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tv   Bloomberg Daybreak Australia  Bloomberg  May 19, 2022 6:00pm-7:00pm EDT

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>> welcome to daybreak australia. shery: from panama city, i'm shery ahn. >> australia is set for another election. the conservative coalition is battling to survive. investors are weighing the prospect of growth against inflation risks and tightening monetary policy. we are also hearing from panama city. >> this is a picture across wall
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street. another volatile session with the s&p 500 falling into the red. you are hearing futures muted. we continue to see treasury yields lower across the board. we are hearing about growth concerns. we have weaker than forecast jobless claims. oil managed to rise even in the new york session. choppy trading. equity markets paring back losses and that sustained the gains. sources are telling bloomberg that china is seeking to replenish its strategic stockpiles with cheap russian oil. it was all about sentiment.
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not that far off from the 20% decline from the closing high we saw in january. suffice it to say the uncertainty, the volatility is out there in all asset classes. haidi: also a great chart. let's look at our asian markets shaping up into what a week it has been. we have more risk going into the start of trading and this weekend, it is the last day before the federal elections. this is what we are seeing when it comes to sydney futures flat at the moment. if you take a look at history, the election regardless of who wins, history tells us potentially we will see arise
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when it comes to australian shares. the asx 2000 has risen eight out of the last 10 federal elections. that is something to bolster confidence for investors. we have a broad-based extension of the dollar dropped staging the biggest drop since november 2020. kiwi stocks are up and the dollar yen, under 1.28. >> it's interesting to follow the markets recently because in the last two weeks, we have seen a shift from all of the concerns over inflation and growing price pressures. that concern continues to be there. there seems to be more concerns about growth, the trajectory of where economies are headed. are we headed into a recession is the key question that analysts are asking. coleman sex and jp morgan saying a recession is not a minute. take a step back -- it is not imminent.
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jp morgan saying the data doesn't show that. the concern and fear of an imminent recession in the u.s. seems to be overblown. haidi: don't forget we are still technically in the pandemic. it's interesting that many of these economies have moving toward normalizing having to live with covid, it still a major issue. a lot of economists and policymakers have pointed out it has always been a dirty word. neither of the major parties have talked about the implications of what they are setting policy for in terms of long covid. this is creating a snafu for voters. we expect one of the independence will be filing an application with the federal court later today because there
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is an issue where people who have tested positive may not be able to vote in saturday's election. upwards of 200,000 plus people may not be able to vote. it's a pretty big problem going into what is expected to be a close race. polls suggesting that the prime minister liberal coalition will lose and the labour party will form a new government. paul allen joins us now. we're in the final hours of the campaign. we have seen major policy differences emerging particularly when it comes to spending. >> finally after a lot of back-and-forth, the labour party has released costings for its policies. $19 billion australian in terms of new policies. generous childcare subsidies, billions for manufacturing investment and a plan to raise extra revenue.
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labor claims all this extra spending will deliver extra productivity. the liberal coalition government warning that labor's plans risk stoking inflation and adding to the heavy debt burden on that topic and neither party is returning to budget surplus anytime soon. in the dying days of the campaign, we have a real policy debate going on. up until this point, the labour party has been presenting a small target to a bold policy initiative and they ended up losing. it seems to be relying on the theory that oppositions don't win government. that governments lose government. it is been relying on voter disaffection with the government to do most of the work for them up until now. shery: given how wildly inaccurate polls have been, we
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might be more skeptical about labor being on track to win on saturday. happens if you get no clear-cut results? >> that is a real possibility. the polls are addicting a labor victory, but they have been wrong before. 2 million of the 17 million eligible voters are voting early or applying for a postal vote and those don't get counted until after the polls closed on saturday. it could be waiting for a while for the result. candidates are running on issues like climate and women's rights. we could end up with neither party ending up with enough seats to govern. that could mean weeks of
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negotiation to see what the new government looks like. >> for insight on that, you can download our podcast. the latest addition is available wherever you get your favorite podcast. you will get key insights from our team on our blog. now to vonnie quinn. vonnie: president biden has offered support for finland and sweden's bid to join nato. he met with the prime minister's at the white house a day after they applied to become members. the country's most first broker an agreement with turkey which opposes their bids. >> this is about the future.
