tv Bloomberg Daybreak Australia Bloomberg August 21, 2022 6:00pm-7:00pm EDT
a chance to reset market expectations when central bankers gather this week for their annual retreat in jackson hole. chinese lenders/rates as the economy battles severe headwinds. chanter -- china's energy crisis adding to the problems stop a limit on how some in -- on supply for some industrial users. u.s. futures under pressure after we had a volatile session on wall street. the s&p 500 having its worst day since june and we see the pressure continuing in the asian session. we have $2 trillion in options expiration which didn't help with the volatility level. the 10 year level headed to the 3% level and everyone hanging on what chair powell comments will be this weekend in jackson hole. in order to gauge what the trade
will be this year, a flattening yield curve has been the wager of the day. crude pressure on -- crude prices under pressure at the open. we had seen three days of gains for oil prices but there had been that conflicting dynamic about perhaps in improving domestic, and some saying they were pre-liquidating some of those trades. take a look at this chart on the bloomberg and you can see how if we do get those uranian oil supplies, it could go pretty fast. today, president biden spoke with western leaders and if history is any guide, we could see a fast revival of that output if a deal does come in place. >> it will be interesting to see what it means for energy prices
because any cooling could give asian stocks a bit of reading space. we are looking ahead to a weaker start. we saw futures closing and new zealand down. a little mixed in the g10 space but the move in the aussie and yen, the trade is very much focused on what happens in jackson hole. if we change now, we have more than 300 companies reporting earnings this week. the focus is in terms of how bad the numbers are versus what we have indicated in the second quarter economic data. analysts have been downgrading their forecasts, every single sector except for energy and industrials. you have that against the backdrop we are seeing in the weakness with the offshore yuan at its weakest point in the year and there are the energy
shortages investors need to grapple with as well. haidi: one of the issues on investors minds at the moment. this morning, a lend lease loss, estimates for a property of $142 million. operating profit coming in at 270 $3 million. they announced what is going to be updates when it comes to the sustainability link and we have seen the climate change issue for what is setting up to be a record year. lend lease could be facing additional challenges to deliver on some of these commitments. as well as what we continue to see with the slowdown in the property sector as well.
lots more coming up. we will be talking through the economic headwinds and the outlook for that level economy. setting up for a big week ahead with central bankers gathering at jackson hole. take a look out what is coming up. we're speaking to a lot of great guests, including tony lombardo at 12:30 p.m. in sydney. shery: the key focus is what is happening at jackson hole this week. it could be resetting market expectations because investors are taking a look at what the
favorite trades of the year have been in treasury markets and that could take a turn depending on what chair powell says. let's bring in kathleen hays, stephen engle, and andrea possible. expectations are high for what we can expect from chair powell this week but we've had a chorus of fed officials emphasizing the need for higher rates. kathleen: that's a great way to start this -- jackson hole, the federal reserve, the fed chair, especially at times like this, if the central bankers set the course, not only for the u.s. but frequently other markets as well. i wanted to start by reminding everybody back into but he 10, ben bernanke signaled the second
round of quantitative easing. how do you do something like that? it depends on how hawkish he is going to be. this is the first time he's going to be speaking since the cpi headline number pulled back from 9.1% in june and then you got a jobs report, the payroll up twice what was forecast in the month of july. that is a push-pull there. is he ready for inflation to come down. perhaps partly because of the consumer price index starting to look a little weaker. will he jump on that bandwagon? you can see over time that expectation for where the fund is going has gotten higher. it still has about 150 basis points more to go. the president of the richmond
fed on friday made it clear he is on the side saying it will do whatever it takes. we are looking to return inflation to the 2% target and will do what it takes to get there. powell not saying we are going to go 50 or 75, it is looking big picture. i would say one thing, if powell focuses on how they could get a soft landing and not so much and we are going to keep pushing hard even if it means recession, markets might take that as a little bit dovish. haidi: we are also watching the broader environment in china. is that loan rate likely to attract the pivot given we are seeing these indications of an energy crisis as well? stephen: obviously the chinese economy is suffering. the slowdown numbers across the
board in july and as kathleen was just talking about, the fed is going to be tightening while the pboc going in the opposite direction. they cut their seven day reverse repo rate and this is likely to set the stage for the loan prime rate, expected by all economists surveyed by bloomberg to have at least 10 basis points cut. the five-year lpr, more of a mixed reaction. six of 16 expecting a cut to the prime rate which is more associated with mortgages. the bank sector, we know there problems, it did drop in july for the first time in a decade and corporate and households have shown a reluctance to borrow.
