tv Bloomberg Daybreak Asia Bloomberg May 24, 2022 7:00pm-9:00pm EDT
haidi: very good morning. time for asia's major market open. shery: welcome to daybreak asia. our top stories. stocks remain under pressure as u.s. inflation fears roll the dollar and treasury yields in focus. new zealand seeing hiking rates by 50 basis points nearing a neutral stance for the first time since 2015. plus, beijing could face harsher covid curbs as official shift the focus from shanghai to the capital. haidi: let's get you a look at how the fed -- is shaping up
this midweek session. looking pretty muted. we saw some mild gains when it comes to the aussie dollar as rebalancing continues to happen. we saw steady flows, when it comes to rival and we saw dollar-yen, dropping 1%, the lowest since april 14, that 1.26 handle is where we are sitting. watching new england ahead of the rbnz -- watching the new zealand ahead of the rbnz decision. looking at another 50 basis point hike, trying to get ahead of the curve. shery: take a look at u.s. futures right now rebounding after we saw those losses being pared back. we still had losses on the s&p 500. with the defense companies gaining ground and we actually saw them now at the moment rebounding a little bit. the -- even futures up .07%
after we had social media companies erasing $100 billion given the profit warning from snap. we are watching treasuries and we have that safe haven rally. the 10-year yielded dropping. right now crude is rebounding after losing ground for a second session in new york. remember, we had the u.s. announcing the release of strategic crude. the department energy offering to sell as many as 40.1 million barrels of oil, haidi. haidi: let's get more with o ur asia editor. you take a look at what happened across the tech complex. there is no exhaustion yet when it comes to the selloff. andreea: hi, haidi. no, it doesn't look like it. even though the nasdaq 100 has come down 30% from its peak and the p.e. valuations in the text
esters are coming closer to historical averages, but look, it is not, it's turning to be a macro picture. investors are really becoming concerned about the deteriorating macro outlook. we saw those gonds yields come-- bond yields come down last night. and that would be supportive of the tech sector. we do know these companies are a lot more sensitive to rising interest rates and rising bond yields, but this is a sector that has gone to -- into a selloff already on a pretty shaky foundation. as those bond yields increase as monetary policy was tight ened. and also from a company perspective you saw stalling growth. we are all on social media during lockdown and people have returned to the office. there are already headwinds there in the tech sector. but i think it also speaks to
just a generally deteriorating outlook for companies, for consumers because of the rising inflation. consumers are not spending that much. companies are looking at how to navigate this going forward. shery: a very different picture when it comes to china. the stock market there. i mean, even after 33 specific measures to support the economy, $21 billion in tax rebates we saw markets falling. andreea: yeah, that's right. and that is a lot of measures. look, investors are remaining underwhelmed by what china is trying to do. the focus continues to be on these lockdowns. you've got economic activity that has stolt. -- stalled. and that seems to be with the investors in the markets are looking at, and so far none of
these measures seems to have done enough. they also want more easing. you saw that long-term -- being cut last week, but the one year was not cut, there was disappointment there. yeah, investors remain skeptical that these measures are enough to counter the deteriorating economic activity from these lockdowns, and the uncertainty when these lockdowns are going to happen in beijing, shanghai. in or out of lockdown? so, there is a lot of uncertainty there. and so far, none of these measures seem to have been enough to really drive the chinese markets. and, on top of that, we do have the drop in tech companies. we saw overnight the nasdaq golden dragon index falling. so, a lot of headwinds for
chinese equity markets. shery: there with the latest on the markets, and of course, all the do with monetary policy right now. watching new zealand's central bank expected to deliver a 50 basis point rate hike as inflation climbs to a 30 year high and on apartment falls to the all-time low. our policy editor kathleen hays is with the latest. they have signaled very aggressive tightening. >> and they have done very aggressive tightening in the last couple years. people can see that the rbnz going for the bigger hike again but it will be the second one if they do so, taking the key rate up to 2%. in fact, this is a race apparently to get to neutral, get to the point where you are no longer stimulating the economy by keeping the rate too low. so it's going to pull inflation down. 2% is the estimate for the new
tilray. they have not been at neutral since 2015. and when you look at that chart, what you see again, if you go to the big drop down, march 20 20, 75 basis point rate hike. the fed had done 50. that is when they first showed how aggressive they can be. then back in october when -- most did not think about raising their key rates, they did a 25 basis point hike, two more and then in april of 50 basis point hike. that is another reason why they expected to go for it again. one more thing to show you. what are they going to do next, what is that signal in their monetary policy? at the press conference about what their attentions -- their intentions are. right now investors are expecting five more hikes in 2022, 250 basis point worth. that would get to 3 or 3.5%. in fact, people are saying
another thing you might see is maybe moving that estimate of the neutral rate, maybe 2% is not high enough, moving it closer to 3%. that would be interesting to see if you have an unemployment rate down, inflation 6.9% year-over-year. maybe to get to neutral and we would be at the point where you start to get tighter and putting a lid on demand and bringing the inflation rate down you will have to get the key rate higher, maybe something like 3%. another thing people are looking for today. haidi: our economics and policy editor kathleen hays ahead of the rbnz meeting. urging the nationsbank to boost lending as the economy can use -- continues to get battered by pandemic controls. for the latest, we have stephen engle in hong kong. is there a message from the meeting between the banks and the regulators? the data is not great, but it is also hard to see how people can borrow when they are locked
down, right? >> that's right. and companies obviously are suffering and there is a trickle-down effect -- the state council concerned about employment and if companies, the small to medium-size enterprises, are struggling, they will not be able to pay wages. so there are a lot of subsidies from the government. a whole raft we heard about on monday, some 33 new stimulus measures targeted at small to medium-size enterprises and companies that have been hammered absolutely by these lockdowns and other pandemic restrictions across the country. now we are learning from state media yesterday there was on monday another meeting between the pboc governor as well as a representatives of the banking regulator, essentially instructing the big major financial institutions, 24 of them, were represented at that meeting on monday, telling them, you have got to lend more. you absolutely have to
lend. in april, the total number of new loans was five times lower than what we sawin march. we have the bar chart. you can see the precipitous fall off in new loans. and may is not shaping up to be much better. and you can understand with gdp expectations being ratcheted down on a weekly basis. the full year gdp forecast was 3% and bloomberg says 2%. the second quarter and contraction. you can understand why many big banks, and less they are absolutely told to, they are kind of hesitant to do a slew of new lending because the risk appetite is a little bit weak right now. shery: stephen engle there with the latest on the economy in china. let's get to vonnie quinn. >> china's top officials for