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it is about a revived nato that has the tools, resources, clarity, conviction to defend our shared values and lead the world. vonnie: china is seeking to replenish its oil reserves with cheap russian oil. beijing is in talks with russia to buy additional supplies. russian crude prices have tumbled as buyers step away. u.s. treasury secretary janet yellen is rejecting the idea of the fed and other central banks boosting their inflation targets. she is in germany meeting gus -- governors. the u.s. had been aiming for 2% but consumer prices have been running at an annual rate of 8%. canada has banned huawei and z
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te from its wireless networks over national security concerns. is this is that had installed gear from the companies will need to remove it are the end of 2027. the decision brings canada in line with similar bands in the u.s. and u.k.. relations between ottawa and beijing have been worsening after the resignation of the huawei cfo into thousand 18. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. shery: still ahead, we will be speaking to ivanhoe founder and others on the opportunities in latin america amid surging commodity prices. the ubs representative gives us her take on recent market volatility. this is bloomberg.
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>> this is been a valuation re-rating. >> that is now deflating. >> what we are seeing is a rotation from growth stocks turning far in the future toward stocks that are more value. >> we see more opportunities out there. >> the directional trade and more about the relative value. >> everything on the fundamental front seems packed. >> we have to wait to see what the fed is doing is the right thing. >> everyone is afraid to get it wrong and the chances are they
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will get it wrong. >> talking about 2024 maybe later. >> we don't think a recession is going to happen in the next couple of quarters. >> some of our guests on the volatile week of trading. our next guest says the economy will avoid a recession and that we may be passing the peak. the managing director at ubs private wealth management. we have seen so much volatility in the markets. the problem is that there is not conviction either way across any asset class. what do you do in order to try to hedge the volatility and losses? >> it's important to obviously always manage risk control. i think overall, the fears about inflation and a fed soft landing
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what will we do with rates and the balance sheet is the overriding concern and once we get past that and get some clarity from the fed, i think the markets will ease up. >> what makes you think because we see growth forecast being front and center. there are increasing concerns about china, the u.s. consumer. what makes you believe that a soft landing can be achieved? >> it is certainly going to be difficult for the fed to do that. this fed has not seen inflation like this for over 30 years. the models that they have really don't apply to a situation where we have pandemic deglobalization, inflation, rising interest rates. when you look at the data, unemployment is still low. the earnings are still
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reasonably good. we have had some certainly sentiment from the consumer where they may be starting to change. monetary policy is still relatively easing. the fed has only raise rates half a percent so far. that is not data that gives us the imminent recession scenario. recessions are normal part of a business cycle, but we don't see that as our base case. the risks are rising. >> in the meantime, are we expecting range bound trading until we get that clarity and do you adhere especially during the debt or do you stay on the sidelines? >> it is really to each investors level of risk tolerance with their willing to tolerate. it is possible the market could go down further from here.
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i think it's important to look at quality stocks that have cash value, good margins and pricing power. dividend stocks that have increasing yields year after year. those are the things that sustain a portfolio. it's important to understand or recognize the resilience of the equity market. we have been here before with corrections and quality comes back. >> many investors are preferring energy given the surging commodities. what are the sectors where you find opportunities and the quality names you talk about? >> we like energy. we like commodities because of inflation. we like defensive sectors like health care. the dividend stocks in a rising interest rate environment is going to be a challenge for bonds. those are the sectors we are
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looking at for the defensive play in an inflation environment. we are telling clients to focus on yes we have inflation, we may not have recession, but we do have inflation. the prints are going to be high for several months. ultimately, inflation will be coming down because of the year-over-year comparisons. >> what is the bottom for the s&p 500? >> if only i knew. i know what i can't tell you. [laughter] it's really hard to time the bottom especially if you are a long-term investor. it was great to have your insight. coming up next, joining us live from panama city is a guest giving us his take on commodity pr wit means for the latin american market.