which really dropped off the cliff in july. it is typically a slower month but it was much lower than expected. we were going to get those cuts, unlikely, but you mentioned the power shortages and down in the south where temperatures have been above 40 degrees for a number of days. no rain for 15 days. nanjing, hasn't had any rain since early july. that is exacerbating the water levels at the hydroelectric dam. privileges will be extended to the corporate sector to this thursday. factories like toyota and a big battery maker are planning plant closures as well. more strain on the chinese economy. shery: given everything
happening in china, including the jackson hole meeting, what are we expecting for the investor mood in asia? andrea: one of the major things markets are going to be looking at is that shape of that yield curve. it is becoming a much more difficult trade given how fast that yield curve has inverted. a lot will depend on what chair powell will say. not as much about how may rate hikes there will be but also the economic consequences of these rate hikes. we have seen that curve steepen and it shows how complex it is. where bonds are going, the shape of the yield curve will be a
major focus for investors. shery: we will be live at jackson hole later this week for that crucial powell speech as well as interviews with fed presidents. let's get over to vonnie quinn with the first word headlines. vonnie: the australian prime minister says inflation is a key priority for his government. headline inflation is running at the fastest pace in 21 years in the second quarter and is forecast to accelerate even more by the year end. he echoed advice from the treasury department that inflation will not go past 10%.
singapore is repealing a colonial era law that criminalizes sex between men. it is something most singaporeans will now accept. he stopped short of recognizing same-sex unions, adding the constitution will be amended to add the definition of marriage will be between a man and a woman. in japan, the prime minister has tested positive for covid and has relatively mild symptoms. he developed a cough and symptoms and came up positive on a pcr tests. he is currently resting at the prime minister's official residence and is expected to resume duties on monday. china's latest covid outbreak is worsening with new cases jumping over the weekend. a southern island saw the most infections. in hong kong, daily cases rose to the highest in more than four
months. the city is reopening one of its biggest isolation stations. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: still ahead, that solicitor general set to hand out legal advice on the former prime minister, scott morrison. one of us truly is most respected political commentators gives us her take later this hour. up next, as markets oh wait the fed's rating, fed officials are caught in a bind pushing back on financial conditions. find out on bloomberg head. -- bloomberg ahead. this is bloomberg. ♪
shery: you are watching daybreak: asia. here's a look at the week ahead. china's primetime rates are set to be released monday with banks likely to follow the pboc decision to cut a key policy rate stop the bank of malaysia it makes a decision with most analysts saying a key rate unchanged at 3.5%. in singapore, we get july's cpi data. analysts see inflation rising on a range of demands and cost factors including higher prices for food and fuel imports. on thursday, traders expect the bank of korea to raise its key rate by 25 basis points. the jackson hole symposium begins, always closely watched for clues on the path ahead for the fed and other central banks.
major chinese companies set to release data this week. aggregate, it likely contracted amid covid lockdowns. low expectations could set up positive surprises such as alibaba's flat revenue where consent is called for contraction. qantas is set to give a look at how a tight labor market and covid related impacts are affecting the aussie flight carrier. that is your week ahead. our next guest says officials are caught in a bind and that could spell trouble for risk assets. let's ring in peter mcguire. good to have you with us. this chart on the bloomberg, right off the bat, financial conditions starting to ease again. this is not what the fed wanted to see. will they have to address this? peter: i think it creates
headaches, naturally. we will be interested in what they discussed this weekend the rates coming out. jay powell, again, we've had a very strong move over the last eight weeks as far as u.s. equities. if it maintains over the september-october timeframe where will we see a pullback? as far as a short debts come hedge funds, options and all those sorts of things, this is the limit the fed is facing and now they move forward. shery: we have seen the dollar rising to that best week since april 2020 or so, so it has been a good week. if we do see a pullback in financial conditions because of what the fed does, what does that mean for the u.s. currency? peter: i think first off, it's a
punch. you see the yen being hammered. it got smashed last week. the euro at parity, so overall, the commodity currencies have been smashed as well. it seems to be king dollar reigns supreme. i think there's probably further upside by the end of the month. haidi: then you take a look at the australian earnings season, how does it compare? what's the next six months hold in terms of the guidance we have so far? peter: i think the major concern is looking as far as the domestic situation in australia, wage growth, what we are doing with inflation, the general