pandemic control is raising pressure on the capital contain its latest covid outbreak, signaling harsher restrictions. chinese vice premier urged authorities in beijing to stick to covid zero and stop the virus's community spread. a teenage gunman has killed 14 students and one teacher in a texas elementary school. governor greg abbott says they killed the shooter, and 18-year-old armed with a handgun and possibly arrival. two officers were also shot but not seriously hurt. the attack in a town west of san antonio is the deadliest school shooting in more than four years. they are seeking information on the killers motives. the u.s. is seeking to raise pressure on russia by letting key sanctions expire and outbound cash flows. starting wednesday american banks will be barred from
excepting funds from russia's government. analysts say allowing the waivers to expire increases the chance russia will default. treelike has chosen -- sri lanka has chosen -- the debt restructuring effort, key to the bailout from the imf. the government still hasn't appointed up finance minister. sri lanka has suffered its first ever default last week as the government struggles to stabilize the economy. global news 24 hours a day on air and on bloomberg quicktake powered by 2700 journalists and analysts in 120 countries. i am vonnie quinn. this is bloomberg. haidi? haidi: china is shifting its focus from shanghai to beijing as covid -- over the capitals ability to contain the outbreak. more from standard chartered
ecb rate hikes. christine lagarde told francine lacqua that monetary policy in europe is at a turning point. >> we are at a turning point. we have all of the components in place for that. we are turning our back to negative interest rates. we are moving very likely into positive territory at the end of the third quarter, and then, of course, we will calibrate. we will establish exactly by how much we want to do that. francine: when you talk about no longer negative rates, has the market understood this could mean off of positive rights? >> when you're out of negative you can be at zero, you can be slightly above zero. this is something we will determine on the basis of our projections, on the basis of our forward guidance. i think there are good reasons to believe that all three conditions will be satisfied in june and during the summer. francine: where are we in the
third quarter, could we be above zero in terms of interest rates? >> we will be out of negative interest rates most likely before the end of the third quarter. francine: how do you see inflation is developing. there are some of the unknowns because of the war. >> there are lots of forces and some of them counteracting against each other. you have the war, which in and of itself is a massive drama and has massive impact not just in ukraine and for russia but for the rest of the world. we have energy prices which have gone up significantly and represents a big chunk of inflation. we have food prices. there is a whole series of things that are weighing on growth down and pushing inflation up. francine: how likely is it that the eurozone goes into recession? >> we do not have that as a baseline. we also do scenarios.
we have the negative, the adverse, various alternatives there on the basis of hypothetical such as boycott of oil, interruption of gas supplies, clearly a significant impact on the economy. for the moment we are not seeing a recession in the euro area. haidi: ecb president christine lagarde speaking with bloomberg at davos. our next guest says that growth fears are overdone. joining us now is manpreet gill, head of investment strategy at standard chartered. always great to have you with us. what about 2023, and what about when -- reduction start happening in earnest on the balance sheets? >> it really depends on inflation. voluntary reduction is one factor in on its own, until combined with policy that is really tight, it is something i
am less concerned about. the key here is a lot of pain that we have seen this year seems ultimately -- raising higher fed expectations which went on longer than the market expected better if we are at the point where the fed is delivering on what is priced in, which is a determinate of inflation not rising further, we think that of course might star t to cool concerns about the rising fed rates. and that gives us room to optimism given where we are today and looking out for the rest of this year. haidi: what is going on when it comes to positioning on bond markets at the moment, sovereign bond markets and treasuries? manpreet: there are a few factors, one is -- it's quite one sided. we saw that across a host of indicators. and some of the moves we saw. it does feed into a shift in
teams we saw over the past few weeks, early worries about inflation -- and worries about economic growth. i think these are led by individual retailer earnings in the housing market data yesterday. and. that is what is driving that. two points are missed. for investors, it is a most a good thing. we are finally moving away from one direction up or down. that is something we missed for the last part of this year. and second for economic growth, if i use a major bank stock like pmi data points, yes, we know it's slowing. but at the end of the day for investors for financial markets, -- what matters is whether we go all the way down to recession levels. and so far, we do not look like we are going there on those mainstream benchmarks. something to monitor but not something we are excessively
worried about. shery: the diversification case, what are you seeing in terms of diversity on global government bonds at the moment and are there any opportunities to adverse -- average into some of these markets? manpreet: on the bond side, they were elevated. i would not be surprised after yesterday we see that ease up a little bit. one of the measures we look at in terms of looking at the positioning is too one sided. the opportunity is that there are not climbing higher. the fed is not repricing ever higher, then of course we may see the opportunity to rebalance towards bonds. that does not mean that we have to -- move away from equities. but in bonds, what we would rather do, rather than jumping into treasuries alone, we look for asset classes where -- also have other factors, yen-dollar
bonds, is one asset class that has been sensitive to the rising bond yields. so, i think you are getting, you are not relying on one engine in terms alone. in addition to high yields and -- the dollar bonds is a relatively uncorrelated area within that because it is much more about getting to the turning point in chinese policy rather than to the u.s. dollar valuation call. a mix of assets is starting to look interesting again. shery: are you seeing a turnaround in chinese policy? we have seen dozens of measures. i do wonder if there is a good time to get into chinese properties right now. manpreet: well, timing is always tricky. and i think the one thing with policymakers is that one would need patience. a lot of measures have a hard time having a direct impact on an economy in lockdown. we do need to -- get off of lock
downs and large parts of the economy in many measures need credit. pboc is encouraging lending but this is a measure that could have an impact with a lag. the good news italy is only seen some of these measures start to turn higher -- at the end of the day for investors like ourselves, we believe those conditions are in place, whether that is for equity markets where valuations are extremely low or a 30% discount of global equities or in bond markets where we do not need to -- the high yield dollar space. at the end of the day, we think what direction it is really going. there is a raft of measures to support economic growth, and i think that is what they are looking for. these specific measures in high yields for example to support liquidity, that will be the key to unlock some of the value. it does require patience. but for long-term investors the value is there.