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this is bloomberg.
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[speaking foreign language] >> there have been restrictions in the exports of bananas and flowers to ukraine and russia. the total amount of private exports not petroleum related has increased in the first quarter of 2022. above the average compared to the 2019 pre-pandemic figures. that is something that makes us feel highly motivated. >> latin america's reliance on commodity exports has governments and investors talking about the spiking prices. joining us now is an innovator
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and company builder peril. joining us in panama city, good to see you. you are in some way different businesses. i will go straight to africa and your biggest object which is copper. you have done well in the first quarter. can you accelerate output? >> absolutely. we are doubling our business as we speak. it will grow toward the end of 2024. most rapidly growing copper mine in the world. >> are you accepting more partners? >> the mining industry is very small. we know each other and we are talking to each other, but i can't talk about it on television.
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i think we will see a lot of the major mining companies, there has been success. it's like honey, follow the other bees. copper was historically in the congo. they tend to keep going for a long time. a lot of people are coming back to the congo because of the high grades, the lack of ice and snow. the risk of regulatory regime from a government that wants to attract foreign investment. >> is that the top speed you can go out right now?
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>> we are only going one phase at a time. the third phase is kicking off now. there is no theoretical limit. we have to find more resources. it is the hydroelectricity that is the limiting factor. >> take me to what we have been discussing today earlier in the form is the fact that all of this mining is taking into account sustainability, clean technology. how realistic is it to get all of those resources at once? >> mining is such a difficult business that i like to say it is definitely not a business for intelligent people. we just want to make a few billion dollars, we would make
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an app and sell it to a company. mining takes decades. the process of finding a mind, we work and 60 countries, it could take a decade or longer. then to engineer design and construct a mind, we don't know what the price will be years from now. we have to be at the bottom of the world cost curve, yet we design the mine around the esg characteristics that are necessary to attract the capital to build the minds but to keep the and customers happy. >> you are in so many different tech ventures. tell us about some of the things that excite you especially what can help with the product shortage we are seeing. >> in australia, we have sunrise energy ventures. we are expanding a project in australia. scandium is used to turn aluminum into super material. we are also developing
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disruptive new technology to compress electrical energy and do a lot of engineering work with a lot less energy. we have been at that for 20 years. we receive subsidies from the french government. we will be talking to them more to the general public. >> what can you tell us in terms of where your business is headed? i know you had this love and hate relationship with mining. you always said you want to leave a better place. are you going to be decreasing your work in mining doing more around cleantech? what does the future hold for you? parks we're interested to see were technology is going to develop this new technology and discern what we need five to 15 years from now. then to think a new way on developing those materials in a greenway. the whole enterprise has to be thought out.
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we're trying to project our consciousness 10 to 20 years away to figure that -- to fix this enormous supply chain issue that the world economy now faces. the federal reserve for -- federal reserve board may raise rates, but they don't recognize integrated world economy is gradually breaking down. that's insanely inflationary. these critical raw materials are normally necessary for the new economy, but they are also critically important for each nationstate national security. >> it was a pleasure talking to you and being with you here and panama city. we will have plenty more to come from the bloomberg new economy
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>> a policy reform free zone this election. >> playing the long game as a country working on the development of skills and trying to attract the right skills to complement our domestic skills. >> that we are building enough homes for the population. >> we need to see labor moving freely between states but also internationally. >> the cost of doing business is a big issue. >> this is prohibiting businesses to grow and get out of the situation. >> the skill shortage is a key constraint to economic growth. >> the relationship between china and australia is to the extent that it has minimal impact on china. >> at the forefront of renewables.
