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tv   Bloomberg Daybreak Asia  Bloomberg  May 22, 2022 7:00pm-9:00pm EDT

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>> we are counting down to the asia market open. >> welcome to "daybreak asia." australia's new prime minister is set to be sworn in ahead of a crucial meeting in tokyo. president biden is continuing his first trip to asia with a plan to build a diplomatic coalition to counter china. stoxx set to start the week on a note of caution with concerns over slowing growth in the world's biggest economy. >> let's take a look how we are setting up in australia. we awake to a new prime minister, perhaps a new cabinet. the incoming prime minister anthony of nec is going to be sworn in imminently. we know that we tend to be in an uplift when it comes to equity trading in the three months
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following any federal election regardless of which party wins, so we are looking ahead to that but we see weakness going into the start of trading potentially in sydney. about a quarter of 1% lower to start cash trading. we have seen the relief rally for treasuries as well as other stubborn bonds get stifled by hawkish central bank talk. also watching new zealand with expectations for the rbnz meeting midweek, somewhere between 25 and 50 basis points. the shadow board coming out saying they see the need for a 50 basis point move. that would potentially create some interesting headwinds for the kiwi dollar as well which we have just seen plunge between april and may. but a lot of people are saying potentially there is an even more bearish outlook for the kiwi dollar. dollar-yen holding at just under 128. expectations are for more greenback weakness. the aussie dollar has gotten a postelection bump.
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the rba saying they don't see a sustained rally, a high of around $.72. >> especially with weakness on the dollar. the five-day worst performance in quite some time. since november. right now equity futures pointing higher. 0.8% for the s&p e-mini futures after we have the s&p 500 pulling back from a bear market. even nasdaq 100 futures looking higher after we saw that wipeout in tech stocks. the nasdaq 100 finally in line with long-term averages. we continue to watch the treasury space because we have a violent rally last week which sent the 10 year yield toward that to 78 level. we are seeing -- oil prices, wti seeing weeks of gains with a very tight market for products.
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it really is about what is happening with the fed. we get minutes later this week. not to mention retail earnings also are in focus here. >> let's get you straight to canberra where we are seeing the incoming prime minister anthony albanese being sworn in. this is one of the swiftest changes in government is an australian history. -- in australian history. all of this being timed so that the new prime minister as well as his foreign minister can head to tokyo for that meeting tuesday. anthony albanese is the son of a single mother who was raised in public housing. he is being sworn in as the 31st prime minister of australia along with him sitting down, his deputy, who is widely expected to tap the defense portfolio. there is also penny wong, she will be foreign minister. katie gallagher will be the new
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australian finance minister. anthony albanese standing in front of the governor general taking this frustrated labour party three years ago, you remember the shock election, and really managing to turn it around. we have seen broad dissatisfaction with both major parties even though it does look like the major -- the labour party will get the majority to govern. but it has been an extraordinary victory when it comes to pro climate, pro women's issues, as well as the greens doing extraordinarily well when it comes to some of these states like queensland. after we get that swearing in this morning, happening right now, the new prime minister and foreign minister penny wong will be flying to tokyo for those meetings with the quad, japan, the u.s., india, and australia. interestingly we will see the office bearers take on and
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divide up all of their cabinet portfolios until the full cabinet is named later in the month. we are waiting for details with other appointments in the days and weeks to come. it is a victory for the labour party but the prime minister takes the reins of an economy with a lot of challenges. interest rates rising at a faster clip than real wages and a ballooning fiscal deficit, higher national debt as well as tensions with key trading partners like china. let's bring in paul allen who takes a look at what this result means, the implications. they are moving closer to a majority. what are the implications? >> it may not be completely easy for anthony albanese to govern. he has 52 seats right now, 56 needed for a clear majority. so the counting is still taking place. postal votes are still being counted. it is possible he could get there but if he does not he is going to need the support of the
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cross bench. there has been an erosion of the support for both major parties. in sydney we saw the liberal party strongholds go the way of independents. liberal voters have been frustrated by climate change and women's issues. a number of seats in sydney falling to the deals -- teals. the greens picking up a former safe labor seat in brisbane. a real shift in attitude for both major parties. the voters really expressing frustration about timid policy we have seen on climate. >> not so much a shift on attitudes toward china, but perhaps a hardening of australia's stance under this new government. . >> yes, anthony albanese came under fire from the government
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-- the old government accusing him of being the communist party of china's pick at the election. he has since hardened his stance. he has said he was noncommittal when it came to the question of taking a call from the chinese premier xi jinping. there are believed to be some in his cabinet who have a more moderate position toward china, particularly on issues around climate. elsewhere, foreign policy is very much unlikely to be changed . scott morrison did concede very quickly saying he wanted to be sure anthony albanese could get to tokyo on tuesday to represent australia at the quad. that is set in stone, that was a bipartisan policy as well. they were criticized during the campaign for being inflationary, $5 billion of extra spending expected over the next four years. we will know more how the treasurer -- he has a budget he
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plans to release around october. >> we are hearing now the central governor of the central bank in australia that the rba has no plans to sell bonds from the portfolio. this reminds you the per care ready -- the precarious situation in the economy. the cost of living, the wages, it could be a difficult balancing act for the new government. >> this is something else anthony albanese campaigned on, wages growth. in a policy light, small target campaign, everyone got excited when he said he would like to see wages growth at or above the pace of the rate of inflation. he did moderate that stance to say that is the kind of growth he would like to see for the minimum wage, although the government -- the new government very conscious that wages growth is an issue, an area of policy