shery: always good to have your thoughts from standard chartered. you can get around up all of the stories you need to know to get your day going in today's edition of daybreak. dayb go. available in the bloomberg app. you can customize your settings so you only get what you need, what you care about. this is bloomberg. ♪ lila: before i was diagnosed, there was nothing really to worry about. and then when i was diagnosed, there was just such a big weight put on my shoulders. every night i felt like maybe i won't wake up tomorrow. speaker: st. jude children's research hospital works day after day to find cures and save the lives of children with cancer and other life threatening diseases. dr. stewart: there are treatments
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haidi: a quick check of the latest business flash headlines. japan's easing border control should lead to a rise in domestic and international travel and boost the airlines revenue. japan's government is set to relax border controls on a trial basis this week leading in small groups of visitors. the leader says that and a
weaker yen should help ana returned to profit for the first time in three years. >> you should comprise 10% of all travelers in japan. with the covid situation, i do not expect a huge jump in numbers of visitors but i still expect 3% to 5% of foreign travelers to come back. haidi: the hotel is shelving plans for an ipo after market downturn hurt valuations. the indian startup -- has gone through a change in the offerings timing. the earlier possibility for an ipo has been pushed back to 2023. coming up next, china imposing fresh virus curbs. the virus czar shifting her attention from beijing to shanghai. this is bloomberg. ♪
>> the covid outbreak in shanghai, which is slowly relaxing curbs. let's bring in emma o'brien. what is the state of play in terms of expectations? beijing is very fearful that they will see a repeat of what happened in shanghai. >> we have seen cases ease up a little, around 49 for monday. you had seen restrictions in beijing for around a month without moving into full lockdown. most districts are under work from home orders and other curbs
are in place. the signal we are seeing is the vice premier in beijing is in shanghai focusing on the outbreak there. the signal shows the attention is shifting to the capital and what seems to be a bit of an immovable outbreak there. shery: we've heard about outrage in chinese social media when it comes to home restrictions. what is the reaction so far? emma: i think in beijing they are very concerned and wary about a citywide lockdown being imposed. that would be a step up from the work we home -- work from home restrictions. you can still go to the supermarket, you can still move around, with various restrictions in place. you need to wear a mask of course at all time outside your
apartment. some places need to take get it clear in recent test to enter like city parks. we saw a couple of weeks ago rumor spreading like wildfire on chinese social media that beijing was about to lock down. which the authorities and had to deny. we are a couple of weeks on from that. the situation doesn't seem to have improved. they are still seeing cases in the community. so it may well be time in their view to intensify things. haidi: emma o'brien there with the latest. let's get to vonnie quinn with the first part headlines. >> george soros's warning that russia's invasion of ukraine could be the start of another world war. speaking at the world economic forum in davos, the 91-year-old billionaire called it the greatest threat to open society.
he said other issues facing humanity have taken a backseat in the conflict. >> russia invaded ukraine and it has shaken europe to its core. the invasion may have been the beginning of the third world war. and our civilization may not survive it. >> russia and opposition figure alexei navalny has lost his appeal against the new nine year prison sentence. he was convicted in march of fraud and contempt of court. the suspect in the killing of a goldman sachs employee on the new york city subway has surrendered to police. the 25-year-old was wanted in the shooting on sunday and what police i was an unprovoked attack. in response to the shooting, the new york city mayor has asked to
meet via zoom to talk about crime concerns. >> we got him, and we got him in a way that he did not cause more injuries to new yorkers. we got a killer off our streets. but far too many killers are back on our streets. >> 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'm vonnie quinn. this is bloomberg. shery: a teenage gunman has killed at least 14 students and one teacher in a texas elementary school. the attack took place in a town west of san antonio and is the deadliest u.s. school shooting in more than four years. let's get the details, what stands out to me is this is the deadliest u.s. school shooting in about four years. we had that mass shooting just
recently in buffalo. and were following news of that goldman sachs employee being shot in the subway. explain to our viewers why americans do not rein in all this gun violence? >> it is a great question. obviously at horrific, deadly shooting of little kids in their elementary school today, just a couple of days before the end of their school year. 14 dead. you ask the important question as to why this keeps happening. to your point, it keeps happening. it was not that long ago president biden was in buffalo after a number of people were shot and killed in a grocery store. i live not far from sandy hook elementary school in connecticut. in 2014 we had over 20 five and six euros killed in their elementary school. it keeps happening, in the simplest terms, because the federal government, congress cannot pass common sense gun legislation. you and i remember right after
the sandy hook, the newtown shooting of those kids and their elementary school, president obama came out and wept and said there is no chance that we will not see legislation passed, and of course a few months later, in 2013, the bill that they were trying to push through congress failed, and it failed in large part because of the senate filibuster rule. this is where we are today. i expect when president biden speaks that he will be saying something similar to president obama back in 2014 and it is likely going to fall on equally deaf ears in a congress that is split and unable to break a filibuster. haidi: i think it's extraordinary, looking at this from australia, we went through a massacre that was devastating, but extreme titan when it comes
to gun regulation and laws here almost immediately. given that this took place in texas where recent legislation allowed people to carry a handgun without any sort of license, do we think that there might be more restrictions on a state-by-state basis, or is this a federal inertia and inability to move forward? >> we have seen action at the state and local level. i live in new york, and that is the neighboring state to connecticut where the sandy hook shootings occurred. new york passed very stringent gun control legislation, as did other more blue states across the country. right now the supreme court has a case about new york's legislation and we expect in the next few weeks that they will find in favor of the petitioners and overturn that law. so there has been action in some states at the state and local level. the problem is, guns are carried