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we have the opportunity to lead the world. >> australia has been in such a great position. we are keen for a stroll you to continue to be globally competitive. >> for me it is steel migration. >> several business leaders on the key issue priorities ahead of the election. the latest opinion polls putting the labour party ahead. for more, i want to bring on our next guest. in breaking news, there was some concern that a significant proportion of australians who tested positive for covid wouldn't be able to vote tomorrow. has that changed? >> it looks like that has been reversed and that anyone who has covid will be able to vote by phone which is a huge decision because it did look like there could be several hundred thousand people who had been diagnosed in the past week who couldn't vote because they
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hadn't registered for telephone vote or postal vote in time. >> as we had to the polls, what are the key issues driving the election? >> it comes down to economic strength versus social issues. labor has presented a stronger case in terms of the social side of things like daycare, aged care, and disability insurance for the coalition has been pushing their credentials. we have seen newspapers endorse a split down the middle between those who think the government does deserve another shot and those who don't. neither side has been compelling this time around. with tickets coming down to the wire and it's not a clear front runner. >> the coalition campaigning has been steady managing the economy
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coming out of the pandemic. how resilient is the economy right now? >> the economy is running hot. it's not just the job indicators but -- record highs. there are a lot of people at work which is what they are touting as well. overall, it looks like an economy that is going from strength to strength but at the same time, inflation is running hot and cost-of-living has become a big issue. people are still spending. all the data we have from retail sales and spending data from banks points to the fact that consumer spending is still resilient and higher cost have dissuaded people from going on and spending.
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we will have to see how that changes. >> some are surprised that the rba went on during an election cycle. does the outcome change things for the central bank either way? >> so far, both of the parties are not very different in their policies. it looks like it's not going to change a lot of things dramatically as far as the economy is concerned. which is why market pricing has not changed. economists are still predicting interest rate hikes through the rest of this year. pointing to the cash rate at 2.7% by december which is quite aggressive. that's not what economists are predicting, but we will continue to see interest rates rising. >> affordability continues to be a touchstone. what is the trajectory for the property market? parks for both parties, they have come out with policies
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proposals to boost demand. which economists are saying will provide some support which is not a good for if economists are tipping the price will fall this year and a bigger fault next year. if these come into play, maybe we will not see the fall and prices which is good news for people who already own a home. if you're trying to get into the market, it's -- >> pretty dire. for more insight on the election race, you can download our podcast hosted by paul allen. the latest addition is available wherever you get your favorite podcasts. now to vonnie quinn. vonnie: the kansas city fed president says the stock market slump should not surprise investors given the current environment. he told cnbc the fed has warned
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it will keep rising rates to cool inflation. jay powell has already indicated it is on track for similar moves in june and july. sri lanka missed payments worth 78 millions of dollars. the central bank's warning inflation could accelerate to 40% in the coming months. indonesia has lifted a ban on palm oil exports in a move that will bring relief to the global market after the war in ukraine choked off critical supplies. the president says shipments can resume from may 23. a former japanese vice financed minister told us that until the
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gap narrows, the yen is likely to remain under pressure against the greenback. >> the market expects the rate to go to 1.50. if it goes beyond that, then i think we would be somewhat concerned. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: we're back here at the bloomberg new economy gateway latin america.
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great to see you here. we are actually meeting face-to-face at the form. let's talk about what is happening in the copper market. the long-term outlook seems to be positive. everybody is electrifying, but we are seeing seven-month lows. what is the outlook for you? parks in the short-term, we are seeing a lot of volatility in commodities and copper is not an exception. at high levels because stocks are low and there have been issues, volatility in the short-term with prices being at high levels. the long term, fundamentals are strong. the demand which is driven by the transition in the energy sector because of climate change does imply that the prospect for copper and the outlook fundamentally is very strong in the mid-and long-term. >> when you are basing your business performance, what is the base case addario for this
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year and next? >> that is information we don't share publicly, but i can talk about the consensus in the market. what we have seen 12 or 18 months ago, the consensus long-term price was probably below three dollars. now, we are seeing some indicating the long-term price will be around 3.20. certainly it is going up. there is a view that demand is growing. supply is constrained. the fundamentals are shifting. there is structural movement in the market indicating that prices will be higher. >> we are seeing big changes when it comes to chile. we know there will be stricter environmental regulations. will that affect your new and future projects? >> as long-term investors, any
