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tv   Bloomberg Daybreak Asia  Bloomberg  May 18, 2022 7:00pm-9:00pm EDT

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>> good morning.
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i'm haidi stroud-watts in sydney counting down to asia's major market opens. >> i'm shery ahn at bloomberg's new economy gateway latin america panama city. welcome to daybreak asia. our top stories at this hour. u.s. equities posting their biggest daily drop in almost two years at higher prices by into corporate earnings. >> consumer and retail shares hit the hardest with recession fears and target suffering the biggest selloff since 1987. tencent warns about chinese tech crackdowns. revenue growth near zero. >> asia will find it difficult to find any reason to do anything other than follow the fold we saw overnight.
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as you mentioned, those deep declines. as you look, the return of traditional haven demand. u.s. stocks had their worst day since june 2020. bonds are jumping. the australian 10 year yield is falling as well as at this three year yield. the kiwi bond yield is falling. the equity set up in sydney looks like a downside of about .2%. we are also two days out from the election. we will be getting the opposition party budget costings later today. budget day in new zealand. we will be watching for that with health care expected to be the big benefit. watch out for related stocks doing well on the back of that but we are seeing kiwi stocks up by about 1.6%. the strength in the dollar is returning in full force. we have had three sessions of a greenback pullback that has been reversed. you see dollar-yen strengthening. really it's a return to
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traditional fx havens. the likes of the aussie dollar getting a little bit more backing under the u.s. with strength returning in the dollar. we are looking at weakness more broadly when it comes to hong kong and china, given tencent dropping 7% in new york. it looks like there is further downside ahead when it comes to chinese tech. >> yes. in the asian session we are not seeing any sort of reversal with u.s. futures lynching to extend -- clenching to extend declines we saw in the new york session. the nasdaq down more than 5%. treasury futures rose across the board with the 10 year yield falling below the 2.9% level. wti in the asian session extending the declines below the $110 per barrel level. we see equity market weakness and as you said we are watching the dollar index that has now risen for the first time in four sessions as we have seen this
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haven demand. on the other side, we are seeing emerging market currencies taking a hit. in fact, developing economies are taking a big hit across the board. we are seeing a more aggressive federal reserve and rising inflationary pressures. what a time to be live at the bloomberg new economy gateway in latin america here in panama city. we, of course, continue to watch the surge in commodity prices as well. latin america is a star is a shining barter now as it is one of the top exporters of some of those very important critical minerals like copper and lithium and of course, those are key in the tradition to green technology. we will speak to yankees hall of fame pitcher mariano rivera about his sustainable energy investments as well as the argentina secretary of mining fernanda vela. avila. >> we are joined by garfield
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reynolds and our chief north asian correspondent stephen engle's. we've not spoken to you in a few days. that feels like a gauge of relative calm. the volatility with a vengeance, it will be tough for asian today. >> yes, it will be very difficult. the volatility and the lack of real conviction across all manner of markets. treasuries, sure, they rallied high overnight. yields came down by 10 basis points after they rose by 10 basis points the previous day. in any case the gains were driven by ultimately the same cause. inflation is really high. the fed will go ahead with rate hikes even if that risk is causing pain to the economy because that is the only real tool to use.
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in that situation, where you hide? it is difficult even for investors to come as it were, hide in commodities because of supply shocks. now we are getting the demand hit both from the high prices themselves and from what the fed and other central banks will do. so good luck trading this. >> let's talk a little bit about haven demands. it really says something when you have seen the japanese yen so week easily. we talked about how it lost it. now it is seeing its best day in a few weeks or so. where will we see airports trying to hedge? good luck trying to trade this, but, if you have to trade where do you go? >> there are huge declines in
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you see the potential that the declines are over and becoming less. the yen fits that. it dropped to a two decade low. even amid the concern that the yen could go lower again, there is a feeling that it has gone, you know, not as fast as it could go. the yen might help you look at some bond markets and things in australia for example. this is something that for a while has been called out of the bond market. the central bank here is not as hawkish as others. over the longer-term, it yield gap that is quite wide, treasuries should come in. but again, how do you time that? how do you say, -- stay
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convinced you are in the right place when so much is changing so fast? >> see, there was some hope that the olive branch from the government, china's internet sector, could kind of spark this sustained turnaround but tencent is really potentially saying don't get ahead of yourselves yet. >> yeah, absolutely. that's what they're saying. you know, there is talk from policymakers including from leo for ashley o'hara -- leo hua earlier this week saying they need to boost growth in the economy. that is the priority now rather than the crackdowns we have seen for more than a year now on tech, property, gaming, and the like. now they need jobs and growth so there is some relief on the pressure for tech companies on the regulatory front. however as martin lau the president of tencent admitted in an analyst call late yesterday
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after fairly dismal results, essentially saying, going from words to action takes time and there will be a time lag. we do not know how long that will be until we get specific relaxation of these curves. now, tencent, i must add, was specifically targeted by regulatory action. but tencent has its finger in so many companies. they have propped up gaming companies and online education and the like. fintech. obviously there has been regulatory pressure there and it has been caught in the downdraft in regulation. this stock has lost $500 billion roughly of market value since its peak in 2021. once a juggernaut, now, in the latest results, posted revenue growth of 0.1%. essentially, 0% revenue growth. that is the worst on record since 2004. that is despite a fairly nice profit from this sale of singapore's shares.
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they still him -- had the income fall 51%. gaming, their bread and butter also flat revenue because they are still something on the right list -- waitlist for the monetization licenses after the first game approvals were issued for the industry after the moratorium on new game approvals was put in place last july. so, there is pressure all down the line. >> garfield, i apologize in advance for asking you this because i know you hate this. -- hate this word. but given all the bad news steven has talked about, have we seen peak china pessimism at this point? >>uh, [laughter]. i'm not sure how to answer when you put it that way. a couple things strike me.
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i was thinking about how you look for markets when you think maybe the clients have gone about as far as they can. you would think it is difficult. though i would not put it past the chinese authorities in particular for china to get much more beaten-down. equities do have a potential advantage there in that the authorities in china are looking to find a way towards easier policies where around most of the globe, the fed and others are stuck in making policy tighter. those those are a couple straws in the wind that could the word -- could signal that the worst is at least close to being behind china. >> our chief correspondent for asia and contributor garfield reynold and our chief north asian correspondent stephen engle's as well. let's get you to vonnie quinn with first word headlines. >> the u.s. is conducting its biggest ever investigation into bankers use of messaging apps for work.