across state lines. when you have states like texas and others that don't pass legislation, people can easily cross state lines, get guns, and of course bring them to other neighboring states. so this really has to happen at the federal level if we are going to address this violence. shery: we are expecting to hear from president biden in less than an hour from now. can anything being -- be done through executive action to govern through executive orders? >> the president has taken, we could say they be steps, is probably the best way to describe it, with ghost guns and other things via executive action. the problem with executive orders is they are narrow and easy to overturn if the next person in the presidency is somebody who opposes it. that's what we see time and again. that's why president biden has said over and over, if a bill
passes his desk that is focused on common sense gun legislation, he will sign it, because executive orders simply aren't going to do the job. i think it is important to note, vast majorities of americans support common sense gun legislation. the gun show loophole, red flag laws, background checks, pretty basic legislation. it's not that the american public doesn't support this, even people who feel strongly about the second amendment. the fact is that structurally, congress cannot pass it over the filibuster. the real question for buying tonight is, are you now going to support ending the filibuster to get this through? and i hear the answer is still going to be no. haidi: you talk about the invocation of the second amendment, is it really about constitutional limits? is the obstacle political rather than constitutional? and where is the supreme court
potentially stand on this? >> we have a supreme court that is about 6-3, or 5-4 if you are being conservative. i think it is constitutional, but political, more importantly. many people who support the right to bear arms also believe there are common sense steps that can be taken to ensure that guns don't end up in the hands of children. the killer tonight of these 14 children and teacher was an 18 year old young man. i don't know anything about his history yet. but there are common sense things that even people who believe in a constitutional right to bear arms believe can be taken. for instance, an assault weapons ban. ghost guns, the president did an executive order on that. a huge number of people can now produce their own guns. these are the kinds of steps that can be taken.
we also suffer from a real mental health crisis and we don't have the amount of health care we need in that area as well. in a long-winded way to answer your question, it is constitutional that more importantly, it's political. it is divided on party lines, just hours after these children were killed. you are hearing republicans accused democrats of politicizing the issue and democrats saying the same to republicans. i would like to be optimistic but the rhetoric even hours later does not suggest that. haidi: it's very disheartening and distressing a conversation to have, but so much value and insight to get from you. we will be hearing from u.s. president joe biden in about a half hours time to talk about this latest school shooting. more to come here on "daybreak: asia." this is bloomberg. ♪
recession for the economy. >> the eurozone will not go into a recession. there will be a slow recession. shery: it really doesn't help that we continue to see the fallout of the global supply chain crunch. these are the top stories today. u.s. department of energy is offered to sell up to 40 million barrels of crude oil from the strategic petroleum reserve in an effort to address supply disruptions from the war in ukraine. the world second-biggest shipper will limit shipments to as much as 10 million tons in the season that started in october 2012 and. use migration chief says worn ukraine risks a major migration
wave into europe from africa and the middle east. severe shortages would leave people looking for food in a much more chaotic fashion than the millions of mock -- ukrainian refugees. take a look at the yuan food index price. global food prices reaching record highs. it is a one-way street in terms of the pandemic impact as well is the impact we've seen from the russian war in ukraine. bloomberg terminal users can read more about these stories. the bank of america is boosting pay for tens of thousands of u.s. employees that are less than $100,000 and adding reimbursements for purchases. ceo brian moynihan told bloomberg it is key for maintaining a healthy workforce. >> our turnover was probably
near 20, it came down to 15. got it down to 12 right before the pandemic. it fell to six in the pandemic, we said on day one that everybody keeps their job. we kept everybody on. we went back up to 12 and then 13. we announced a wage increase for all employees under $100,000, which is a good number of people. based on years of service, were trying to reward loyalty and career building. it keeps going up. but also, paying $10,000 of tuition reimbursement in advance for people. the health-care benefits, the mental health benefits, we announced $4000 to buy an electric vehicle. the key to all this is, to your
point, stabilize the employee base. when you have 25,000 branches, having people work for 15 or 20 years on a career path is a lot more effective in operations. >> in the investment banking world, you're dealing with the market that is seen a pretty big selloff. we are expecting a pretty big slow down in certain investment banking services. do you expect the bonuses will have to come down, and how hard will it be to retain them? >> those colleagues at work in very narrow areas, it's a much different equation in a company like ours. it's the ebb and flow of the market. the pools are down and they've done a good job. on the trading side we are more than holding our own. the trading revenues have been solid. >> how much do you feel like you
have to keep up the bonuses to preserve staff? shery: the bank of america ceo brian moynihan. returning to the office continues to be a key issue, especially that divide are seeing between u.s. banks and european banks. goldman sachs really trying to get their employees back into the office. talk about 70%, 80%, 85%, according to the ceo of goldman sachs international. it's quite a different picture from the likes of the ubs ceo who says two thirds of the workforce are likely to always work in a hybrid way. haidi: it's quite interesting. it's something you are not seeing reflected when it comes to office rentals, certain on here in austria where a lot of ambitious plans are going ahead. the really is an expectation
across some firms in some difficult -- demographics that we will see a full return to work. it's all part of the broader effort to try to attract and retain talent, especially younger, junior talent where there has been a seismic shift from the pandemic. we've heard about competitive sign-on bonuses, flexible working conditions and some other bonuses that are not monetary as well, to try to encourage the younger talent to come to these banks and also to stay. it's really quite interesting seeing these chief executives gathering in davos once again to have these conversations after what has been a difficult couple of years. let's take a look at the set up when it comes to the trading session here in sydney. it is pretty, up about .10%.
