts to make a car and the automaker would have to get all of the parts ready, it relies on many
parts suppliers. many of them are not even in shanghai. so we are talking about a regional supply chain to manage. when you have major companies on a white list like automakers, you still have to include their suppliers. otherwise you are able to make a car. so i think the government is aware of this situation and they have a strategy called one plus m, m being the number of suppliers they have to be included beards of this is a wake-up call for all of us to look at the supply chain and how to manage it in the current environment. stephen: you take a pulse check of the different members. how many have left and how many have left because of the
difficult operating situation. do they leave for a personal reason or on behalf of the company to seek other areas of production outside of china because of this lockdown and the threat future lockdowns could happen? are you seeing that a sizable number of executives are not willing to come to china or are leaving china? >> at this point i think companies are still assessing and reassessing operations in china. certainly this is a time for rotation. some executives will leave china at some point. some of those positions might be localized. when you look at companies, there are two types. one is in china for china. their customers are in china. so there is no way to move the supply chain out of this country
because you want to be closer to your customers. but there is another type that will be part of the global supply chains and in the past month or so and obviously from -- some of our numbers experienced huge disruptions in terms of supply chains and some of them might have to move out of the country to meet certain demands but that could be a temporary situation because china at this point still has the ecosystem to provide products of members. so i think most members are still in a reassessing stage at this point. kathleen: i want to follow up on that. reassessing, but reassessing a long held position that it was worth being in china. is it possible, even with lockdowns it is the crackdown of
property developers. it is all of the pulling back the chinese government has done to big companies in china over the last couple of years. and how do you change minds? does the government care or just let the foreigners go? >> our companies are in china for commercial reasons and i think in the past, the focus was more on efficiency, the so-called just-in-time supply chain concept and in the past few years, obviously given the u.s. china trade war and the covid situation and companies are obviously taking another look at their supply chain strategy. maybe the focus will move away from efficiency to more resilience. so we are finding a balance between them. so i think that is what companies are going through right now.
certainly the covid situation is a wake-up call. haidi: we are not expecting borders to reopen. how difficult has it been for business leaders to do virtual business without being able to travel and have negotiations in person? >> it is challenging. when you cannot easily travel and when you have regional executives that cannot visit you in china, it is an issue. we have raised the issue with government authorities and at some point they are going to have to ease controls. since early 2020, it has been 2.5 years and executives can't travel. if they do, they have to go
through quarantine measures. it is not sustainable. so hopefully later this year they will ease measures so that our company executives can travel. [talking over each other] haidi: stephen engle continues to join us live at the summit throughout the day. a lot coming up, including strategy analysts. we will get details on the turnaround in china tech. boeing's biggest airline customer in china has moved jets from their fleet plan, citing uncertainty on delivery. danny lee joins us.
what do we know so far? >> the chairman told investors they would go forward up to 2024 with delivering almost 80 jets but now they do not include boeing's best selling aircraft, the 737 max. they are concerned there was uncertainty over delivery of them. so going forward they will plan without them. but it does not mean they will not take delivery of them, it just is a question of when. kathleen: what does this mean for boeing? >> china is the biggest overseas market and china seven is boeing's biggest customer in china. at the moment boeing faces challenges on many fronts, at
least for the 737 max and it is critical for them to reduce the backlog of almost 300 of the aircraft that have been granted until recently and with the rest of the world starting to resume flying, china, who has not started flying them commercially is a big headache financially for boeing and generally moving forward with their plan because boeing said they expected deliveries of them to china in the third quarter of this year but now with covid outbreaks, it hasn't happened so when china southern who last year could have had 520 in the fleet, they have 399. so there's a big difference
haidi: crypto markets are stabilizing after the collapse of luna. there has been another stable coin losing pace with the dollar. su keenan has the latest. >> there is a lot of focus because he is to many the key of -- the king of crypto and a wall street veteran that runs the galaxy index but he recently got a tattoo on his shoulder of a wolf halloween at the moon with lou know -- with luna written above it, but the luna ecosystem, eight stable coin that has failed spectacularly. the whole concept was flawed in the last week and caused a rout in crypto.
because he was so high profile in his support, many are wondering where he has been. he has not tweeted since may 8. his galaxy digital holdings from last friday was bracing for a hit this quarter so that might be part of the quiet. anyone who bought after 2020 in the bitcoin universe has been flat or seriously down and that explains why galaxy and others are licking their wounds. galaxy made it clear there treasury did not hold any of these coins so there is no loss. kathleen: another stable coin loss. >> di finances lost. it's a smaller coin then tara.
20 million or so market cap versus in the billions. tara when it she pegged -- depegged. die --d.i.e. has a team that is trying to fix the peg. tara was algorithmic and had bitcoin behind it but this is a reserve coin with two different kinds of coins backing it and there is an expectation it will be re-pegged and the crisis averted. kathleen: it looks like the red hot commodity rallies continue in the asia trading. brent crude up marginally. the big move today helped put
steam heating up the market. brent driven up by big demand for gasoline in this country. inventories are low. summer is coming. a record four dollars a gallon in futures. uncertainty over ukraine continues. look at wheat. the rally continues up a full percent. it got as high as 12,475 in trading today. metals, copper up nearly 1%. aluminum more than .5%. and china deciding to lower mortgage rates for first-time homebuyers. that means if you build houses,
>> filings reveal some of the world's wealthiest investors made big asset shifts this year. a hedge fund sold out jd.com among biggest holdings and exited airbnb and starbucks. and alphabet, airbnb and starbucks were sold. and a large position in chevron. we could see renegotiations [indiscernible] speaking at eight tech conference in miami, elon musk continued to question the platform, estimating it could make up 20% of all profiles. shares closed 8% lower in new york. kathleen: investors are weighing
the prospect of shanghai lockdowns easing against the latest economic data. looking at earnings from tencent this week, let's bring in sophia. you are watching these markets. you talked to a lot of people in them. is optimism growing or still pessimism until everyone sees how long covid will last and potential lockdowns and what the government will do about it? >> right now we are hearing growing optimism but also a lot of skepticism in the market. the question is if this is the start of a turnaround for chinese markets that have done badly this year and last year. economic damage from covid zero outweighs everything in the market. j.p. morgan analyst yesterday upgraded shares to overweight
less than two months after calling them on investable. so a very binary market. any indication there is flexibility when it comes to lockdowns in large cities like shanghai or that covid zero is being applied more practically will be an optimistic sign for the market so we are watching for that. this is the third straight day in a row for no community spread cases in shanghai and that is one step towards it but the economy is still very restricted and you saw that in massive declines in retail sales yesterday and that jobless number for youth hitting a record. extremely worrying for investors. haidi: the jp morgan about-face on chinese tech. >> a lot of people are talking about it. nothing has changed that
dramatically for the industry in such a short time. what happened is we know the word on investable was published by accident and went through editing and it was missed. j.p. morgan lost their underwriting job because of it. they are saying the speed of what is happening in terms of regulation shows at least china is looking at the sector as important for the economy and maybe we are seeing a turnaround in earnings this week. haidi: a lot more to come. this is bloomberg. ♪
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