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the s&p is forcing wall street banks to search more than 100 personal mobile phones carried by top traders. the investigation is to see how common it is for traders to use on authorized platforms like whatsapp to text together. the u.s. treasury secretary confirmed it is unlikely washington will allow moscow to continue making bond payments on its foreign currency debt. janet yellen says investors had enough time to adjust to russia's exclusion from the global financial system. speaking in germany ahead of a meeting with the g7 finance chief she said the sanctions on russia are effective. >> the sanctions imposed against the russian federation have already had enormous impact. russia is experiencing recession, high inflation, acute challenges in their financial system and an inability to procure the material and products they need to support
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their war or their economy. >> sri lanka is about to default on more than $12 billion of overseas bonds as its new prime minister struggles to stabilize the economy. it is set to blow through the grace. on $78 million in payments through wednesday marking its first sovereign debt defaults and independence in 1948. the government will hold talks with the imf. u.s. national security advisor jake sullivan says north korea may be preparing to conduct another missile test around president joe biden's visit to the region this weekend. sullivan says officials are preparing for all contingencies including a test while the president is in south korea or japan. biden will discuss security threats, supply chains, and efforts to reduce reliance on china. global is front of our is a day on air and on bloomberg quick take part by more than 120 journalists and analysts -- 27 hundred journalists and analysts in over 120 countries.
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>> ahead from the bloomberg new economy gateway latin america we speak to former new york yankee pitcher mariano rivera, a big advocate for investment in panama and the sustainable energy space. first, the views on the big stock selloff from barrett chief global strategist christopher smart. that's ahead. this is bloomberg.
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>> we are playing it more
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conservatively that aggressively both on the fixed income as well as on the equity. to your point, dining down areas that are high deal or areas like that. >> it is a different phase of investing that takes different approaches. your best approach is to actually de-risk portfolios at least back to neutral to some degree. >> i think today is more validation that the consumer is not as strong as we thought it was. we are starting to see inflationary pressures really effect the earnings of companies. >> the consumer is getting weaker from the bottom up. from the lowest income up. it remains to be seen without socks. >> -- it remains to be seen where that stops. >> for more analysis let's bring christopher smart a chief global strategist at barings. we keep seeing this lack of conviction, right? the jitters you see when it comes to market sentiment. what do you do at this point when you see a trading session
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meant -- session like last night? >> when you see things you do not expect you try to be more conservative. frankly, my barings colleagues have been more conservative this year given the rise of uncertainty around inflation but also growth. what seems to have hit the market today is that half of the investors who were worried about inflation have to worry about growth and there is nobody there to work -- look through the gloom to see where things settle. >> so i the moment, what would you advise a longer term investor to do given the bread th of uncertainty with the global economy? >> our view is with the shock of the market is seeing now, there are two things. first, we have had investors for the most part who have lived through three or four decades of declining interest rates, rising multiples for equities and strong earnings for the most part. now you are entering a new phase where we are not really sure
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where inflation will level off. that means, it's hard to know what the appropriate multiple is for earnings. the u.s. economy is fundamentally strong. the u.s. consumers aside from the lowest income levels is still very strong. companies are ready to have very good balance sheets. we have just come through and earnings season that was relatively good. aside from what we are today from a few key companies. it is hard to time when we will see a bottom here but it is important to understand it is a long way from a recession in the u.s. and you should position yourself with companies that have good business models and are likely to have good balance sheets to whether the current volatility. those are the places where you will do well. >> in the meantime we continue
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to see this is safe haven demand continue to accumulate whether it is with the dollar or gold or the japanese yen. how do you hedge? >> i think as you and your colleague described in the other conversation when you have this stagflation shock, higher inflation lower growth. there are very few places to hide in the near-term. you could hide in cash. you could go to safe havens like the yen or u.s. treasuries. but it's important not to overreact going into the downturn. when you see market corrections like this. the evaluations are clearly much better than they were a few weeks ago. again, you have to pick stocks. you have to pick companies that are resilient fees -- to these pressures. you find them in a lot of different sectors. you find the right management, the right business models.
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and balance sheet strength to whether the uncertainty. our colleagues in credit in the high-yield sector are finding good opportunities with firms that do not have immediate refinancing needs. >> how are you factoring in the geopolitical overlay? here in panama city one of the biggest conversations of the day has been then near shoring, friend shoring idea that they want to bring the supply chains here to latin america to get closer to the united states. if you want an american supply chain the western hemisphere, another for china, europe wanted don't supply chain. it -- wants its own supply chain. it's incredibly inflationary as is. how do you trade that? >> it is hard to traded without understanding what is behind the
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administration's policy when it talks about friend shoring. there is a lot of effort underway to bring important parts of the technology supply chain, particularly, semiconductors into jurisdictions where we feel they are more stable and accessible. whether you have to do that for your clothing and your foreign archer -- furniture in your toys is another question. i think most of the global supply chains in place today are likely to stay as in place as they are currently because they make more sense. they will shift us different market opportunities shift. what i think the term friend shoring is really focused on is some of these key mainly tech sometimes defense-related sectors where those will shift. i cannot really see an overall reorganization of our supply chains carried it to the extreme. >> valuations are looking very compelling in china. tencent said the recovery will
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be slow. there is lots of short and midterm uncertainty. do you have long-term confidence in the china growth story? >> he definitely sidestepped the question. from our perspective it is hard to know in the near-term what will be going on. china is going through tough times now. there is every expectation that the government has the economic tools it needs to support credit targeting certain sectors. particularly, the real estate sector that has suffered so much offering some regulatory, if not relief, at least certainty in the near-term for the technology sector. i think the big concern is obviously the covid spread anti-lockdown's in the measures it has taken. i think that is something we are all struggling with around the world. if the government is able to manage through that, i think the
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outlook is quite good better this year. >> christopher smart, good to have you back chief global strategist at barings. thank you. to get around about the story you need to know in today's edition of daybreak terminal go to dayb . you can customize your settings so you only get the news you care about. this is bloomberg.