going into the rbnz decision day, still to the downside when it comes to equities trading. dollar-yen has been the beneficiary of that rebalancing, the shift away from the dollar has scenes -- seeing gains but certainly dollar-yen falling to the lowest since april 14. we have lots more to come here on "daybreak: asia." including the start of trading around major markets across asia. the u.s. watching tech related stocks. suggesting the risk appetite to the downside for some of these riskier asset classes and asset names, that selloff has not abated quite yet. lots more to come. this is bloomberg. ♪
committees, still pretty strict restrictions. also for the restrictions when it comes from impact from corporate. toyota suspending production caused by the lockdown and some of the supply chain bottlenecks that look like they could persist even as the city slowly begins to reopen. we're watching the situation in beijing where authorities are shifting their focus, and there's lots of concern about what's going on with these forced home disinfection's and the possibility of more restrictions in the nation's capital. shery: here's a quick check of the latest business flash headlines. more than a decade of bribery and market manipulation, they will pay $1.5 billion. u.s. regulators say the offenses took place from at least 2007
through 2018. glencore agreed to plead guilty to charges including bribery, corruption, and price manipulation. production rose in china, weighing on the tesla share price in its most recent attempt to ramp up production in shanghai. isolating thousands of workers in a huge factory to ensure they are covid free. the gigafactory has recently resumed production. elon musk personal wealth has fallen below the $200 billion mark. he saw it drop by 5.4% to $192 billion as tesla shares fell. this happened since he announced his decision to buy twitter. haidi: let's look at some of the stocks were watching when trade begins in japan and korea. we will watch depends railway
operators after the australian prime minister told his japanese counterpart that he wants to cooperate with japan when it comes to high spree -- high-speed rail projects. we could see a bit of a bump up on the kospi as well. a mixed picture going into the start of trading in the midweek session. the big decision to watch out for is from the rbnz, expectations of either 25 or 50 basis points as the central bank hurdles toward neutral. much more to come, including those market opens. this is bloomberg. ♪
shery: welcome to daybreak asia from new york. haidi: is as major markets have just opened for trade. the top stories, stocks remain under pressure in asia with the u.s. recession seeing growth. new zealand seeing hiking rates by 50 basis points. beijing could set harsher covid curbs as focus shifts from shanghai to the nation's capital. shery: first quarter gdp numbers out of singapore. growth of 3.7% year on year.
that would match the estimated number by economists. corner by quarter is a mix. 0.7% growth. singapore has maintained the 2022 growth forecast in the lower half of 3% to 5%. singapore lifting most virus restrictions so pent up demand is being released but labor markets have returned to pre-pandemic levels. but three point 7% year on year growth for the first quarter. -- 3.7% year on year growth for the first quarter. pressure on the nikkei and topix. u.s. stocks fell in the new york session. japanese yen strengthening past
the 127 level against the u.s. dollar. japan's cabinet office came out with the monthly economic report, saying they see signs of picking up in the economy and have raised views on housing and job market in japan. we are watching jgb space because yields dropped given global bond yields are receding. the kospi, significant week as for the korean won. it is bouncing back against the u.s. dollar. this as the kospi has gained half a percent. losses in the previous session were seen and the korean won virtually unchanged in the previous session. investors are trying to way gross -- growth concerns with loosening of covid restrictions. but we are headed toward the be ok rate decision thursday. haidi: and we expected
potentially another 50 basis point move out of the rbnz. to get on top of inflationary pressures. kiwi stocks trading sideway going into the meeting in sydney. opening of 1/10 of 1% higher. major funds are picking australia as a place to hide amidst fears. a commodity heavy set up when it comes to equities. government bonds gazing across asia, including australia. 10-year note resetting eight basis points to the downside and signs of slower growth, inflation in the u.s.. data in the u.s. causing traders to rethink with the path forward will be. kiwi dollars seeing downside but nice gains with the yen trading against the dollar.
looking at treasuries, the yield curve deep into tuesday. it was the homestyle data plummeting by the most in almost nine years last month that caused the reaction in treasury markets. we are watching futures looking a little bit better. 4/10 of 1% higher and resilience when it comes to oil markets. shery: our next guest is maintaining a de-risking stance. frank, good to have you back. when you say de-risking, does that mean you are maintaining a defensive stance? what is helping you do that? >> yes. globally maintaining a defensive stance. we see the valuation is nowhere
near attractive and you have leading indicators like credit, liquidity, growth that are not indicative that we want to take more risk on the market. so that means resource and income will be strategies in the global equity market. shery: any of the trading in china? we hear about measures from policymakers to support the economy. >> yes. we have violation assets very depressed in the world. the yen, for example. but we also have it in the equity market and it is in the offshore equity market.