consensus on main street, we all understand the conditions we are facing and high energy costs and so on. how that rolls across to the balance sheet and equity markets is going to be interesting. it might be a very tough time. domestic equities leading up to christmas, with us sitting on our hands and looking and seeing opportunities, i think volatility is going to ramp up over the next matter of weeks. haidi: which will be interesting when it comes into this rotation not just into growth but back into these name stocks. what do you make of that? in addition to what we are seeing in crypto as well. peter: exactly. the meme stocks have been outstanding to look at and just observe trade. i really got off on the chatter
that you hear and comments. i can see why so many traders enjoy those interactions and the opportunities are immense. i can't go out there and say what's going to be the next one to follow, but they never saw the surprise and you only have to look at bed--- bed, bath to look at what's going on. shery: good to have you with us. xm australia ceo singapore the rest of the week. you can get a roundup of all of those stories you need to know to get your day going in today's edition of daybreak. you can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪
shery: here's a quick check of the latest business flash headlines -- berkshire hathaway one approval from u.s. regulators to buy as much as 50% of occidental petroleum. berkshire spent a year wagering on occidental after making a bet on the houston-based oil company three years ago. the stock had its just gain in five months. billionaire ryan cohen targeted a $68 million profit from the
sale of his stake in bed, bath & beyond, an investment he held just seven months. he scored a 56% gain, other retailers are feeling the pain. bed, bath and beyond shares tumbled as much as 43% after his exit. asset management will be in focus when china opens for trade after an investment service but in a review for possible downgrade. the bad debt manager faces -- a forecast that was worse than expected. taking a look at the day ahead for us trillion and new zealand, another big day for earnings were a number of companies. reporting a full-year net loss of 99 million australian dollars or 67 million u.s.
the qantas ceo is apologizing over delays in lost baggage, offering $50 off return flights for frequent flyers based in australia and new zealand. work is underway to improve regulation of crypto assets, include of a start of token mapping. haidi: we will be watching those assets as trading gets underway in asia. the s&p 500 and nasdaq futures extending losses heading into the big jackson hole week. treasury futures modestly higher. wtf -- 4300 is the level two watch when it comes to s&p futures. take a look at the picture for risk as we get into that monday session. stocks finish for the u.s.
easing lately. annabelle: basically, bank of america will vote this morning. they are expecting the fed and jay powell this we get jackson home to reinforce a commitment to price stability even at the risk of sparking recession. this shows the difference one year makes. last year power went into jack son hole with the narrative inflation was transitory. now it is different. bank of america pivoting quickly to rate cuts. taking a look at what bank of america sees from here. look at the midpoint of the fed fund target rate at the terminal chart. 2.4%.
bank of america seized that getting to 3.5% or 3.75% i the end of the year. until we see a change of inflation at 8.5%. they needed around 2%. -- need it around 2%. haidi: let's not get ahead. the full impact may not yet be felt. annabelle: yes. we have had a big move higher in global stocks since june lows by nearly 10%. also risky assets. this is also off the back of expectations that the fed would be at the final stages of tightening. that could certainly not be the case. essentially, the full impact is still to be seen. what that means in terms of strategies, they are seeing risky assets are looking a little better here. haidi, they say, do not sell in
a quiet market. they say it will get noisier ahead. haidi: a lot of uncertainty ahead of what is a big week for central banks. let's get to vonnie quinn with the first word headlines. vonnie: richmond had president thomas barkman says the central bank is dedicated to ending inflation even if that means recession, acknowledging a recession can happen in the process. recent fed speakers agreed more rate hikes are needed while debating the height of the next move. india has no plans to import. reserves declined to their lowest monthly level in august. prices surged nearly 12%.
government officials are discussing whether to cut or abolish a 40% import tax on wheat to help miller's in some locations get supplies. germany may not be able to replace all its imports of russian natural gas at this winter and may have to result to nuclear power. chancellor olaf scholz says there is a chance of extending the three nations reactors beyond december. global news 24 hours a day on air and bloomberg quick take powered by more than 2700 journalists and analysts in more than 120 countries. shery: wearing masks in most indoor settings as we move further from pandemic era curbs. emma o'brien joins us on more. singapore is further opening up. lifting restrictions we saw through the pandemic.