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mining company does not like uncertainty. there's been a lot of change their as the new constitution has been written. process is still unfolding. therefore we have to see what the final outcome is. we understand that writing a new constitution provides the possibility of a a social pact which leads disability -- leads to stability in the long-term. in terms of investments, we are working on them, but as to how this unfolds to determining the best timing to undertake them will be. >> what about water rights? >> water rights are being changed. there has been a long discussion about water rights over time. if this constitution is enacted,
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this would be a type of permit administrated by an agency. we have been moving to the provision of seawater for our facilities. we don't rely on water in the same way and we will rely on it last because we have seawater as the base case. we will be building a desalination plant one of the biggest ones. that is good news. we are almost 80% and that will provide basically independence on water provision. >> you are transitioning to newer greater technologies as well. i think you have a pilot on your green project as well. it give us a scope of what it is trying to achieve. i think you want to be carbon neutral 2050. >> this is exciting. we want to be carbon neutral and reduce our emissions by 30% by
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2025 which is very close to where we are today. what are we doing? various things, but one of them is renewable energy as the source of power for our energy needs which is great. we are running this year for the first time fully under renewable energy for electricity requirement. >> when will you wean yourself off completely? parks in terms of energy contracts, we have removed them completely. what we have left and this is common is the diesel we use in the trucks. the technology is not there yet to replace it by alternative energy. that's where we are working to power by hydrogen. we have the pilot and we are doing trials in association with other small startup companies and we think that technology right through will come for us and the industry then we will be able to move to green copper without emissions. >> good to see you in person.
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haidi: a great conversation. coming up next, ken griffin says recession is inevitable, but not likely in the short-term. that interview is just ahead. this is bloomberg. ♪
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haidi: let's take a look how sovereign bonds are shaping up. we are seeing the move when it comes to the australian 10 year yield dropping nine basis points. this after we saw treasuries ending the session highs. the yield came off the richest levels of the day. let's look at the breaking news across the bloomberg. new zealand april trade numbers coming through. imports $5.73 billion. trade surplus. for april and the 12 month year today, that leaves a trade deficit of $9.117 billion.
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shery: it's time now for morning calls ahead of the asia trading day. strategist are saying investors worried about the u.s. recession may have gone too far. there will be no recession this year she says and the economy can bounce back. hsbc strategists are slashing their year and targets i 9%. they said the u.s. market is facing a growth slowdown in the second and third quarters. real rate shock is also sweeping through markets. strategist suggest staying defensive with an underweight in stocks. citadel founder ken griffin says he is out of step with many investors because he doesn't see a recession happening in the
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next couple of quarters. he told us that the key market themes are well now -- well known and differentiation is the key. >> markets are awash in opportunity. every day, there is something to do. it comes down to in a business predicated on research, it is about idea generation. what differentiated view do we have whether it's about commodity, credit, equity that is different than consensus? that's where we deploy the capital. >> is there something that you see as securely attractive? >> no, i don't. the contemporaries we speak to and compare notes with,
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information flows seamlessly across the market. the big debates around -- commodities are the other big debate. in particular, where is the u.s. going to go with energy policy? how fast can europe pivot away from the impacts of the war with ukraine? what is going green mean and in particular, now that we have seen shortcomings of policies that were out of sync with reality and the devastating impact on consumers, regulatory issues are coming back into play in a powerful white that is unsettling. thematically, the big themes are known. the key question is how well can you formulate your differentiated opinion from others? for example, i think we are out of step with many people.
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we don't think a recession is going to happen in the next couple of quarters. we are not surprised by the equity market move. the fact that we don't think a recession is about to happen is differentiated view. >> that was the citadel ceo ken griffin speaking. coming up, apple's release of a mixed reality headset. we get the scoop. this is bloomberg. ♪
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>> we are watching the make or break star liner lunch at the moment. this comes after years of setbacks and technical difficulties. the orbital spacecraft is returning.
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it is set to launch aboard a demonstration flight that brings boeing one step further. this is orbital flight test number two and it is a capsule that in the future is designed to service nasa to and from the iss. you are looking at the launch at the moment. the flight has been scheduled and encountered numerous delays. you are saying that successful launch. this is bloomberg.
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