tv Bloomberg Daybreak Asia Bloomberg August 23, 2022 7:00pm-9:00pm EDT
the 10 year yield is holding above 3%. u.s. business activity contracting for a second straight month. energy costs are delivering an economic blow. shery: take a look at u.s. futures. this after we saw large training volumes. the summer low, people are more cautious given we are heading towards jackson hole. business activity, the housing market not looking great. the real estate sector was one of the big losers. we watched the treasury space,
the two year yield took get hit today. perhaps the expectations of the fed will not be as hawkish as markets expected. oil is not doing much. annabelle: the nikkei futures are unchanged. the asx looking at a fractionally higher start, the low trading volumes in the u.s. would also expect, pmi for japan, rates are still holding
but lower on the months prior. you have the backdrop of the war in ukraine, inflation risks, procession fears for the global economy. shery: for more on how markets are reacting ahead of the meeting at jackson hole, let's bring in andrea. we are seeing business activity slowing, not only in the u.s., asia, europe. today, i wasn't only demand and manufacturers, but also service providers. >> it appears to be a synchronized slowdown. we saw weakness in new orders, strong jobs market. in the eurozone, the contraction
is all about the extraordinary energy costs, rising interest rates. hey, the world economy is slowing. e, it's a deeper of a slowdown. haidi: there could be more internal pressure building for a bigger move within the fed. reporter: these were two regional feds. what would they do with the discount window for july? is different.
it just goes to show you the moves on how hawkish the fed is. when you get this indication, this is what they would do with the discount window, how much pressure it is on the fed. shery: we have the two year yield taking a hit. the treasuries are a little mixed today. also, digesting week numbers. reporter: the home market is trying to look forward was happening in jackson hole. the weakness with the dollar.
the treasury ended up above 3%. we saw a knee-jerk reaction in the u.s., the dollar and treasury market. the jackson hole traditionally, normally every year, there is a lot of fixation and it does tend to deliver a lot. this is an unusual time against the backdrop of high inflation, slowing growth. whatever jerome powell says is going to carry a lot of weight
for the market. especially this year. there is a small possibility they are less hawkish. perhaps that is going to give a bit of a boost to equities, which we know the rally has caused going into this meeting. haidi: our chief asian correspondence. we will be live later this week for that crucial speech, key interviews, philadelphia, st. louis, cleveland and atlanta. we will have big conversations at jackson hole. stay tuned. let's get you to vonnie quinn in new york. >> the former malaysian prime minister will serve a 12 year
prison sentence after losing his final appeal. the ruling prevents him contesting the next general election. he will go down in history as the first malaysian prime minister to be convicted and imprisoned. a pakistan court has asked the former prime minister to appear next week. the court will review a remark he made about the government. the political drama threatens to undermine pakistan's quest to convince the imf to release a loan. the united states plans to announce $3 billion in additional arms to ukraine as the nation marks independence day. that will be the largest single installment in security. germany is also finalizing nation that of additional weapons. -- a shipment of additional
weapons. ministry from 13 indo pacific nations will meet next month. the gathering will be used to discuss trade, supply chains and clean energy to counter china's influence in the region. 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, we focus on the global rush for gas with goldman sachs. on the lookout for opportunities in tech but staying cautious. this is bloomberg. ♪
is this a bear market rally pause? guest: i believe it's a bear market rally. that was my signal, that this is a bear market rally. i still think it's time to remain cautious. the fed has been steadfast. it's time to play defense. love high quality names that have strong balance sheets, consistent dividends. with that being said, he still have to look at opportunities.
it could provide good buying opportunities for sectors like technology. if you can withstand the volatility, you have a longer timeframe. haidi: how long is the timeframe? do you see a return to the re-rotation in tech strength? ryan: it's going to take some time. when i see near-term, i am looking six months that we are going to see some volatility. the fed is going to raise interest rates 75 basis points, then after that they might start slowing a little bit because we are going to start seeing more economic data like we saw today,
that's going to change their mood. with that, my think you will start seeing more people jumping into the tech space, higher valuation. shery: with a potentially hawkish fed, what is the trajectory for the u.s. dollar? we have seen moves into the greenback given the safe haven moves, our question of the day is, where is the u.s. dollar headed in the next 10% move will be higher or lower? ryan: i think it's going to be higher. the fed is steadfast in fighting inflation. they are going to continue to increase rates moving forward, that will boost the dollar. you look overseas. there are a lot of issues in europe.