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they are pushing pretty hard. >> paul with the latest on australia's election. we are watching the new treasurer being sworn in and of course the swift transition of power happening at a time when we have a lot of the geopolitical agenda, joe biden now in japan after weekend talks with south korea's new president. with north korea and russia's war in ukraine featuring prominently, he will meet japan's prime minister keisha -- prime minister kishida. let's bring in stephen engle. how important is this military spending news? not to mention all of these geopolitical news overshadowing perhaps a more -- a deepening of the economic engagement of the region? >> that is right. the biden administration wants to focus on their pacific economic framework, biden's framework for asian -- for
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economic engagement in the asia-pacific. the ipf has sort of been watered down and has not gotten a lot of momentum even domestically especially because -- essentially because it does not involve tariff cuts and economic or trade benefits for the signatories. according to critics of course. obviously given what is happening with russia and ukraine, what is happening with north korea and its saber rattling, the backdrop of course of tensions with china and the quad meeting tomorrow between the united states, japan, australia, and india, which the chinese foreign ministry has decried as america's attempt to create a nato in the asia-pacific, obviously geopolitics is front and center as biden is on the second leg of his two country trip. he arrived yesterday in japan. he will meet with prime minister
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kishida today, who will present the plan to mr. biden for increasing defense spending. japan spends about 1% of gdp on defense right now because it has a pacifist constitution. nato nations have a goal of about 2% of gdp on defense so there is room for japan to increase that, but he arrives in japan after a weekend of talks in south korea where north korea and russia will -- were front and center, but also economic issues because joe biden, part of his ipf is about supply chains and semiconductors are key, strategically and economically to the united states. he went to samsung and had this to say. >> the global semiconductor shortage has caused a shortfall on consumer goods especially automobiles. contribute to higher prices around the world. and nowita al and
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unprovoked wars and ukraine has spotlighted the need to secure our medical supply chain so our economic and national security are not dependent on countries that do not share our values. >> biden in japan today and tomorrow we'll wrap up the meeting with the quad meeting tomorrow before flying back to washington. >> stephen engle joining us from hong kong. president biden -- we will get the reaction to all these geopolitical moves. of course steve just talked about supply chains, semiconductors in the pacific economic framework. the pushback against china. what has the potential to move markets in asia this week? >> all of those depending on how
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the situation develops in china. we have had a lot of optimism stopped by the fact that china's benchmark loan rate came down three times as much as economists estimated. 15 basis points instead of five, which was an unusually sharp move. previously has not been known for short moves especially on the easing front. china's economy faces a lot of concerns. there is a need for a follow-up to that. a lot of eyes will be looking at what comes out of china, but from a policy point of view and our chinese markets react, the times china stocks and bonds are stabilizing after having a pretty wretched few months, and that wretched few months has been a major drag on asia given how important china is. we will be watching for that.
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it has kind of been on the back burner for a while as the fighting became less hot. there is a growing issue of the supply chain and what joe biden was talking about was semiconductors. and the quite extraordinary situation with baby powder. who would have thought one factory going out of order would mean the u.s. has to airlift baby powder? that cannot be the kind of thing that helps risk sentiment when you can see how fragile even one of the world's most robust economies can be to the supply chain issues. >> garfield reynolds there. let's get you to vonnie quinn
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with the first word headlines. >> shanghai will start categorizing parts of the city by covid risk as authorities take new stops -- new steps to curb infections. starting next month, parts of shanghai will be designated low, medium, or high risk areas. 14 days without community infection will be considered low risk. medium entire restriction -- medium and high risk areas will be restricted to their homes. at least two cases of monkeypox in the u.s.. it is traditionally confined to regions in africa but infections have been rising in europe and north america. biden says it could be consequential and advisors are working on a plan. india has cut taxes on fuel as inflation hits households, farmers, and manufacturers. the government has waived import taxes on cooking coal.
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the finance minister says the fuel tax cuts will cost around $13 billion annually. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. >> ahead, we speak to the u.s. -- the japanese ambassador to the u.s. about biden's indo pacific economic framework. >> plus the risks of global synchronized slowdown. this is bloomberg. ♪
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>> rising cost pressures will be a key issue for policymakers and business leaders at the world economic forum. we will also be watching fed minutes on wednesday, policy decisions do from new zealand and south korea as well. let's get more from the chief asia-pacific economist at the -- harvey getting the sense we are in the middle of a fairly synchronized global slowdown now? how can policymakers counter the risk of stagflation? >> we are there. we wish we were not but we are. we have to acknowledge the
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slowdown is happening. really there is a possibility of recession in the u.s. europe is not heading all the way to recession, but growth has come down. we were hoping around 4% for the year, it is going to be half. in china, it is not going to be recession. i do not think it is global recession but it is global -- global deceleration. inflation will be not double, which is good, but certainly not coming down. not coming down in the west. most importantly for asia. that is what we have seen already since the beginning of the year. in a way, for asia, this is an inflation year.