what do we know? emma: singapore is really moving against hong kong in terms of financial centers in asia, dismantling one of his most significant virus curbs, the wearing of masks indoors. you no longer have to wear a mask and offices, public places like restaurants, movie theaters, that sort of thing. that is a big step towards body as cases come down to around 3008 a in singapore. it has led the way somewhat in normalization. >> is a lot of this coming through? emma: that's right. hainan island continues to be a problem, the southern province of china very favored by vacation doors. now it seems to be among some of
the infected down there they are seeing consistently around 1000 cases there. it is being called a mini shanghaid with the city being locked down. now they are trying to move some tourists out of the island and try to get them home. they are subject to restrictions typical with china's covid zero situation, lots of tests and mandatory our selection for a couple days when they get to their home places within china. shery: in japan we are seeing cases have a close to record highs for a while now. now the prime editors -- prime minister tested positive. emma: japan is in the middle of singapore and china on the extreme end. they are keeping some restrictions, particularly around travel. tourists cannot freely travel in and out of japan, unlike singapore. but yes, cases are still peeking. they are on a different wave
cycle. they are seeing the top of that now exemplified by the infection of the prime minister, that has a pretty mild case and will return to some work duties, isolated of course, today. shery: you mentioned singapore going in the operation to hong kong. what is happening in that city? emma: you are seeing a wave pickup there. it is affecting the hospital system. it is starting to become quite inundated. they are reopening isolation centers that they used to house people that cannot necessarily quarantine when they have covid at home. one of their biggest isolation sites is being reopened. they added 200 beds there. that is a sign of how hong kong continues to follow some of the covid zero path set by china. shery: emma o'brien with the latest on the pandemic.
haidi: we have more earnings crossing bloomberg. star entertainment reporting results given a difficult situation for the gaining environment in australia with a number of inquiries happening across different states. star entertainment reporting capex $150 million. revenue trends from the fourth quarter continue in the early first half of full year 2023. we are looking at full-year international vip rebate, 2.65%. star entertainment, the final dividends of those share, not issuing one. the net full-year normalized --
the normalized numbers coming through their as well. we are seeing a difficult operating environment with the full year net loss $198.6 million. it has been a really challenging year for a lot of gaining giants. when it comes to how the stock has performed down 15%, what a downside for the a is 51, 5.2%. take a look at the start of the training day here. in asia we are seeing the aussie dollar bearing the brunt of the risk off sentiment going into jackson hole. will chair powell attempt to hit reset when it comes to monetary policy and inflation expectation? the aussie is positive but under the 70 year estimate level where we have a bit of a peak. we have the move when it comes to kiwi stocks, down .2%.
the second quarter earning has been ok. it was a little out of place when it comes to guidance but it has not been as robust as in the u.s. earnings session. politics remain at the forefront in australia today. we are getting the solicitor general's advice when it comes to the former prime minister scott morrison, whether his secrets wearing in of himself for five ministerial posts broken any laws. we will get analysis from the university of canberra's michelle grattan: with her analysis. we are not expecting that this advice wasn't just any laws were broken does this raise the question of whether should have been laws in place to prevent this? is the damage already done for the labour party? michelle: on the question of whether there should be laws in
place, i think you cannot cover everything by law. conventions are important. what we are talking about here, convention and proper behavior. no one expected a prime minister to take this action. it was not necessary to insert himself into all of these portfolios, even in a pandemic situation. i think the idea that a leader would not tell his colleagues was bizarre. in terms of whether the damage has been done, yes, to an extent. because, there is a lot of talk about undermining the democratic system. but, the fact that this has been exposed shows there is a certain
prevention in the system for the future. that leaders would be much more careful, much more aware of convention in the future. having said that, i think that the labor government will move to formalize conventions, at least to an extent. shery: the prime minister's reaction has been quite interesting. this is a new piece that has followed into their lap at a time where there are a lot of domestic pressures. prime minister anthony albanese said this is what he keeps getting asked about. how do you see the labour party government handling this? is there fairness to criticism that he is still behaving like an opposition leader?