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>> i what -- i was not quite as certain about this bubble three years ago as i had been about the tech bubble of 2000 or as i had been in japan or as i had been in the housing bubble of 2007. i used to think then in terms of near certainties. this time i felt it was highly
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likely but perhaps not nearly certain. today, i feel it. it is just about nearly certain now. >> and gmo cofounder jeremy grantham calling the market selloff in a conversation with bloomberg in january. >> here is a check of the latest business flash headlines. he plans to wind it down melvin capital management after billions of dollars of losses and a botched plan to regroup the farm. -- the firm. the once highflying hedge fund told clients about the plans to liquidate funds and return cash to investors. the assets are worth of an $.8 billion at the end of april. tesla lost its spot on the esg version of the s&p 500 index. the ev makers score on environmental, social, and government standards has been fairly stable but slid down the ranks due to improving global peers. working conditions were also cited along with tesla's
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handling of investigations into deaths and injuries of the driverless system. >> let's look at how we are faring when it comes to the set up. there is no chance that asia will escape that huge crash in sentiment we saw overnight a horrible session for u.s. stocks, particularly consumer discretionary facing names. nikkei futures just shy of 2%. cash trading in a half hours time. jobless numbers today out of australia as well as what is ppi out of new zealand. japan core machine orders and trade coming up this hour as well. nikkei futures pretty much to the downside and u.s. futures are potentially looking to end the selloff. lots more to come on daybreak: asia. asia. this is bloomberg. when we started our business
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>> i think will be a major challenge especially in purchasing power. especially for those startups that are consumer driven -- automobiles, basic stable -- stable consumption. a lower level of demand because of purchasing power and increased price. >> the panama kamal -- canal on how inflation is affecting key transit points. global shipping bottlenecks continued to rattle industries and consumers. it is their turn to make the 40 mile journey across the panama canal. they say the global supply chain pressure increase for the first time this year in april due to the war in ukraine. and stringent lockdowns in china.
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. it rose from 2.8 in march. historic commodity prices for many latin america countries, by building new factories on home turf. bloomberg users can falling -- find more about the stories and our news debtors -- letters about supply lines. >> -- joining the government of panama to develop the world's largest production and distribution hub, let's discuss the green push, the founding president, he has the hall of fame picture for the new york yankees, is great to have you with us in panama city with the event, let's get started with your involvement. what is the drive that you think is worth pursuing their? --
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here? >> first of all i was looking for opportunity to bring panama, creating jobs, linking companies and the government. all the people here in panama it is my job, i take the platform the lord has given me in baseball to be a producer the benefits our country. >> specifically green technologies and environmental measures for this company, why? >> with all of the things that are happening, global warming, all the factors happening, we need to be more green. i believe 100% on that. it will give us the opportunity. all over the world, we are suffering and dying, so, why not?
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we can do something to help the indians. >> and also perhaps the economy, what are you expecting in terms of more jobs in panama? >> not only here in panama, central america, we want to try to do something here, then hopefully bring it to all of central america. it will create a lot of opportunities, more jobs, therefore, especially since american people are needing -- leaving their countries to go to united states because they have a good job there. it is my job to create opportunity for them so they can have a job in their country. >> what sort of opportunities are suing and pamela -- are you seeing in panama? >> one of them is green energy. that is what is -- what i am looking for.
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it will give us the opportunity to do that. with greed and -- green energy will be able to create a lot of jobs and that is what we want. we have been approached with so many opportunities, and take one that we believe will happen. >> the problems of central america and specially with mass migration towards the united states, things get exacerbated given that we continue to have the pandemic raging -- better now, this still a key concern? >> is a huge concern. if we create opportunities for them i do not think there will be able to go nowhere, or migrate because they will have good jobs. i am in panama with a good job, there is no way i'm going somewhere else. >> before let you go, of course, my colleagues tell me the yankees are doing exceptionally well this season. how do you deal -- feel?
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>> the yankees are doing great, i am a yankee for life. i am always optimistic. i pray that it will continue to give them victories to go all the way to the championship and bring it home for new york. >> it was great talking to you here in panama city and the bloomberg economy gateway. let's get to vonnie quinn with the first word headlines. >> sri lanka is about to default on 120 dollars of oversee bonds, it is said to blow through the grace. of $78 million of payments due wednesday, marking one of the sovereign debt default. the finance minister held the talks with the imf. >> has broken his silence after
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the meltdown, calling it a big idea that failed. the lab backer said the coins collapse sent a tumbling and cryptocurrency and decentralized finance. marcus gorelick, the farmer broke who -- bro has been freed from prison for months ahead of schedule and been transferred to a halfway house. sentenced to seven years in prison and 2018 after being convicted of securities fraud. a biotech company he founded. they are preparing for slowing growth a drop in asset prices, they see a 30% chance of a recession the next one to two years and getting rid of inflation should be a top priority. he says the fed was not acting
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quickly enough to slow inflation. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this bloomberg. >> that surge in prices is hitting consumers and eroding profit margins on big u.s. retailers. bloomberg policy editor kathleen hays is here for more, can you connect the dots between the forecast, target having a terrible session overnight, how is that potentially helping the fed? >> it has to do with prices. as to do with inflation. what walmart and target are talking about, they are seeing purchases of merchandise, of stuff is slowing down. they cut their profit outlook for the year, that is what hit their stocks and help drug down the entire stock market flow --
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further -- drag down the entire stock market further. people are shifting from big tv's to restaurant gift cards. over time the pandemic spurred this huge demand for goods. people are having to stay home and buy stuff online. you can see how prices of gun high year-over-year for goods over 12% -- have gotten so high year-over-year for goods. people are doing more, people are doing more, goods will go down, people are buying less and less as they are doing more. that is a big reason why inflation is that a 40 year high. there is less demand for goods, it could help the supply chains. another thing that could ultimately bring down prices. that is how it all fits together. jay powell, when he gave the
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interview, if alec everyone on the markets was watching that -- it felt like everyone on the markets was watching that. he wanted a clear indication that inflation was going down. this is not evidence, a canary in the call mind that the pressure is -- the coal mine that the pressure is coming down. >> at the same time you have to worry about growth. our officials trying to aim for the soft landing another recession? >> absolute, nothing he said is that there is a big imbalance between supply and demand and that is pushing up inflation. another way to bring down demand, bring down consumer spending, they will be happy to see hot consumer spending causing hot consumer inflation coming down. he thinks that consumers, you see the target and walmart, start to push back against
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higher prices. >> what we see this quarter is consumers pushing back, saying you cannot raise prices so you see margin squeezes. it could be a situation where the consumer is saying, no more inflation i will not pay the higher prices. >> financial conditions, stocks selling off, not just a lot of rate hikes, but these expectations of higher rate hikes. in other reason stocks are selling off his tongue to show up in the tightening financial conditions -- is starting to show up it at the tightening financial conditions. but inflation get her hand leads to a lot of -- get out of hand leads to a lot of messy outcomes. the lot -- lack of liquidity is something investors may have to put up with for a while because the -- they are not seeing that yet, looks like they will.