so this is at the lowest ever. so the hong kong market has never been [indiscernible] so the strength of policy response to boost growth in the second half of the year, which will be key, or you could see, given the low violation, some significant -- once then the market response will be enough to lift growth. haidi: there are jitters in the green transition space. our assets looking cheaper? >> yes. among the market, you have the
green transition but china is an interesting example because they are dominating the solar industry on supply chain and some valuation will become default bowl. -- defaultable. so looking at long-term investment in which we remain rather bullish. haidi: a few investors prefer australia, particularly following the election. is this a good place to hedge given the stagflation fears? >> in the region there are a number of countries, australia,
indonesia, they are exporters of resource. gdp positive export. so they are benefiting from positive terms of trade. and you tend to find a rather good relationship between the export position and that stock market return. so looking at the structure of the equity market, some seem to be better bullish than others. indonesia and australia have more [indiscernible] shery: south korea relies and also has central banks
tightening. >> korea is an interesting case because it is one of the markets where you start to see some interesting valuation come as we see on the offshore market. [indiscernible] but at the same time we have some strong indications that the bank of korea is not done yet. we still have some weakening in the currency driven by some outflow from investors. so we probably need to be more patient in that market and also to see bottom on the nasdaq and semi conductor index before
getting more positive on korea. haidi: frank, always good to have you with us. let's get to vonnie quinn. vonnie: george soros warns russia's invasion of ukraine could be the start of another world war. speaking at the economic form, he called russia and china the greatest threat to open society and that other humanity has taken a backseat to the conflict. >> russia invading ukraine has shaken europe to their core. this invasion might be the beginning of the third world war and our civilization might not survive it. vonnie: the u.s. is seeking to raise pressure on russia. starting wednesday, americans
will be barred from accepting funding from russia's government. those outside the u.s. might still be allowed to receive russia coupon payments. china raising pressure on the capital regarding its latest covid outbreak, and authorities in beijing has been urged to stick to covid zero. this is a sign that the government could be losing patience. in the united states, a teenage gunman has killed at least 18 children in a texas elementary school. the death also includes three adults and the shooter, who was killed on scene. the shooter was 18 years old and
was armed with a handgun and possibly a rifle. it is the deadliest u.s. school shooting in four years. north korea fired three ballistic missiles early thursday morning. this comes on the heels of biden's trip to the region. pyongyang has been firing missiles at a record pace this year. 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: defense stocks in japan and south korea are moving on that news. we have not seen them respond to that heavily to the north korea ballistic missiles. a bit more immune given that this has happened several times already this year. we have heard that the projectiles were fire near the airport. we expect military drills to be
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haidi: the pboc and china's banking regulator are urging the nations banks to boost lending as the country continues getting battered by covered controls. stephen engle is here. we see this news coming from china about policy support. what was the message this time? >> the pboc governor and the representative of the cbrc met monday and reported tuesday with 24 financial institutions urging them to start releasing approved loans. in april, lending fell off the cliff. it was 1/5 the number from march. it is down to a five-year low in
new yuan loans and pandemic restrictions have kept consumers with low appetite and the inability to take out loans but corporate is cautious of supply chains as factories are idle. so this is in addition to 33 stimulus measures approved by the council. the state council has been pushing for employee it so -- employment so many of the measures that came out of the meeting on monday are focused on small to medium-sized enterprises that could potentially use some tax relief. added tax relief was announced but also some subsidies are earmarked for companies who are
unable to keep their workers. so this is a major concern of chinese authorities, keeping employment. but if you look at the various stimulus measures, it is mostly focused on small to medium-sized prices in the corporate sector. very little for the consumer, and the consumer takes up such a huge part of the chinese economy. we saw that reflected in retail sales, contracting 11% in april. we expected 6%. new car purchases, first-time homebuyers getting some relief. but ubs is the latest, down 3%. they expect more policy measures coming down the pipe.
haidi: monetary authority of singapore expects the outpour -- output gap to turn positive this year. there is a need to brace for some volatility amid global financial conditions which are tightening. they say currently the policy settings remain appropriate and the forecast range is appropriate and policy moves to slow inflation are being put in place and taking effect. the economy is expanding at a slower and. some cite the war in ukraine and supply chain disruptions impacting this region. so the growth rate projection is staying but it will likely be on the lower half of the range.
[indiscernible] while it fights inflation. tensions among ecb officials could grow over how aggressively it needs to act. we see european futures opening higher after christine lagarde said the ecp is charting a path towards the end of negative rates. let's hear more from her from the world economic forum in davos. >> we have been going through eight years of negative interest rates, special accommodations. and we are clearly now at a turning point. i thought it was appropriate at this point to explain what the direction of travel is and destination is in the relatively short term, and what our aim point is. reporter: if you are hiking and want to, why wait until july? >> we are not in panic mode.
we started the journey thinking about it carefully in december with steps along the way and we are at the stage now where there is every certainty where we will start purchases early in july or the end of june which will clear the way for a rate hike that will come shortly after. reporter: because of the timetable, which goes to the credibility of the ecp, might you miss curve of inflation? >> i do not think so. anyone who is careful about analyzing realizes that we are in a situation starkly different from that of the u.s. and we are perfectly on time, not behind the curve. i think there is great value in being steady, predictable. as we said all along in our
forward guidance that we would stop in terms of net asset purchases because we will reinvest as we go and then we will look at interest rates, which will be the main tool for the run. reporter: -- further on. reporter: how do you see inflation developing? >> there are a lot of forces and some counteract each other. you have the war in ukraine which is having massive economic impacts in the world. we have energy prices that have gone up significantly and represent a big chunk of inflation. we have food prices. there is a series of things weighing growth down and pushing inflation out. on the other hand, we have forces, i tend to be a positive person and i try to look at what will likely counteract those
very significant shocks. there is unemployment at a rock-bottom rate. we have massive savings still untouched. and look around. the summer season is coming in europe, which is a destination of tourism. everything is full in europe. try to book a flight or hotel room. people are catching up what they have been missing. so services are recovering and that will be a counterforce. reporter: how likely will the euro zone go into recession? >> we do not have that as a baseline. we have the negative, adverse and various alternative scenarios on the basis of hypotheticals such as the boycott of oil, interruption of gas supplies that would
haidi: a quick check of the headlines. bank of america is boosting the pay for tens of thousands of u.s. employee and adding reimbursement for portions of electric vehicle purchases. base salaries will climb as much as 7% for those who have been with them since 2021 or earlier. and shelving plans for an ipo this year.