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>> where do we see a peek then? -- peak then? >> for the u.s. and europe, probably around peak -- probably a round peak. deceleration is happening faster than asia. this is happening in europe because of ukraine and in the u.s. because a very tight monetary policy. for asia because they are coming out of covid later and the opening up is happening later, they still have demand, that is why it lasts longer in asia. and supply chain disruptions were not as relevant in asia last year. we are already seeing all types of measures from export bands and food -- bans and food in the
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region. >> we are watching president biden's visit across asia. he is supposed to be announcing this economic framework for the indo pacific. we do not have the details specifically but usually when you have geopolitical agreements on trade and commerce, do they have economic implications right away? when would you start factoring that in? >> i think biden did not come to the region with a big bag. the numbers about packages are tiny. he cannot really go through legislation. it does not mean it will not be useful for the u.s. if they use what he has used for europe. i think he is going to make trade and technology deals more
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flexible without going all the way to a free-trade agreement or anything like that. that is not going to happen. that is why i think he is so vague. >> we do have three big monetary decisions from south korea, new zealand, and indonesia this week. what is your expectation? >> hikes. >> all this week? >> frankly speaking i think that is where we are. . -- full stop. you could think about the philippines or india. indonesia, just think indonesia. of course inflation compared to others that have suffered like south korea. import prices, increasing very
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aggressively. we know it is going to be a hike of about 75 basis points somewhere. for indonesia i think they will hike but they will need to do 100 basis points. i do not think we can expect indonesia not to react. the central bank in the region that will be most affected is the bank of indonesia. >> we will have an exciting week on daybreak asia. plenty more to come. this is bloomberg. ♪
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>> here is a quick check of the latest business flash headlines. shareholders are expected to
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>> if only i knew. >> you don't know? >> i know but i cannot tell you.
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>> i do not have a crystal ball. >> i think we are getting close. >> when you look at the trend it is pointing downward. >> we are going to end the year slightly higher than we are today. >> what we get that clarity from the fed, the markets will go ease up. >> you are going to need more than that to sort of stop the fall. >> we think the s&p gets down to around 3600. >> are guests talking about the outlook for the s&p 500. there are a lot of questions about when we could see the bottom. the s&p 500 was very close to the 20% decline, which would mean a bear market. it did manage to pull back in the late rally we saw friday. we continue to see the extension of gains on the s&p, futures gaining around 1%.
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even nasdaq 100 futures gaining. we saw a $5.5 trillion wipeout already. the nasdaq 100 being helped by the fact it is trading in line with long-term averages. dow jones futures also gaining ground at the moment. we continue to watch everything around monetary policy. those expectations are really being felt across assets. president biden's top economic adviser gave the federal reserve the white house green light to continue its aggressive inflation fight even at the expense of causing a recession. kathleen hays is here with the latest comments from brian deese. what did he have to say? >> it is very interesting. reassuring in a way, that this is joe biden's chief economic advisor, director of the national economic council, and he was asked about this inflation fight, asked if there is risk of recession. he said we need to give the fed
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the space and the independence to do its job, which is to get inflation under control. there are always risks. so many on wall street, so many x fed officials, so many current fed officials acknowledged there is a risk of recession. if you do not raise rates enough and fast enough to bring down inflation. we also
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that is the thing, then we can start getting under control. we can avoid a recession because we will not have to fight it quite so hard. kim bullard feels they are heading the right direction with supply chains. maybe more people come back to the labor force and start working again. all kinds of things could happen. >> bullard was somewhat optimistic. they could bring a recession under control. there are so many voices saying almost by definition you cannot. >> it is a very tricky task. kathleen hays, global economics and policy editor with the latest on the fed and inflationary pressures that are now spreading to food costs as well, given what we are talking about, supply chain disruptions, is leading to food costs continuing to surge especially with the war in ukraine. that is hurting china. china imports and depends on imports of soybean for 85% of
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its consumption. xi jinping has tried push farmers to harvest more, consumers to really reduce waste, and of course we still have to see what happens, but so far
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>> japanese markets were opening just under about 15 minutes or so from now. we are seeing nikkei futures looking pretty positive, extending gains to almost 1% there. we are seeing oscillation when it comes to u.s. stock futures. we are seeing nasdaq as well as s&p futures looking positive at this point. treasury futures edging lower. the aussie also falling to a
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three week low. let's get to stories we are watching ahead of the open in tokyo. the boj next move as governor kuroda warned the 2% inflation target is not sustainable. it is the first time the reading has hit that level since 2008. kyoto news reporting prime minister premier kishida's approval rating rose to the highest since he took office. biden will be meeting with kish ida before a summit with japan, australia, and india. >> he previously served as the ambassador to the u.s., ichiro fujisaki. we heard perhaps fumio kishida was ready to announce an increase in defense spending. what are you expecting from these talks? >> thank you very much for having me. i think president biden has
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intervened at the right time. there is an anxiety in the region about u.s. engagement after the invasion of ukraine by russia. i think he comes to korea and japan to assure us the u.s. is fully engaged in this area. we are very happy about it. >> -- >> the ask for defense spending is not u.s. pressure. it is because of the situation around japan. that is the consensus, that we have to increase defense spending. to what level is a different view, but we cannot just stay like this. we have russia. we have north korea and china is coming into territorial water very often.