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>> let's actually talk about those risks for the stock markets and get to our market coanchor's with a kosher -- a closer look at how the asian market is setting up. the hawkish expectation from the central banks really hitting the markets. >> this is something we have been tracking for a week. as really come to the forefront recently. the fact that you're getting consumer discretionary, coming off of a 52-week high in terms of u.s., the s&p 500, 41 percent of the discretionary is down over 40%. the fact that you're getting underperformance relative to stabilization good indication, is a very good indication that markets are starting to position for stagflation or recession. we are not there yet, but is something markets are starting
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to price in. higher monetary conditions, stronger dollar, 7.5 trillion right now is the current market cap that has been wiped out. it is a much bigger market, the here and now the bond rally continues. we have flipped on the green on the long end of the treasuries and futures curve. you're covering this massive move down and new zealand and australia ahead of the japanese open. and looks like lower here, 600 points right now, i am looking at my charts and graphics here. 600 points on the nikkei futures traded, there we go the top of your screen, new zealand every single stock is down. we are now moving to a 1% decline in the nasdaq future. no indication that the selloff will stop anytime soon. >> maybe just go back to it if you can.
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david ingles there in hong kong, the bearer of bad news. coming up next political instability is or is been a hurdle for latin america -- latin america investors. the mining investor joins us next. this is bloomberg. ♪
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>> most of the cars in 2035 will
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be electric vehicles, the day and electra vehicles the main component is batteries. it is the cost of the electric vehicle is the battery. it is an important commodity. if you look at many countries, argentina, chile, 30% of it in the world, you will see countries that eventually have -- economically like in argentina, just by having the right economy -- commodity for the future. >> there in argentina, political dominoes have meant that is not a good place for business, but the nation's government is making efforts to develop more of its mass deposits of lithium commodities that is critical for clean energy transition. let's discuss the opportunity
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with the argentine and secretary. it is -- argentina secretary. it is great to have you in panama city. other countries, peru, chile, we might even see a hike in mining taxes, argentina does not seem to be going that way, haps you might even lose of taxes altogether. >> what the government is doing, there is a big influx in the mining sector driven by the mining of new minerals. there is a push to lower the carbon economy, we are trying to be most important to the different industries mining and argentina. we are -- in argentina.
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we are trying to foster investments and copper mining to argentina. >> that also means you may be dropping miners from a new tax and commodities profit as well? >> dropping mining? >> taxes. >> we are not dropping mining taxes. we are keeping the situation as as. we are doing new policies to promote investments in the mining sector. to give the sector more certainty about what they are trying to do to develop the industry. we know the world now needs more minerals to ships towards cleaner energy. >> argentina has vast amounts of lithium along with chile and bolivia, have you talked about perhaps aligning policy?
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>> of course, we are trying to further develop the projects we already have. we have six projects under construction in argentina right now. we are thinking more investment will come. in the past two years, an announcement for more than $10 billion, with digging that investment will go further because of the need the world has for the animals -- minerals that will help move towards clean energy. we have to be talking with the neighbors in the region to keep developing what we have. we also have another thing that is happening in the country, different provinces, are working together to create an environment for investment in the region. our approach to work together,
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and the region. >> will that look like and opec cartel for lithium? >> know, what we want to do is develop and further -- no. what we want to do is further develop in the country we know we have the resources and we need to go further in the supply chain and value chain. we know that is something we have to work with, we know that we need more infrastructure and it is important for us to develop. working together will help us to do that. what we want to do is be -- i think it is most important to move in the value chain. argentina has to have something that we want to do is to be deplatform for electric mobility in latin america. we have to work together with our neighbors on that. >> tells a little bit about the
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projects you have going on right now with dollar a volume of output you are expecting in the year? >> we have five that are in the more advanced stages. there are some of the exploration stages in the visibility stages. we start with those projects, we will put ourselves -- in the next five years. this year, argentina granted a project to a landing group that will produce over 130,000 tons of copper. the world we need more and more copper in the next few years. i think we have a very promising future with copper as well. >> we will look forward to see the mining industry. the secretary for mining joining
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us here, we have plenty more coming from the bloomberg new economy gateway in latin america, uber president joins us with his look on the high inflation and surging fuel prices. >> we do have some data crossing bloomberg when it comes to japan, we have expected that continuing widening of the trade deficit and that is what we are getting when it comes to the trade balance we are seeing a deficit of ¥839 billion, slightly better than dictation's -- expectations. we had been expecting the widest deficit since march 20 19, it is not hit that level, the balance between exports and imports, just shy of expectations coming in at 12.5%. the imports coming in at just over 20%. just -- 28%.
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just shy of expectations of a 35% increase their. the weaker currency has created a bit of a inflationary effect. certainly the early indicators with the imports rose faster than exports is going to be true we are expecting the trade balance to stay in deficit. when it comes to core machine orders, 7.1%, the expectations of three point 9%, 7.6% also being expectations your on your level. that -- you're on your level. lots more to come on "daybreak asia." this is bloomberg. ♪
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>> let's get a quick check of the latest headlines. tencent says it will take time for beijing -- the industry may struggle to grow in the short-term. revenue growth has all but evacuated -- evaporated in the first quarter due to lockdowns. revenue beating estimates at $20 billion. target plunged the most in 35
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years, the retailer ceo says that operating cost shown no signs of easing, they join walmart, a day after their retail shares plunged since a 1987 black monday crash. it is the pretty terrible set up when it comes to equities trading in asia. all of 2% at the top, the kiwi stocks were essentially everything will stop trading when new zealand is in the red and budget day. we're looking s&p futures to extend that outcome of the global bond rally is intensifying into the end of the week, it -- investors continue to head for havens and the yen is heading up well -- as well. this is bloomberg. ♪
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>> welcome to "daybreak asia." live from bloomberg new economy gateway: latin america city. >> asia's major markets have open for trade, it is continuing the global stock selloff, equities posting their biggest daily drop in almost two years as a flight to havens including treasuries and the dollar, will be watching the retail in this region after the u.s. counterparts are hard-hit. tencent warns that china's crackdown and inflation and lockdown put revenue growth to near zero. >> the selloff right off the bat across asia stocks, take a look at the nikkei, as you continue to see the selling pressure
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released red across -- spread across asia, down one point he percent, you're talking about -- 1.8%, we are talking about losses, utilities the only sector gaining. we saw strength in the japanese yen, the best gain about a week or so, it is also at that 128 level against the u.s. dollar, we continue to watch jgb as well. the pressure is .235% at the moment, it has already been a little mixed with the decent five-year off lending support. we are looking at it down to percent now, the korean won is down 0.1% against the u.s. dollar, it was one of the few gainers in yesterday's session.