board members of the highflying indian stock are talking through changes and timing. the earliest possibility for an ipo has been pushed back 2023. and they -- we've been watching the impact of the yen on airlines and japan corporate and ana has been impacted. they say border controls will lead to a rise in international travel and the yen will come into play with weakness here the government of japan says border controls are on a trial basis this weekend they will start letting in small amounts of visitors. they say the weaker currency should help lift air bound to travel as they returned to profit for the first time in three years. xfinity mobile runs on america's most reliable 5g network,
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vonnie: a teenage gunman has killed at least 18 children at a texas elementary school. the death toll also has three adults but it is unclear -- but the attacker was killed on the scene. he was an 18-year-old man armed with a handgun and possibly a rifle. this is the deadliest u.s. school shooting in texas in almost a decade. and covid restrictions threatening economic growth. pboc governor and officials called for faster loan approval. credit data for intro -- for april showed levels the worst in
five years. the indonesian central bank says a move will absorb $7.5 million from the banking system. s&p rate at a record low to support recovery. philippines has tightened monetary policy. sri lanka looking for a bailout from the imf. they are in plans and talks with global creditors. they suffered their first default last week as that country struggles to stabilize the economy. 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: the quad leader meeting
in tokyo has wrapped up. paul allen joins us. china not exclusively mentioned in a statement. paul: the china does not -- the word china does not appear but there is an intention to set up joint monitoring of ships in the pacific. and there has been an uptick of chinese ships so it is pretty obvious why that statement is there. the statement says the quad opposes units to lateral actions including militarizing features, and there is only one country who is doing that so it is hard to escape the conclusion that the quad is talking about china. but china's not the only one not mentioned. there was discussion of the
situation in ukraine but russia was not singled out for condemnation. india is a major partner of russia and most of the quad partners have important trade relationships with china so they were walking a fine line. shery: china's foreign minister will visit a number of pacific island nations this week. paul: the purpose according to the foreign ministry for that is to build relations and enhance trust. china recently signed a security agreement that resulted in dismay in the u.s. and australia. chinese foreign minister will be in the solomon islands thursday and friday and then will visit seven more small pacific islands and nations over the following days. china's courtship of the pacific islands are viewed with a lot of caution. it was a major feature of the election campaign in australia.
the chinese foreign ministry is urging the united states and others not to meddle in their affairs at the quad moving to do something about this, promising more resources to strengthen relations with pacific nations and invest in infrastructure and climate change resilience. shery: paul allen with the latest on the quad meetings and what the foreign minister of china is doing on his overseas trip. looking at stop commodities, we watch a huge rally in prices. some downside for sugar, soybean oil, wheat, and corn. this as we see more measures of protectionism around the world, countries restricting exports given the surge in prices. india is the second largest exporter of sugar and they are looking to curb shipments.
also with wheat. malaysia just announced banning chicken exports. the imf says global food inflation is a major concern i will likely continue rising. they spoke with bloomberg at the world economic forum in davos. >> it's a major concern for us. looking at food exports, since the start of the war, 20 countries have put restrictions on food export. wheat, palm oil, many others. fertilizer also. so i worry about what will happen with food prices. it will probably go up more in the future than what we have seen. it's a major concern. reporter: will a domestic government come to the rescue
and flatten the prices and subsidize whatever the commodity is until the brakes? how close in your country are we to a breaking point of the domestic subsidy feeding people? >> after two years of the pandemic, governments around the world do not have fiscal space to provide widespread support. this is something we are tracking closely, this question of how many countries are facing rapid increasing import prices and will likely have problems. this is one of the trackers we have. it's a major concern. reporter: how much is this a failing of the developed world? from providing more financial aid to get supplies to the rest the world from ukraine? >> it's a challenging issue of how to get ukraine supply out of
ukraine. the problem is the embargo on the black sea. we cannot get ships to take the wheat out. thinking of creative solutions in terms of putting them on trains and setting them out, but that will take more time. in addition to the war we have the effects of climate change around the world. one of the reasons why india has put export restrictions on wheat is because of bad yields from bad weather. so we have to try very hard at this point to get supply out as much as possible around the world. haidi: imf managing director. and surging prices around the world are pushing central banks to act. new zealand central bank set to deliver another 50 basis point rate hike as unemployment falls to an all-time low. kathleen hays is here with the latest. what do we expect to see from
the rbnz? kathleen: a survey by bloomberg in wellington and asia saying 50 basis points, the path is paved and the need is clear. we have inflation rate 6.9% of the 30 year high. unemployment down to 3.9%, it has never been lawyer -- it has never been lower in new zealand. so it is a race to get to neutral. 2% is that neutral rate. the basis point hike is the alkaline on the bottom. that will get them to neutral. this is an endocrine -- this is an aggressive bank. the bank of korea getting back on the rate hike path. i'm the reason why they are expected to follow through with
another aggressive mood today -- move today. if they get to the 2% neutral rates, which is estimated, they will be the first central bank of the world to do it. they have not been neutral since 2000 -- since 2015. the question is if the rbnz decides with inflation so high and unemployment so low, it may be neutral is no longer to percent. some economists are waiting to hear if governor or will talk about the neutral rate becoming higher, suggesting they will have to get more aggressive and the chart showing aggressive's looking -- and the chart showing there could be more rate hikes for the year. haidi: next, china shifting pope -- shifting focus from shanghai to beijing as covid concerns
another massacre. an elementary school in texas. beautiful, innocent second graders, third graders, fourth graders. and how many scores of little children who witnessed what happened, who saw their friends die as if they are on a battlefield, for god sake -- for god's sake? they will remember this for the rest of their lives. there is a lot we don't know yet. but there is a lot we do. there are parents who will never see their child again. never have them jump in bed and cuddle with them. parents who will never be the same. to lose a child is like having a
piece of your soul ripped away. there is a hollowness in your chest and you feel like you are being sucked into it and will never be able to get out. suffocating. and it is never quite the same. it is a feeling shared by siblings, grandparents, family members and the community left behind. jill and i have talked about this in other contexts. the lord is near to the broken hearted and saved -- and saves the crushed in spirit. so many crushed spirits. so tonight, i asked the nation to pray for them. give the parents and siblings
strength in the darkness they feel right now. as a nation, we have to ask, when in god's name are we going to stand up to the gun lobby? when in god's name are we going to do what we all know in our gut needs to be done? 3448 days. 10 years since i stood up at a grade school in connecticut for another tragedy. a gunman massacred children at sandy hook elementary school. since then, there have been over 900 incidents.