europe is on the cusp of a much deeper recession than what we could potentially have here. compare the u.s. dollar to other currencies, you're looking at a stronger dollar. shery: it does not bode well for emerging markets. what is your position there? ryan: great point. i am cautious on emerging markets and they take a neutral stance as a whole. china had a great second quarter. i think china will continue. looks like they have put covid and lockdowns behind them, i think that will bold well for them moving forward. as a whole, stronger dollar and slower growth, that does not bode well for emerging markets. shery: do you buy into the narrative that perhaps you can
play the policy divergence you are seeing with china? how the pboc is easing and perhaps more fiscal stimulus in the cards? ryan: i do. if you can withstand some volatility, whenever we talk about china and emerging markets, you can't ignore the geopolitics and the concern and risk there. if you can withstand some volatility, china is a good area to increase exposure. shery: good to have you with us, thank you. you can get around above the stories you need to know in today's edition of daybreak. terminal subscribers go to dayb . you can customize so you only get the news i and industries on the assets you care about. this is bloomberg. ♪
shery: hedge fund titans are remembering julian robertson, the billionaire tiger management founder who died at the age of 90. he was one of his generations most successful money managers. su keenan joins us with more. he left quite the legacy. su: said day. so many on wall street are remembering and. he was one of the most successful hedge funds. he started tiger management at 48. that's relatively old.
in the late 1990's, asset soared to $22 billion. returns were averaging 32%. they are known as the tiger cubs. let's listen. >> if you take a long period of time, it's been pretty good to stick with a lot of the good hedge funds that are out there right now. i certainly have money that i don't manage myself. su: he was not only known for his investing. he was also a major philanthropist.
many close to him will tell you. spohn from the fact when he would greet someone, he would call them tiger. that ended up being the name of his fund and other tiger cubs as well. haidi: of course, one of those disciples triggered a recent blowup with archegos capital. su: he was saddened by that. some on wall street might disagree a could happen to anyone. he was a star trader to come out of tiger. his fund lost $20 billion in a
matter of days. that is one part of the legacy. chase coleman is one of the tiger cubs where up until this year, one of the most successful. he spoke in less words about the wonderful mentor that robertson was, not just to him but to so many on wall street. under starring those philanthropic's efforts. there was a downturn towards the end, it closed many major funds into thousand. julian robertson died at the age of 90, leaves a major legend. back to you. haidi: traders are bracing for hawkish talk from fed officials at jackson hole, but i goldman sachs chief economist tells us he sees jay powell signal a
slower pace of rate increases. >> the property market downturn is a multiyear development. the fed wants below trend. that is why financial conditions are where they are. you have the fiscal drag. plenty of headwinds for sure. i don't think it's quite as bad as in china were euro. i think it will be balancing two things. one, they will lay out a case as they did in the minutes, slowing the pace of increases.
i don't think he will be specific about the number, but he will be saying there is a risk of over tightening, and therefore, it makes sense to go more slowly, but at the same time, it will make clear the job is not done, inflation is too high. they are committed to bringing inflation back down. it will be a balancing act. >> there is a mix of themes. macy's, bloomingdale's do well in the have-nots are struggling. john taylor visiting with bloomberg, saying sustain the higher yield environment. are we getting the x-axis wrong?
do we need to look to years, three years or five years of elevated inflation? >> one year from now, two years from now inflation will be lower. there are some drivers in commodity prices that are clear, good sector in general, that will come off a lot. the risk is where we have seen indications, it will be well above normal. i think there will be improvements, but not everywhere. shery: goldman sachs speaking with tom keene. coming up. amid a global rusk to secure lng shipments, western reliance on gas exports will soon wayne.
votes by regional directors can be symbolically important of the separate benchmark fed funds rate. the indonesian central bank delivered a surprise 25 basis point hike as it tries to manage and placement and stabilize the rupee. the first increase since 2018 was only predicted by seven out of 31 analyst surveyed by bloomberg. the bank governor warned inflation was likely to exceed the 4% target this year. a tropical storm is bringing heavy rains and high winds across the northern needs. the storm could cause flash flooding and landslides in northern ireland is of the island nation. it is forecast to strengthen as it heads toward hong kong thursday morning. julian robertson, the billionaire founder of tiger management, has died at age 90. he became one of his generation's most successful hedge fund managers and a mentor
to investors. his fund had 22 billion dollars in assets and annual returns averaging 32%. a wrong way on the yen led to losses. -- a wrong way bat on the -- bet on the yen led to losses. 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. ♪ david: minneapolis fed president neel kashkari is speaking at a gathering of the wharton, minnesota alumni club. he says it is clear we have to tighten monetary policy. he has been commenting on looking back, how they can see the fed was slow and when it comes to inflation risk, lower oil is welcome but he is focused on the underlying price trends and says mortgage rates are tapping the brakes when it comes to the housing market in the used to -- in the u.s. as we get
more concerning data when it comes to business activity in the u.s. slowing for a second consecutive month. he spoke about high inflation. the fed's job is to curb inflation. the discount rate meeting, suggesting at least a couple of regional fed boards including minneapolis were pushing for a 100 basis point move. that tells us there is a lot of internal pressure building as we look ahead to jay powell at jackson hole. shery: not surprising when you have prices at a four-decade high exacerbated by prices in oil and gas rallying. we have seen a rally in alto prices with support coming from a weaker dollar. but this, with russia's invasion of ukraine, exacerbating fears of a shortage this winter that at one point sent u.s. not gas n
at --- natgas. european natural gas is closing at a record and taking a breather because we are seeing signs of a slowing economy. but our next guest says western reliance on russian energy will wane as alternative supply chains are formed. goldman sachs' head of natural gas research samantha dart joins us. you say rush's leverage to use energy is shrinking, but what does it mean for energy prices now? samantha: for now, we are still in that situation where europe doesn't have access to enough alternative supply to easily compensate for those russian gas losses. so, we are left with high prices having to fix the problem,
higher prices accomplishing mainly two things. the first is, they discourage domestic demand. we are seeing that. if you look across consumer gas demand in northern europe, it is down 15%. the second thing i prices can accomplish is, they help attract imports from other places. -- high prices can accomplish is, the help -- they help attract imports from other places. and it is helping european gas storage remain on track. this is important. we still expect european gas storage to finish the summer at about 90%. shery: oil prices, gas prices continue to rally, and we have seen energy companies do pretty well when it comes to patting
their margins. tell us about what you call the political economy of inflation as we see more policymakers try to distribute this wealth, and what it means in the long-term when it comes to the commodity space. samantha: that is exactly right. we have seen policymakers shift policies that focus on macro economic stability to policies that focus more on redistribution and social support. a great example is what we saw out of germany recently. germany has allowed the pass-through of certain costs of energy to end-users. at the same time, they are removing vat tariffs from that consumption. so, the goal in allowing the pass-through is to prevent the supply chain from collapsing.