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after the blood bath we saw in new york. >> there is no place to hide, take a look at it here in sydney futures look pretty dire. it was a sluggish start, we saw a halt in the against energy, crude is giving back as well with the broader risk on sediment. the other part of the story come as the extension of the global bond rally. the australian yield holding onto that tumble of 13 basis points, the sharp turn on that when it comes to treasury counterparts. the drops and yields in australia as well as new zealand. stocks trading in the red, it is a budget day for new zealand, people like had -- health care might benefit and get a boost their when it comes to related stocks. the kiwi dollar, the aussie
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dollar with the risk off callback we see the downside pressure again renew on these risk facing and commodity facing currencies. it that traditional haven for the u.s. dollar, for the yen, for the treasury, that is that classically for safety. the s&p future sessions down a further half of a percent. we are also expecting downside when it comes to the start of trading in hong kong and china with those tech stocks as well with tencent really trying to manage expectations of any sustained rally we could see across the sector with government support. the u.s. 10 year yield continues to hold onto that drop in yields, brent crude trading under one a nine bucks per barrel -- $109 per barrel. >> jessica, what a day to speak
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to you, where you hide at this point? what is your trading strategy when you take a look at a market that is trading like this? there is no conviction, there is so much jitters. we are seeing the s&p, just really stay away from a drawdown of 20% of the bear market. >> this is a very tricky situation. the fed, we still believe there is some stock a selection opportunities. we remain extremely cautiously selective when it comes to china. obviously we try to keep minimum presence given their current regulatory pressure. we are seeing in other areas like the transition and technology, it is important to note that there are a number of names that defensive in nature or policy beneficiaries.
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they are probably safe havens at the moment. >> the irony, the domestic issues, china, in a way is idiosyncratic enough to be shielded from some of the global pressures. is that a narrative that could be conducive if you are longer-term investor that can whether the short-term pressures on china? >> indeed, we think it is important to remain focused on the long-term growth story. we are also monitoring closely the short-term develop its. we think -- developments. if you want to overcome the situation is important to remain focused on, things that are aligned with the long-term growth objective of the government. they beneficiaries there profitable -- that are profitable. when we look at the tech space
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it is a vast universe. related to software, or where you have those high tech manufacturing. indeed, any names that can help the industry upgrade would be interesting. >> given the inflationary pressure, where are the companies that actually have some pricing power? >> given the inflationary pressure, a number of names, mostly i would say in commodity it is becoming extremely interesting, beyond china we are identifying a selection of the opportunities in india. they have a number of things,
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refiners we see opportunities in oil. gas exploration. we also see opportunities in the financials, amid the dead tightening -- the fed tightening environment. given the reopening play we think there are also interesting things in thailand or indonesia. >> you are not concerned about all of the global central bank tightening measures actually hitting those emerging markets and developing nations especially when it comes to capital flow being lured elsewhere? >> obviously this is one of the major risks that we are monitoring very closely. to be clear, in the short-term those economies will not react necessarily positively. that being said, trends compared to the past of cycle, a number of those economies are
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presenting stronger fundamentals. we look at the inflation level, some of them are still actually within reasonable range although we are starting to see more inflationary pressure across the region. some countries have already started tightening. in the case of india, korea, australia. there are also economies that have been quite flexible in their monetary -- monetary policy easing as in the case in china. economies in the asian region, have been quite exelon that front -- flexible on that front. >> it is been really good talking with you, her calls on the market right now, let's get to vonnie quinn with the first word headlines. >> u.s. treasury secretary has
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confirmed that is unlikely washington will allow russia to make an enzyme current -- foreign currency debts. germany ahead of the meeting with the g7 finance chief say these sanctions on russia have been effective. >> the sanctions imposed against the russian federation have already had enormous impact. russia is experiencing recession, high inflation, acute challenges in their financial system. the inability to cure the materials and products they need to support their war or their economy. >> u.s. national security advisor jake sullivan says north korea may be preparing to conduct another -- and missile test this weekend. they are preparing for oil contingencies -- addressing
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security threats, supply chains, reducing reliance on such a -- reliance on china. >> the intelligence reflects that there is a genuine possibility that there will be either further missile tests including longer-range missile tests or a nuclear test, or frankly both in the days leading into, on, after the president's trip to the region. >> the u.s. is conducting its biggest ever investigation to the banks use of messaging app for work. they are investigating over 100 personal phones. they are using an opera -- unauthorized platforms like whatsapp as they try to decide which firm to punish for the practice. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> still ahead, more from
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bloomberg new economy gateway: latin america here in panama city. we discussed rising fuel costs and the other challenges facing drivers. >> stocks are just tanking in asia after that nightmare session in wall street, the nikkei future, down, just a handful of stocks trading in japan and australia, are in the green, we are seeing in japan the biggest loser is energy. consumer discretionary really being hard-hit. complete losses when it comes to the -- interesting not seeing a huge haven push so far in the yen. the sector of safety as seen for the fx space come here in australia we are seeing a just shy of 2% there with consumer as
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well as tech, energy, materials the decline. this is bloomberg. ♪ another crazy day? of course—you're a cio in 2022. but you're ready. because you've got the next generation in global secure networking from comcast business, with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things 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™.
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>> we are playing it more conservatively, both on the fixed income as well as the equity, to your point, dialing down areas that are high-yield. >> it is a different phase of investing, it takes different approaches. your best approach is back to neutral to some degree. >> i think it is more validation that the consumer is not as strong as we thought it was, we are seeing inflationary pressures affect the earnings of countries. >> the consumer is getting it from the bottom level up and it remains to be seen where it
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stops. >> some of our guest they are on the soft a selloff, the risk off move is extending in the asian session right now, a spring in our analyst who is setting up for the open right now. david, asia in bad shape as expected given the magnitude of the selloff your? -- here? >> right now the breath of the decline, when you get 90%, roughly of stocks falling, he basically tells you that you take any other story out there in detroit out the window. -- and you throw it out the window. these markets are just coming online right now, your benchmark is doing this, you're also getting a lot of these measures of implied volatility. you also see it track on futures , you see a move up a little bit further you we have the metric here the nikkei index, south
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korea, there we go as you can see moving a little bit higher on the back of the chase, lower if you will. >> we are open in china and in hong kong, a whole set but set of issues -- a whole set of separate issues. >> most of which are bad, increasingly we are getting a lot of good news, the reason we are looking at correlations, a crunched numbers a couple minutes back, the correlations between the different chinese benchmarks -- onshore or offshore, to a lesser extent attack, it has -- tech has broken away from the s&p 500, there is not a lot of rallying in these names. as we approach the open we are likely to see some pressure on these markets. the elusive breakout, whether that is the golden dragon index,
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we are again at that level. we increasingly see the number of times we have hit our heads on the 50 day moving average is definitely getting longer longer in that will be the case. >> we are so close to that bear market on the s&p 500, two percentage points away or some like that. how significant would be if we did in fact down to that 20%? >> it is a great headline for us , who work in financial journalism, if you are a trader i am not sure it matters a lot. i think we are about 80 points from that specific level, we had to look at the cash market, it is accelerating right now as far as futures are concerned. i think we get there at 38, roughly 28, 25, we get it coming online to your point i will and on this.