michelle: there is no doubt that the labour party would have memories of the coalition. when it came into government, pursuing the former labor government. there has been payback in the background. i think the labor government is very aware it has got to be careful in using the situation. that it will be seem to be going through the proper processes. so, there are cautions in the way it is handling at. -- it. but it is right. i think the issues that the public is really concerned about, not the past. obviously, we are censorious of the previous prime minister but
we are facing real issues of the cost of living and real wages going backwards. i think that the government in the next couple weeks will want emphasis on its job summit at the end of next week and that will be looking at issues such as getting more people into the labor market. more immigration, things like that. that's what the real world is primarily concerned about here. haidi: is the latest data rocking the opposition members? they have to dance a delicate dance. with the former prime minister, do they defend him? well this decreases the political capital for the government? michelle: it well. -- well. we are three years from an election. in terms of this coming to a
crunch in votes it is a long way off and will be long forgotten by then. but in immediate terms, the opposition is in a very difficult position. scott morrison, i do not think you will be wanting to leave power until he can get another job. this is hardly improving his employability. some in the opposition would like him to go now. the opposition leader is in a difficult situation, to put it mildly. haidi: the one hour press conference did not help him. michelle, can you make sense of when he went ahead and put himself in secret at the top of those ministries? he said he needed to because of the pandemic. that does not seem to be the case. not to mention, the portfolio ministry seemed carefully
curated to be somewhere he could have full, unilateral power as a minister. michelle: the central theme coming out of this reinforces what we already knew about scott morrison as a leader. that he wanted control, he wanted power centralized to an incredible degree in his own hands and the pandemic day of the opportunity for him to do that on a number of fronts. he was also a leader who did not like public exposure too much. he liked things secret. those two characteristics of him really account for a great deal of what happened. shery: it feels quite trump-esq ue in a lot of ways. what does the opposition need to do to get over this and become a
viable party? michelle: the best thing i believe would be if scott morrison left the power limit -- parliament as soon as possible, but there are reasons why he does not want to. but while he is there, he is a lightning rod for criticism of the opposition. they have a whole lot of other problems trying to get back on their feet. therefore, what we will see, if you rate -- if he hangs around as we expect is there will be more revelations. there is another book coming out a few months away written by a journalist that has been a trenchant critic of scott morrison. he has new material. you will have another book just before christmas of criticisms of him. from the opposition point of view, this is a no-win situation.
shery: canberra professor michelle grattan: always great to have you. paul allen is here with another story when it comes to australia. green bonds. a part of this will be the big push from the new government, making climate change and new energy a priority. we have seen a record, banner year for green bonds. paul: definitely. 4.6 billion aussie dollars worth of issuance starting to close in on the record we saw last year of $6 billion in greens bonds -- green bonds issuance. still small globally speaking. there are 300 billion issued globally this year alone. but, moving in that direction. the obvious catalyst for change was the new government and new policies, a 43 percent cut in
emissions by 2030 and net zero by 2050 is now legislated. that was criticized by the green party at the time as bringing a bucket of water to a house fire but it is law now and propelling green bonds forward. we are seeing that reflected in the numbers, the near record amount we are headed to by the end of the year. shery: we are here in sydney with more to come. this is bloomberg.
shery: despite rising inflation, fuel prices, and borrowing costs the supercar market is holding up fine. lamborghini set a record for the first half of 2022, the best six months ever when it came to sales and profit. the ceo told us the italian carmaker has already looked through early 2024. >> let's speak about 2022. we had the best six first months ever in our company history. as we speak, things are going strong. every day, we sell more cars than we are able to produce. we will be doing a lot in the next couple years. we will hybridize our entire lineup and 2023 is very
important for us because we will unveil a new vehicle with a hybrid system. it is very important because we will celebrate our 60th anniversary. we have no fear that this will be a fantastic year also in 2023. but, it's very difficult to make a forecast because of all of the things that you know better than me. guy: let's talk about that as well. you talk about the macro environment. it could get significantly more tricky. you only have to look at germany and italy to get an idea that the consumer is starting to feel squeezed. even the high end consumer is having a tough time, increasingly. what kind of a year do you think you will see next year? what do you think will be possible? stephen: as i said, it is very
uncertain. it's very difficult to make a forecast. today with high interest rates and high inflation, we are still going strong. with prices of energy skyrocketing in europe we have not seen any slowdown yet. this is a very positive sign, but it's very difficult to make a forecast for 2023. we have a very solid order bank that is reaching already to the beginning of 2024. so we have covered 18 months of production. so, we should be fined for the year 2023. shery: look at how currency markets are trading. the dollar is seeing its best week since april 2020. not a lot of movement on the japanese yen, week at the 137