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this is very much of concern to us. >> we are expecting more clarity when it comes to the indo pacific economic framework perhaps also to counter china's influence. what would japan like to see in this sort of new trade agreement? >> of course japan was pushing tpp, both we understand -- but we understand at this juncture the u.s. is not in a situation to arrange itself in tpp. so we wanted something as a token of u.s. involvement. i think they have chosen a very ripe area like digital and also supply chain, energy, which are very focused. it is not only trade that matters. those areas are very much
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concern to us. there are some countries that have anxiety over labor environment, regulations, that understand this agreement does not one that is divided -- is not one. it is divided into four. that is how i look at it. >> what it benefit japan if south korea was included in the quad? can president biden help with that? >> i personally feel south korea would like to come into the quad, -- if south korea would like to come into the quad, we should welcome it. we share democracy, we share common values of freedom of speech and everything. i think korea is the right member. it is very much suited for the
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quad as well. >> what should the talks today center around when it comes to dealing with south korea? there have been suggestions that japan despite not having formal diplomatic relations should be considering sending aid. >> well, i think it is a great opportunity to give some aid. as the president said, president biden said they are offering, but not getting a response. i do not know what japan has been doing. i think if the north korean site is going to receive vaccination and things like that, japan would be willing to extend it. at the same time, japan is asking for humanitarian help about those abducted people.
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as for humanitarian things, i think it is not one package, but we can work on each thing. >> ambassador, what do you make of prime minister fumio kishida 's diplomatic efforts so far? there was a lot of skepticism given he had never dealt with foreign policy. how do you think he has done so far? >> he has been foreign minister for four years under prime minister abe. he has experience. also,, very frankly, he will not be seen very strongly by some people but he should -- he has made many decisions himself. trying to ameliorate relations.
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i think these are the reasons people are welcoming his leadership as you have seen. >> ambassador, what is the one change japan needs most right now? >> what change? not one. we need many changes i think. we have to change our economy. we have to change our political system as well. there are a lot of things we have to change. academic as well. it is not only one thing we should focus on. it is not only the economy. we have many issues and i think it is wrong to say this is the one. i think if you push me to say,
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the first one, economic policy, trying to boost the economy. we have been behind for almost 30 years and not a real change in japanese economy. we were one of the engines in the world. we were left behind from the united states and china. we have to reinvigorate the economy as well. some of our systems like the academic system are a little obsolete. we have to look at those as well. >> ichiro fujisaki, former japan ambassador to the u.s.. you can get more from this interview on tv , available to all bloomberg's subscribers. you can tune in to japan ahead every week for the leading names in japanese business on monday at 8:40 a.m. tokyo time on bloomberg. ♪
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>> we have the latest numbers out of shanghai, adding 558 local covid cases but finding no new covid cases outside of quarantine for sunday. this as we learn shanghai is laying out criteria it will be
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using to categorize parts of the city as being low risk for covid. the latest step authorities have been taking as they try to look for ways to end what has been a pretty bruising to month-long lockdown in the financial center. beginning in june, these will be areas categorized into high, medium, or low risk categories according to the health commission. districts that have not reported cases for 14 days will be low risk. we have yet to find out what that means when it comes to freedom of movement across the various places. >> and here is a quick check of the latest business flash headlines as well. siemens energy will offer a 4.3 billion dollars to buy a share is an renewable energy, part of an effort to turnaround the spanish wind turbine maker. siemens energy expects the deal to be completed in the second half of this year. it already owns 67% of gamesa.
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the war in ukraine and china's covid lockdowns weigh on sales. the plane maker had a slow couple of years with work travel curtailed, but sales are trending upward for airbus with five corporate jet orders so far in 2022. >> australians have voted in a new government following decades of actions by one of the worlds highest per capita emitters. -- decades of inaction by one of the world's highest per capita emitters. a narrow victory for labor and anthony albanese. how do we characterize the results and how australians have voted? >> normally you expect an incoming government in australia to come in with a majority of the house of representatives.
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what is quite striking is that is not really happening. we have not finished all the accounting but that share of the house, anthony albanese will have roughly 52% of the house. that translates to a little bit under 80 seats. it is not that significant. normally governments would expect to be 85 to 90 than their first term. of course we have three year terms in australia. it is a catastrophic defeat for the current government. the liberal national coalition. there total will drop to 50 to 60 votes which takes them really back to world war ii, levels they were getting then. >> does that mean the politics of climate change will change in australia? >> the real victors of the selection of course are a third group, a bunch of independence and greens who are focused on climate. it has been the number one issue of this election.