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18% down, the blue line 20% down from the 350. >> may be time to draw a bear on there, our market coanchor david ingles. that surge in retail prices is really part of the problem, it is hitting consumers, some big u.s. retailers are reeling as well, it could be the fed hope for battling inflation. we are here with more. how are are these low profit forecasts for consumers, walmart and target and the overnight session, doesn't help the fed? >> it helps them in one important way, one reason they are lowering their outlook for profits this year is because prices are rising so much for goods and other kinds of merchandise that consumers, it looks like they are starting to pull back and shift their pattern. it is expected for some time
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now, as target ceo said, the sales in the latest quarter, more big tv's were sold, now it seems like restaurant cards and luggage, this was what was expected. during the pandemic people were stuck at home and they bought lots of stuff, now they want to travel and do things. there are closets and shells are. so they are starting to shift -- shelves are full of stuff and they are starting to shift. core service prices are up as much as over 12% year-over-year in the past several months that is one of the main drivers of the main cpi going up well over 8% to the highest since 1980, if this continues as good for the fed. he wants to see evidence that inflation is start to come down, that is a very tiny piece.
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he wants to see demand reigned in, 10 -- tightening of financial conditions, selloff or retailers, even though it is tough for investors it may be helping the fed for the long run as they do the messy job of getting the inflation genie back into the bottle. >> that inflation genie perhaps effecting what is happening in the philippines, we are expecting a policy decision, inflation such a huge problem in throughout law -- in sri lanka with food protests in the debt crisis. >> it all goes together, starting with the philippines compared to sri lanka they are in great position. there inflation year-over-year has jumped. in april, just a few weeks ago we interviewed the head, benjamin. he said, they're going to look at rate hikes for the first half
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of the year. the june meeting they would look at it, maybe even hike then. inflation is going up, growth is picking up, the strong dollar due to aggressive rate hikes is pushing down the double -- the value of the peso. investors are betting that there is going to be a 25 basis point hike. in sri lanka their central bank reading -- meeting is well over 14% they do not have a finance minister right now they are expecting to do a 75 basis point rate hike for a truly out of control inflation. at looks like they may not be able to look a debt payment on prop .6 billion overseas currency denominated -- trump .6 billion overseas currency -- 12 .6 billion of overseas currency debt.
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they cannot find the cash to pay for oil, everything is in debt, the food crisis, what the bloomberg team is pointing out the sri lanka market is a extreme case. a lot of places may face similar debt issues as well. >> our global economics and policy editor kathleen hays with the latest on all things inflation including what is happening in the u.s.. we spoke with the chicago fed president that argued moving the fed funds rate above neutral. >> i think it is useful to front load the policy settings at the moment, we did 50 at the last meeting and it is extremely likely 50 at the next meeting and the meeting after. once we get to a good setting for the funds rate where we can
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do a more measured pace of increases of 25 basis points for after that it would give us a nice pad to assess incoming data and know what we are facing. if we do it sooner we can get that point we can do the shallow path and take 50's a little longer. something like neutral by the end of the year, whether you get there sooner or earlier is not that critical. it is being well-positioned to address the problems we expect to face in 2023 is my first concern. >> how far above neutral we had to go to get the results you want? >> we do not have to constantly increase the funds rate to be restrictive, we can be restrictive and sit there for a while. maybe we sat there longer than a less restrictive setting, it takes a little bit longer for inflation to come down. there are many factors that have
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led to the very high inflation we are facing. i am hopeful that in 2023 we are facing core cpe under 20%. >> we have much more to come on "daybreak asia." this is bloomberg. ♪
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>> a quick check of the latest business flash headlines, cisco is down 19% in late trading after the failed decline in the current quarter and slashing its annual forecast. they named disruptions coming from lockdowns in china and the war in ukraine. cisco says revenue will dip by as much as 5.5%. they have told investors that he intends to run down melvin capital investments. bloomberg was the first to
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report that the once highflying hedge fund will liquidate the fund and return cash to investors. melvin assets had lost $7.8 billion at the end of april. coming up next, they slowly eased their lockdown as other cities return to the spotlight of the china covid zero policy we have the latest just ahead. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile.
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shery: we are seeing red across asian equity markets right now with the nikkei down more than 2%. the first fallen about five sessions. energy, consumer discretionary eating the declines. the worst day in about a week. although we are seeing a little bit more weakness on the japanese yen. of course we saw that huge jump in the previous session given haven demand. we are watching the kospi as well. it is paring back some earlier losses of more than 2% but it is still down 1.8% and reversing two sessions of gains. asx 200 is also down and we are seeing the aussie dollar strengthening a little against the u.s. dollar but still below the $.70 u.s. level. the kiwi dollar is also higher around $.63 u.s. let's now get to vonnie quinn with the first word headlines.
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vonnie: japan is reported lisette to waive quarantine for travelers from about 100 countries. people traveling from countries with low covid rates including the u.s. and u.k. will be allowed into japan without having to enter quarantine. travelers from 90 other countries will be exempt from testing requirements if they have had three vaccine shots. goldman sachs ceo says clients are preparing for slowing growth at a drop in asset prices. he sees a 30% chance of a recession in the next one to two years and says getting rid of inflation should be a top priority. he made the comments months after his top deputy said the fed was not acting quickly enough to slow inflation. galaxy digital founder has broken his silence on the terra usd meltdown, calling it a big idea that failed. he blamed the challenging global macro backdrop, and said the going's collapse dented confidence in cryptocurrency and decentralize finance.