10 days ago at a grocery store in buffalo, new york, another shooting. i am sick and tired of it. we have to act. and do not tell me we cannot have an impact on this carnage. i spent my career as a senator and vice president working to pass common sense gun laws. we can and won't present -- we can't and won't prevent every tragedy but we know it will have an impact. when we had a ban on assault rifles, mass shootings went down. when the ban expired, they tripled. the idea that an 18-year-old kid can go into a store and buy assault weapons is wrong. what in gods name do you need assault weapons for except to
kill someone? are people supposed to be running around in kevlar vests, for god sake -- god's sake? and the national rifle association endlessly markets the assault weapons that will make them the most profit. we have to stand up to this industry. most americans support common sense gun laws. i just got back from a trip in asia, a meeting with asian leaders. i learned this while i was on the aircraft -- i learned of this while i was on the aircraft. what struck me on that 17 hour flight was that these kinds of mass shootings rarely help -- rarely happen anywhere else in the world. why?
they have mental health problems. they have domestic disputes and other countries. they have people who are lost. but these kinds of mass shootings never happen with the kind of frequency they happened in america. why? why are we willing to live with this carnage? why do we keep letting this happen? where in god's name is our back band -- is our backbone to stand up to the lobbies? it is time to turn this pain into action for every citizen of this country. we have to make it clear to every elected official in the country that it is time to act. it is time for those who obstruct or delay or block common sense gun laws, we need to let them know that we will not forget. we can do so much more. we have to do more.
our prayer tonight is for those parents lying in the bed, trying to figure out if they will ever be able to sleep again. what do i say to my other children? what happens tomorrow? may god bless the loss of innocent life on this sad day and may the lord be near the broken hearted and save those crushed in spirit. because they were going to need a lot of help and a lot of our prayers. god love you. reporter: sir, will you go to texas? haidi: president biden speaking
from the white house. his frustration palpable after a texas teenager killed 18 children and three teachers in one of the deadliest school shootings. the gunman was killed by police. this is yet another gun attack. the 13 people killed in buffalo. it brings to light the problem of gun violence in the united states. biden renewing calls for stricter gun control and legislation and heading into the terms with such divisive issues, it is unlikely we will see much more action. we have much more to come on daybreak asia. this is bloomberg. ♪
beijing is one month into the restrictions around the outbreak and we are still seeing the same level of cases, 40, 50 per day, including in sections in the community. we saw a spike up to the high in the flareup on sunday, almost 100 cases. that seems to have ignited some tension on the beijing outbreak with the vice premier now turning her attention, -- her attention to the capital, which is probably not good news for the officials there. shery: the latest on covid-19 in china. chinese stocks are listed in the u.s. plummeted overnight with the golden dragon falling more than 6% in new york after the csi became the worst a benchmark
in asia. investors underwhelmed by a broad packet of measures to support the economy. let's start with what is expected today. >> net ease reporting revenue better than expected but a growth selloff in tech. the problem is policy credibility. when you have beijing coming out with all these stimulus measures but it's not enough to boost growth and get company selling again. that's the concern in the market. it will take a lot for the companies to rebound because sentiment is so bad. there is a lot. looking at what is happening with snap and the outlook, it does not look right for chinese tech. haidi: it seems the rebalancing
of the u.s. dollar is underway. what will happen with the yuan? >> we had a week where the yuan was strengthening it but analysts say it won't last. some are calling for seven per dollar, which is the level that was broken during trump's trade war. what happens when it reaches those levels is depreciation can accelerate. so we will see if we get a move toward that and if the pboc will slow things down. if you look at risk reversals, currency traders are betting on more currency weakness. we just talked about covid zero and the economy, the impact is very real and more and more economists are downgrading estimates for gdp growth. the path forward for the yuan seems to be a depreciating one. shery: let's watch the open in
china. in china. some spots we will be watching, some big names in earnings. some have reported better-than-expected results of the first quarter. also watch alibaba and pto express. it is their turn to report earnings today. and a digital pharmaceutical platform has made listings and galaxy is also in focus as shares edge close to the march lows. a mixed picture. the nikkei down to tenths of 1%. the japan cabinet office said the economy shows signs of picking up. the asx 200 being led higher. that is bite consumer staples and materials. that is it for daybreak asia. we will look ahead to the start
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