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they will not hold the balance of power is an parliament so the challenge will be how to wield that power? how do they exert influence over the government and how does the labor government handle them? it will sooner or later if not this term need to deal with them. >> bloomberg with the latest on the australian elections and we have the market opens in seoul and tokyo next. we will be watching for the latest covid numbers out of china. beijing reporting 99 local covid cases for sunday. this is bloomberg. ♪
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>> well book -- welcome to
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daybreak asia. haidi: asia major markets have just opened for trade. our top stories, start to the trading week. slowing growth in the world's biggest economies. australia has elected their 31st prime minister. and president biden arrived from tokyo to seoul in his first trip as president. shery: we will watch his visit to japan. the nikkei is gaining 1%. topics almost as much. the japanese holding at the three week low against the u.s. dollar. the main data point this week from japan will be cpi look -- cpi numbers on friday, a look ahead at what we can expect nationwide. south korea, we got the trading
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numbers for the first 20 days of the month. exports gaining and imports rallying. not surprising given the rallying in prices. the korean won holding at the 1270 level. a little bit of weakness after we saw the best day in weeks against the u.s. dollar. haidi: in australia, the first postelection trading session. a staggered open and numbers are trickling online. an investment into green energy, given that climate was a key topic given -- going into the
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election. some difficult sessions last week. we are heading into the fed decision this week. depending on who you ask, it could be 25 or 50 basis points. the kiwi dollar is holding onto the recent rebound pretty well but we are seeing increasingly bearish building even with the rbs z. offsetting hawkish notice with a lot of risk sentiment deteriorating. the aussie dollar a little higher but it could be topped at about 72. looks like we are seeing a strong session into the start of the trading week. we see a pullback in the s&p
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500. brent crude is being watched. we continue the product situation demanding -- driving demand on higher pricing. let's look at how the changing of the guard will impact australian rocket. -- markets. what are some things you are focusing on given the results of the weekend? >> traditionally it has been said that elections do not impact the market but it seems to be a postelection boost. we have seen that eight times out of the last 10 votes and it's what we saw this morning. this is a government where one of the main promises was to make childcare affordable and that is one sector where we could see
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impact. we only have one childcare stock listed in australia. but climate was the big thing. any potential winners or losers from what will happen with climate change policies will be something investors will watch going forward. it is also worth mentioning at the moment there is not a clear majority for labor and that could be an impediment if they do not get that in parliament that could provide some headwind for australian stocks, especially if they have to start negotiating with them but -- negotiating with independent. that could create uncertainty around the economy and it is already facing some challenges and headwinds but right now, we
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are seeing a positive start this morning and there is clear relief that we have a clear election outcome. shery: what is the outlook for currency and sovereign debt? >> the aussie dollar clearly is a winner. there is relief that there is a clear outcome. we have a new prime minister sworn in. it was talk of potentially a hung parliament. it was a very close election and investors do not like uncertainty so there is definite relief in the aussie dollar this morning. as far as bonds, yields are down this morning. this is a market that will largely be determined by what is going on with inflation, with interest rates, with growth.
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we saw treasuries rallied on friday and yields went down. so the bond market in australia pretty much tracks the global moods and will be impacted by global factors that impact bond markets. shery: our next guest says there will be substantial volatility for financial markets. the asia market strategist joins us. good to have you back. we are watching rate decisions in new zealand, indonesia, south korea. our previous guest said expectations are hikes. what does this mean for how markets will react? >> we fully agree that the three
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central banks will hike this week. in the case of south korea may even the new focus on fighting inflation, we would not rule out the possibility of a 50 basis point hike there. the reason it has been relatively dovish, but now that inflation is beginning to pick up and a little dialogue is changing, many central banks, including those in south asia, will start to tighten and we have adjusted our expectations accordingly. this will wait a bit for the market, at least compared to the previous scenario. but you have to keep in mind the fundamentals are pretty strong. those asian markets, some
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economies like south korea have protected benefits, even in an environment like this. in the case of south asia we have to keep in mind the reason it is going through a reopening process [inaudible] so a slight negative impact from this hawkish turn. shery: in the u.s. we are watching monetary policy from the fed but also last week we had a disaster with retail earnings. what do you see in terms of the earnings outlook across asia? any bright spots or things you are worried about? >> in line with our growth force this year, the reason we still think we will be able to generate decent earnings, we still feel a bit more optimistic
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about south asian markets earning potentials this year and that hopefully includes india. for china and most asian markets, there has to be a bit of a downgrade that could still occur for the markets in europe and so we are cautious there but in the case of china, maybe we are getting close to the point where policy becomes even stronger and you start to see maybe a bottom in the earnings downgrade cycle. at least compared to three weeks ago, we feel a bit better about the earnings picture for china. the overall region, we are focusing a bit more on south asia and diversifying into the asia-pacific markets like australia. haidi: you are already positive
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when it comes to earnings momentum out of australia. given the election and the focus now renewed on climate amount what are you watching out for terms of policies that would encourage possibly more opportunities across investing in that climate theme? >> that is a key issue for the market. we still don't know the effect of the result of the central coalition framework after this election and what gestures will be made on the climate change and potential regulation for the mining sector. the assumption here is we are not going to get a major market changing regulatory shock to balance it and we continue thinking that what is happening in the commodities market where also it is favorably positioned,
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we continue liking the market and we think the newcomer will only have limited impact in that regard. commodity markets will impact more than the election, in our view. haidi: are you picky when it comes to which sections of the commodity market, energy market and your potential to get exposure air? -- exposure there? >> our market now is to diversify -- our mantra is to diversify. instead of trying to pick the winning commodity, we simply prefer a diversified exposure. not directly investing in essential grains like wheat and corn but for other commodities
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we think growth exposure make sense and will serve investors well because it will deliver in the late cycle environment. haidi: let's get to vonnie quinn with the headlines. >> shanghai start categories saying parts of the city by covid risk as authorities tried to curb infections on the lockdown. parts of shanghai next month will be divided by low, medium, and high. high risk areas will be restricted within their homes. present biden warns about growing monkeypox outbreak after cases were confirmed in the u.s. this variant of the smallpox virus is traditionally confined
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to africa but cases are rising in europe and the americas. apex trade minister is meeting in bangkok. officials from the u.s. and allies left during remarks of the development minister and the russia's delegation boycotted a fixation by the u.s. official. baby formula will arrive into u.s. stores this week. shortages because of supply chain issues are worse than in february when abbott laboratories issued a voluntary recall. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: let's look at movement we are watching in sydney.