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he warned the top environment for crypto's will continue. martin's currently, the so-called pharma bro, who gained notoriety for unapologetically raising drug prices, was released from jail. he was sentenced for seven years for lying to investors and manipulative shares of a biotech company he founded. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: despite encouraging signals from chinese leaders, tencent is warning that beijing's lengthy regulatory crackdown on the -- on the industry will take time to wind down for it they posted their slowest revenue growth on record. for more let's bring in stephen engle from hong kong. what is tencent saying about the regulatory overhang, and perhaps
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that investors should not be getting adam themselves? -- getting ahead of themselves. stephen: that's right. there was a lot of optimism after the vice premier added to previous comments from senior chinese leaders the platform economy is critical to the new emphasis in the chinese economy given the covid outbreak and that is employment and of course growth. that gave a lot of optimism but it was short-lived as we saw as well. the tech rally peter doubt -- petered out, lasting about a single day. and the tencent adr got caught up in the overall wall street selloff last night. there has been extreme volatility in tencent shares, but it is emblematic of the first quarter of the multiple whammy's getting the chinese economy. you have that still overhang on the tech crackdown combined with the lockdowns in shanghai and restrictions in beijing. the two wealthiest cities in key
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to growth of tencent's services. basically the lockdowns in shanghai limited significantly commercial payments as well as advertising spending which was down about 18%. and the president of tencent essentially said in this current quarter because of the lockdown and other pressures in the chinese economy, ad spend will likely be further down in the current quarter. the big question was about one will be get that rebound from the tech restrictions. this is what martin essentially said. i am paraphrasing. it takes time from policy words to policy real action. so we don't know how long a piece of string is and how long that time lag will be but essentially, yeah, it is a warning to investors, do not expect a sharp rebound right now. shery: how did their gaming division perform? stephen: gaming has been under pressure as well. last july there was a moratorium
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on new licenses. only last month did authorities grant new licenses, but not to tencent. tencent is still on the waitlist for what is called a monetization. approval on new games titles. essentially what analysts are saying is they are probably going to focus more on quality than quantity going forward. there will be fewer games in the pipeline, but essentially revenue growth for the gaming division was pretty flat as well. it is another regulatory overhang, as pressure on the societal impact of gaming, the addiction factor in the like. but it is there bread-and-butter. so any down overhang on the gaming division hurts tencent. shery: stephen engle the latest on tencent. now, steve was talking about the lockdowns and the ongoing pandemic. shanghai is slowly emerging him that six week covid lockdown, but we do have fresh outbreaks
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around key chinese cities in addition to the ongoing spread in beijing. that is raising the specter of more disruptive pandemic curves. let's bring in emma o'brien. what are we hearing from authorities so far? emma: i mean, you sort of captured it there. there's a very high risk of further restrictions for the next couple of months and potentially until the end of the year in china. as we get stuck in this covid zero lockdowns on, off, sort of loop. we might not see a lockdown in beijing but as you noted, there continues to be some 40, 50 cases a day there. and there are a number of cascading restrictions in place in the capital that mean you cannot necessarily freely move around. you cannot go into a park without being tested, for example. most districts are being told to work from home.
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you are seeing an emerging outbreak nearby, which we are keeping a very close eye on because it is an industrial area, home for factories from the likes of toyota. there's restrictions coming into place there. so it's looking like more of the same for the next couple of months when it comes to china and covid. haidi: in the meantime, hong kong seems to be drifting away from covid zero, it is easing more restrictions despite climbing cases. we are also seeing japan planning to waive quarantine rules for some countries. emma: yeah. i think you have seen hong kong, while not rhetorically, at least in practice, edge somewhat away from the covid zero measure you are hearing out of beijing. they have said that they are going to be tolerating, basically, 200, 300 cases a day.
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that that is going to be normal. carrie lam said this week. and yeah, that they are pushing ahead with the next phase of the reopening, which will ease restrictions on gyms and extend restaurant opening hours. and in line with the opening you are seeing all around the world. japan also moving ahead to dismantle some of those barriers to tourism and entry. and that is what you are seeing in most places, with the exception of china. haidi: emma o'brien there. coming up next, we are live from panama city where we we would joined by uber's head of latin america to discuss rising fuel costs and the challenges that poses for drivers. that big interview is next. this is bloomberg. ♪
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haidi: let's take a look at the selloff that is really being extended. a horror show of a session for u.s. equity bulls overnight. the s&p 500, a bad day away from a bear market. also close to a bear market when it comes to trading in asia, including new zealand, where we are seeing further downside now on budget day. in australia we are seeing pretty much session lows, close to 2% lower, being led lower by
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materials, energy names, as well as consumer discretionary, as expected mirroring the downside. nikkei 225 seeing steep declines. 4% lower. softbank is the biggest decliner, one of the biggest in the japanese session so far, as we get additional pressure when it comes to tech. tencent coming out and saying the regulatory overhang will take some time to resolve, and that is pouring cold water on the hopes that we could see a rebound in chinese internet platforms and chinese tech names. the kospi also down close to 2% as well. take a look at some of these indications of risk aversion. we see not much movement when it comes to dollar-yen, but also yen is turning lower. that is in line with s&p 500 futures also sitting weaker, a negative signal for equities. potentially if you see that further escalation in aussie dollar yen, that could suggest we are seeing that ultra defensive stance from investors,
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really worsening. shery: let's return her to panama city, because latin america is facing one of the most persistent inflation surges and along with higher fuel prices, it is making life difficult for drivers in the region. let's discuss more with the george gordon, uber's head of latin america. really great to have you here with us. let's talk a little about driving in retina -- a latin america with fuel prices continuing to rise. what are drivers across latin america and uber telling you right now? how are you incentivizing them to continue doing what they're doing? george: first of all, thank you for the opportunity. that is a great question. certainly we have seen that fuel prices have increased in much of the countries around the region. it is something we take into consideration constantly, not just given this recent spike, but over the nearly 10 years we have been in the region. we look at gas prices and the price of other input costs for drivers, as something that we think about when we look at
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prices and whether we make changes. recently in many countries in latin america, we increased prices to account for the fact gas prices have gone up, because we know this is a thing all prices go up. every country is a different in terms of the strategy we have taken. in some cases it has been a gas surcharge, in others, a structural price increase. but generally in every country we have made adjustments up. shery: correct me if i'm wrong, but many of the drivers across latin america don't own their own cars. they lease. the cost of living just in general is rising. how are they dealing with the fuel prices and just trying to get them to continue driving for uber? george: what we have seen in general is strong demand still from the supply side. a lot of drivers are still looking for ways to earn money. this is a difficult economy. many drivers come to the uber platform, as much as 40% of drivers are unemployed when they arrive to the platform.