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we focus on energy and mining stock in particular given expectations with the renewed focus on climate and climate change policies and tax incentives to promote transitional energy technology. look at agl. the target when it comes to climate action. down for tenths of 1%. there have been efforts to speed up the exit out of coal for agl energy. iron ore demand out of china remains resilient even with trade and diplomatic tensions but there are hopes of a diplomatic reset with the new incoming government and the new
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foreign minister coming in. looking at banks, speculation the election could help banks hit their green targets. we are watching impacts on banks and a lot of move with big lenders. a rising rate environment. shery: still ahead, we will discuss foreign-policy out of the election and what sort of approach australia's new prime minister should adopt for china with an international security advisor. first, the election victory of john lee and how it could and the country's decades of climate in action. this is bloomberg. ♪
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>> tonight the australian people have voted for change. my team will work every day to bring australians together and i will lead a government worthy of the people of australia. haidi: that was the newly
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elected australian prime minister who was sworn in hours ago. let's get to ben west low. he does not have a clear majority but what will the main dynamic be for the new government? >> when the prime minister of australia changes, that is usually the biggest story of the election night, but that's not necessarily the situation. the big news of the night is this huge swing towards independent lawmakers that support tough action on climate change. it looks like almost one third of voters voted for the minority for the first time in 70 years.
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the greens party won 70%. he will have to negotiate with the other parties to work out what they can do that fills the mandates of his party and the others. shery: what does it mean in terms of pursuing policy? >> that remains to be seen. australia has two houses of parliament. the house of representatives, and the senate. in the house of representatives, the lower house, it will remain to be seen if he will have a majority in them but he should be able to count on support of at least one and a group of minor independence. in the upper house, the senate, it looks like the australian greens will have veto power over all legislation that passes. they say they are willing to be practical but if he doesn't go
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hard enough on climate change, the greens party might refuse party legislation, in which case he would have to take further action to cut emissions. haidi: where the prospects for a reset when it comes to their relationship with beijing? >> it looks uncertain at this point. before the election there were reports the chinese government was reaching out to discuss if there would be space for a reset in relations. previously, penny wong said australia needs to cool down rhetoric when it comes to the chinese government. but the labour party was very careful not to be wedged by the liberal national government which ran really tough on china and it seems unlikely they would be willing short-term to make too much of a show of going
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towards beijing. haidi: ben wescott and a big topic in china, joe's visit across asia. it's really in the shadows of what is being discussed, the president in japan after talks with south korea's new president with north carolina and -- north korea and russia's invasion of ukraine featuring strongly. let's bring in stephen engle for more. we were expecting to hear about the indo the pacific economic framework but it seems geopolitics are a key focus. >> there are so many geopolitical issues in north asia where the quad meeting will be held tomorrow.
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the united states, north korea, india, australia. the new prime minister of australia will be flying up to join the meeting on his second day as prime minister. obviously there are issues with china and the past government. i just read a evisceration from the global times of scott morrison, saying his government essentially destroyed a mutually beneficial relationship economically and perhaps beijing will have something to say today at the press briefing on this election but obviously china will be at the backdrop of the talks tomorrow in japan and the foreign minister of japan has
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been quoted as saying, the indo pacific strategy, including the economic framework, the blueprint with asia is doomed to fail. haidi: what else are we expecting from the meeting in japan? >> that will be a meeting with the prime minister and according to the nikkei newspaper, he will be telling biden he plans to push for more defense spending. the ldp spirited by shinzo abe looks to increase and nato members have a goal of 2% of gdp so if there is room in japan to increase defend spending. haidi: stephen engle. plenty more to come on daybreak asia. this is bloomberg.
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shery: u.s. futures, gains being helped by the elite session rally, perhaps. a dramatic turnaround for the s&p 500 saturday that pushed it back from the brink of a bear market. a rally. nasdaq 100 trading in line with 100 -- trading in line with averages. plenty
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haidi: let's take a look at
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aussie assets after we come out of the election results. it looks like albanese will be able to form a majority government. you see a huge shift for australian voters towards independence and minor parties like greens. it feels like a seismic shift in the political landscape and in the policy landscape going forward. asx trading up 2/10 of 1%. we do not expect to see a huge move when it comes to equity trading and result -- in reaction to an election result. we will be watching energy green climate change related stocks, given the renewed priority given by the labor government and the so-called teal independence that got the seat. we have seen cba calling for a
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rally in the aussie. it depends on if we have seen the peak of u.s. dollars strength. the aussie bonds continue to push through with recent gains. tenure sitting close to a three week low. kiwi is the biggest gain or out of the g10 space, up a seventh of 1%. bearishness is starting to build after a recovery of the lows we saw in april and the start of may but we are watching the meeting with the shadow rbnz board saying they see a half-point hike. most markets looking at 25 basis points wednesday. in his first trip to asia as president, biden will meet with the latest -- will meet with
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leaders. the new prime minister of australia will quickly be sworn -- was quickly sworn in and will be flying with penny wong to japan later today. let's bring in the senior fellow of the hudson institute who was previously a security advisor to julie bishop. what are the biggest foreign policy challenges on what dynamic will be struck in the talks given the precarious relationship canberra has with beijing and given the grouping is one thing to count for the growing influence of china? >> it is significant that wong and albanese, considering the
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impact they will have an government. they are trying to show australia and beijing that nothing will change under the new government and both political parties in australia agree that china has become a major thorn in their side. we have no option i cannot turn back by attending these meetings it's essentially trying to say the policies of trying to confront beijing will continue. from the point of view of their relationship, there will not be a fundamental change.
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haidi: is it a missed opportunity for reset? the previous government got to a point where beijing essentially was not picking up the phone. you cannot conduct diplomacy when the relationship is that trade so why can't this be a -- is that frayed. . so why can't this be eight recent -- why can't this be a reset? >> it might be a diplomatic reset in that beijing might be more prepared to answer the phone but it won't be a complete reset in the sense that what beijing wants from australia is fundamentally incompatible with what australia is willing to give. beijing has been demanding that australia walked back policies.
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foreign and on foreign investments and how the government spends money, and where. you cannot have a foreign government dictate those things to another. but china is not willing to change. australia is not willing to cede. so there might be a diplomatic reset. shery: what about a reset when it comes to the personal relationship between biden and a new australian prime minister? >> i think there will be an improvement in the personal relationship. the democratic party and the labour party. the morrison government had a constructive partnership but
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they were more close with the trump administration. with albanese there is a refresh. it should be better but the australian american relationship is so entrenched that the personal loudly traits of leaders matter less -- but the personality traits of leaders matter less. haidi: when it comes to the meeting in japan, what will the new prime minister tried to get out of these talks? >> albanese during the campaign and personally has made a big deal about what he believes is the relatively -- relative lapse of focus on asia and the south pacific so at the meeting i expect more focus on how the members can better ensure china
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cannot achieve its objective in southeast asia and the south pacific which in some regions is seen as the soft underbelly. there will be more talk i think about climate change policies, particularly as compared to during the morrison government and i think that will be more progress on talking about what resilient supply chain means because people do not really have a lot of content about what that would look like. haidi: you mentioned the renewed commitment to more progressive climate change policies. do you think canberra and the new leadership will be welcomed back into the fold? it seems like the morrison government particularly at big
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international events was on the outside. >> given that the morrison government agreed to net zero by 2050 commitment i think the perception was that it wasn't true, it was dragged there. [indiscernible] i think they want to elevate combating climate change higher up but beyond those sorts of policies, the labor party under albanese is more serious about putting real money into technologies such as renewable compared to the morrison government. from that point of view i think there will be more focus on the
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climate change issues compared to during the morrison government. >> bangkok voters have backed a independent to become governor in the first election of a jackie. -- of a decade. he will tackle problems like pollution and flooding. pakistan's former prime minister is asking supporters to press for new elections in islamabad. the company is already facing economic crisis from rising inflation. he has held rallies lately, drying huge crowds to channel their anger towards the current government. baby formula will arrive in u.s. stores from europe as part of a emergency program.
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the biggest manufacturer, abbott labs, had issued a voluntary recall after four infants became ill. and city scored three goals in five minutes and one by a point. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: coming up, work, droughts, floods, heat waves are straining global supplies. we will discuss how it is impacting nations around the world. this is bloomberg. ♪ the agenda? morning security briefing—make that two. share that link. send that contract.