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we have over one million driver platforms in the region. we still see a strong need for this type of service and this flex of a work. but certainly people are thinking about the price of gas. many drivers rent or lease their cars. it still the predominant -- it still varies by model. shery: what about the man from riders -- what about demand from riders. george: during the pandemic things really dropped. over the past few years it has been story of recovery. we are now above pre-pandemic levels in most countries in the region and globally, and as a company in total. i think it is now a story of growth again for uber. an we have seen on the demand-side a very robust recovery. lots of people coming back to travel, going to airports again, going out at night, commute. we have seen a large recovery in commute use case. it has been a very strong story on the demand-side.
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if anything we need supply to catch up more. shery: uber has been asking governments in latin america to regulate them correctly. what sort of regulations are we talking about, especially in an environment where you have lots of labor regulations and some of these countries as well? george: our service is regulated in many jurisdictions at a country level in places like brazil and at a municipal level in brazil and mexico. panama, where we are today, we have a regulation that has been in existence for almost five years now. so that is to recognize this transportation network company like uber as a platform. as you mentioned, we are also seeing movement and discussion with governments on labor regulations. as we think about these platforms, we're also change in the way people work. it is a flexible, independent contractor model. we have often talked about a third way. we want to recognize this new way of work with modern regulations. that is a discussion started to happen in the region.
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we have also seen it happen in the u.s. and other places in the world, and we are very much focused on working together with the government and other platforms to modernize those regulations, always in the interest of the drivers relying on these services to work. shery: how are you working with the governments in order to create this sustainable city model? i know bev infrastructure in latin america is not very strong. what is uber doing? george: you may be aware but we set the goal, 2040, 100% will be green, zero emissions. it is an ambitious goal. particularly in latin america, where the cost of lack of charging infrastructure are meaningful blockers. but we think we can do it and it will be together with the public sector working together to make this happen. we have started to launch some new projects and products in that direction. latin america the one we are most proud of is uber planet, a
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way for riders to offset the carbon dioxide on their trips. to date we have offset over 47,000 tons. it is getting great traction. it is live in a bench -- a bunch of countries. shery: you don't oversee uber eatrs, but we know it has left and exited brazil. how do you make those decisions when it comes to these latin american markets, about what is good for uber and what is not? george: we look at the acceptance of the product in the markets and we saw strong acceptance in brazil as well as business in grocery and other verticals. when we think about exiting a market, it a pretty high bar. we don't do it very often. but we think about the economics and our relative competitive position. we want to be leaders in the markets where we exist and that is what we strive for. the mobility business, we are leaders with above 65% category position in all the markets we operate. so we set ourselves a high bar. if we cannot achieve that we
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want to refocus and prioritize. it is important to have focus. shery: george gordon, it was great having you here. uber's head of latin america with his take on some of the mobility issues across the region. haidi: we are going to get more on the inflation debate and central banks. the unicredit ceo says the ecb is in a tough position when it comes to fighting rising prices. we spoke exclusively in his first tv interview since taking over the troubled italian bank. he discussed the impact of rising prices on european economies. >> as we look forward, there will be a deceleration. we have two central scenarios for ourselves. one is a significant slowdown. and the other one is a deep recession. at the moment we see a significant slowdown as the central scenario. although europe has not been affected at all beyond prices. so what we are seeing is
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inflation being the precursor of more. inflation is biting. we see for lower income families , really difficult to deal with the rising cost of energy. we also see that for companies that have investments or were dependent on energy or on grain to a certain extent. their whole value change has been completely destroyed. and so they need to reassess what is their position, change their sources, redesign their models. but at this point in time, this translates solely in a slowdown of investment. we have not seen anything else. we do believe that going forward it will be a lot more disruptive. >> do you worry about a policy mistake from the ecb? if you have this possible session area environment and they don't raise rates, what
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happens to inflation and all your european clients? andrea: it is a very tricky economic environment for the ecb but also in the u.s. on the one hand you have inflation, but inflation is generated by a specific segment of the economy, by energy. i'm not that sure that raising rates a lot will calm that down, because it is very concentrated and linked to offer and demand. the rest of the economy, however, we all agree it is slowing down and maybe tilting into recession. raising rates creates an issue. so it is very tricky to manage. yes, we're all concerned to finding the right balance. i think getting to a more neutral stance towards zero is probably ok. the moment you go up a lot from there, it depends a lot on what the rest of the economy is doing. shery: the unicredit ceo speaking exclusively to bloomberg front row. coming up next, the outlook for
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china showing signs of turning brighter. a previa thursday's session next. this is bloomberg. ♪
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shery: here's a quick check of
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the latest business flash headlines. target plunged the most in 35 years after cutting profit forecast due to soaring inflation. the retailer ceo said surging costs show little signs of easing. operating profit is expected to come in at only 6% of sales this year. target joins walmart a day after the retail giant's shares plunged the most since the 1987 black monday crash. tencent says it will take time for beijing to act on promises to prop up the chinese tech sector, suggesting the industry may struggle to grow in the short-term. this came as they reported revenue growth had all but evaporated amid sweeping government restrictions and covid lockdowns. haidi: the investor outlook for china markets seems to be turning a corner just as global markets are engulfed in a fresh selloff. we will look ahead to the open. let's bring in sofia horta e costa.
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could argue there is safety to be found in chinese equities amid the global selloff. but the narrative from tencent suggests this may not be a quick recovery. sofia: yes, exactly. there is still a lot of distrust in the market, but what we are seeing, at least in positioning, is peak pessimism. we saw on the options market, people are selling their most bearish bets and actually buying bullish options that bet on the hang seng index rising. there's still a lot of volatility in the market, not just in china but obviously globally. at least hong kong equities cannot be immune to that. the earnings season can be either -- can be a swing factor either way. we had good earnings from and a very worrying outlook from tencent. so, yes, a worrying picture. but i think what we need to start to talk about is peak pessimism.
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it is not a turnaround in the market, but there is a sense, at leaves from positioning, that the worst is behind us. shery: outright bulls may be hard to find, but perhaps a little bit of positioning change. sofia horta e costa with the outlook on the chinese markets. this of course as we continue to see the block path across markets in asia right now. we are talking about every sector on the asx 200 right now losing ground, especially when it comes to consumer stocks. whether it is consumer discretionary, consumer staples, they are leading the decline. same story for the nikkei, down 2.5%. the topix also down 2%. the kospi pared back earlier gains of more than 2% -- i mean earlier declines. but we are still talking about one of the worst days and weeks. our markets coverage continues. ♪
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