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shery: shanghai is taking new steps to fight covid. haidi: we bring in emma o'brien. what are we seeing and what are the implications for movement? >> definitely gradually lifting of the lockdown in shanghai. you can tell officials are nervous about throwing caution to the wind too much and letting people out engaging in normal life lest they ignite a fresh
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outbreak. what we see is that in june the city will be divided along the same strategy they used pretty lockdown. low, medium, high risk areas. to be candid as low, a region has two have had no cases in test cases at all for 14 days. otherwise, medium and high, you will be under some form of lockdown restriction. so it is quite similar to what they did before this lockdown but emphasizing that it is not a no holds barred exiting in shanghai. shery: what about beijing? we see 99 new local cases sunday. what are restrictions looking like in the city? >> in sections nudging three
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digits, a record. beijing has spun -- has been under some short -- some sort of restrictions for a month. five districts are organizing people -- ordering people to work from home. you imagine the septic from around 40 cases a day which is what we got use to come up to 90 come into the 90's. that will be concerning to them and it raises the specter of a citywide lockdown again, even though we had officials a week ago spreading some rumors around but it does show that the situation in beijing could be getting a bit dicey. shery: emma o'brien. let's look at how commodities are trading, especially in greens. we continue to see the rally in food prices and wheat prices and
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corn is near the record high, especially when we continue to see demand from china, for example. the china depends on imports for 85% of their grain supply. 60% of all soybeans traded internationally are taken up by china, which is the biggest corn and barley importer. we continue watching palm oil futures and cooking edible oil, which has been under upward pressure as we continue to see more moves to restrain exports. but it is all about the commodities space and energy. global power grids about two have their biggest texas -- biggest test in decades. dan, what is happening to power outages? they are on the rise this year. >> it comes down to three
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things. climate change, the pandemic, and war. we are having more extreme weather events including the extreme heat waves in india and pakistan. droughts are drying up that reservoir is needed for hydropower generation. the world is coming out of two years of lockdowns and power generation is increasing as factories get back to work and people are going to work again. that is compounded by russia's invasion of ukraine. they together have increased fuel prices. gas and coal trading at record levels this year. it makes it hard for poor countries to buy the fuel they need to keep power plants running and keep people's lights on. haidi: what can we expect in the years to come? >> this is where it will be tricky. we need to invest in more renewable, clean energy in order to stop climate change from
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bringing these extreme types of weather to the world but at the same time, the world's use to coal and gas power plants that can produce electricity 24 hours a day. as we increase the amount of solar and wind generation, it puts more stress on the grid and there is not enough investment coming in to power lines and energy storage that are needed to translate the intermittent clean energy into around-the-clock power so a lot of experts think that what we are seeing this summer with having hours long powered outages each day in some countries, it could impact the world for years to come. haidi: up next, the outlook for emerging-market stock. investors are looking for signs of a turnaround following for straight months of losses. this is bloomberg. ♪
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shery: a chipmaker has been searching for a big acquisition and a ceo has embarked on a series of purchases as he looks to embark -- as he looks to expand.
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shareholders are expected to vote in favor of a delisting in new york which would end 11 months of turmoil after regulatory crackdowns by beijing, and the listing would clear the way for possible share flow in hong kong. haidi: u.s. futures are heading higher at the start of asia's trading day and what will be a key week for monetary policy and we see hopes for a rebound given how fast emerging-market stocks have fallen. let's discuss this this. there's a lot to talk about. if we are seeing peak inflation or peak bearishness when it comes to these markets. are there opportunities now? >> good morning. yes.
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s&p 500 is very strong this morning following the momentum from what we saw in the last hour of trading in the u.s. on friday because investors got options out of the way. the s&p 500 has been falling for seven straight weeks, the longest stretch of weakness since 2001. emerging markets, pessimism have's peaked. a lot of the news has been parsed in. looking at technical indicators, the average valuation for emerging-market stocks has fallen below the average in the last 17 years and the dollar debt spread for those markets is at levels we last saw during times of stress so some managers have refused bearishness toward the asset class. they are watching before jumping
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in on the peak in inflation and the pause in dollar strength. shery: what does it mean for chinese equity markets as we head towards the open? >> that market seems to be on a roll recently. one of the best-performing global equity markets in the world. that's because people are taking cues from beijing on the easing of lockdowns and shanghai. last week chinese banks cut the lpr ratio by 15 basis points and that is the biggest since the benchmark was created a few years ago and we have a top performing hedge fund manager turning bullish on chinese stocks and last friday the inflows into chinese stocks on shore was the biggest this year. so some optimism as you see in the market right now. haidi: that could be the signal
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the rest of emerging markets are looking for? >> yes. i think china is usually the leading indicator that investors watch out for and whatever beijing is doing to stimulate their economy will have wide-ranging effects not just for emerging markets but for global markets. the bottleneck of supply chain easing could have implications for inflation and the stronger dollar and fed policy rate. shery: as we head towards the open in hong kong and the mainland, these are some stocks we are watching. chinese firms that have disclosed they make disease for smallpox, which is similar to monkeypox, we are watching those shares. we have seen cases ticking up in north america and europe.
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tesla suppliers have -- might be active after tesla has reported hiring a lot of people in shanghai. a semi conductor manufacturer overseas has been added to the benchmark. hang seng index of active since june 13. haidi: u.s. stocks pulling back from the brink of a bear market. could this be the resilience when we started to see a more meaningful rebound? we have seen bounce back the market tempered by uncertainty, the breath of the selloff and shallowness of the subsequent recoveries we see. some futures looking positive when it comes to trading in the greenback. coming up, australia's's were in their 31st prime minister, giving the chance for the
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country to reset with their relationship with beijing. and shanghai doubling down on their covid zero policy. we will talk with someone from credit suisse. let's take a look at the start of trading in shanghai and shenzhen. stay with us. china open is next. this is bloomberg. ♪
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