but the government doesn't want these very high costs to be completely put on the end consumer, hence the removal of vat taxes. it is these policies of redistribution, policies that support available income and lower-income households and this ends up having -- available income in lower-income households and this ends up having lower energy consumption. david: the question of the day is on the dollar because i am curious to get your view on how you think the direction of the dollars going to continue informing the dynamic of energy pricing. why are we getting to this point when you see the negative dollar-oil relationship? historically, that hasn't always been the case. samantha: what we are seeing more recently is this
relationship being mainly driven by what is happening in natural gas. the higher natural gas prices in europe, the higher the chance of a european recession and a lower euro relative to the dollar. and at the same time, the bigger risk of recession may bring fears that oil demand is also going to drop. so, you end up with this negative correlation, as the euro drops, the dollar rises, and demand expectations around oil drop, oil prices fall as a result. shery: talk about who is in the market right now for gas and how that is going to affect competition. because we are hearing that taiwan, south korea, japan are now hunting for supplies ahead of winter. perhaps china now back in the market come about what does that mean for energy prices? samantha: yeah, we have seen
japan and south korea in particular, the import numbers we are seeing are quite strong. but who we have seen drop out of the market in a significant way have been pakistan and bangladesh. it is too expensive for these countries to continue to import at levels they would like. and it is really a concern. because especially in bangladesh, we keep hearing of growing blackouts. there isn't enough natural gas of to generate electricity. -- enough natural gas availability to generate electricity. in this mix, we need to watch china very closely because of its scale. whenever china swings it lng demand, it has a big impact on the market. what we have seen to date is china very weak in the market because of covid lockdowns. economic activity has been sluggish to rebound and with
that, lng imports as well. and what we are seeing now is a drop, especially in the size one region -- size one region -- se zchuian. this helps europe in a way, because it is going to keep chinese lng demand on the low side and leave additional lng available to go to europe instead. shery: goldman sachs head of natural gas research samantha dart, great to have you with us. coming up, australian financial services expert stephen jones leading a trade delegation to jakarta. this is bloomberg. ♪
♪ anabel: you are watching "dabreak: asia," where they check on markets. we have been hearing lines coming through him minneapolis fed president neel kashkari, reinforcing what we know, that the fed is focused on inflation and is still pushing to rein in price pressures. in terms of trading in asia, we are looking muted ahead of the open. all eyes are on jerome powell's
commentary at jackson hole later this week but in terms of future contracts for japan and australia, looking higher now. new zealand online to the downside. in the u.s. market space, we bring up this seminal chart. what has been a key driver of the equity market -- equity rally the last few months could be coming to an end. we are looking at a chart showing a goldman sachs index of the most shorted stocks. you can see the outperformance we had had in u.s. stocks in july. the gap has narrowed significantly. what it means is, investors are closing their division on single stocks. it is a boost to the equity benchmark. in terms of future contracts, still strong, suggesting there is still understanding of a downturn to come. david: annabelle droulers in hong kong. australian funds are increasingly looking offshore for investment opportunities. our next guest is leaving a
trade delegation to indonesia to strengthen economic ties between the countries. let's cross to singapore where a wonderful ambassador for australia is fanning by. juliette saly is you i am talking about, with our next guest. juliette: joining us now is stephen jones, commonwealth of australia financial services, heading to jakarta with this delegation. raising rates for the first time since 2018, australian pension funds are being roiled, why now? are investors going to be happen -- going to be happy with emerging marketplace? stephen: we are looking for pace capital, long-term opportunities. indonesia is a country approaching 300 million in population. very good growth rates year on year, looking at in excess of 9%
growth rates, but also an ambitious economic reform rogue graham. quite simply, our largest neighbor. if we are not any indonesia, we have to be asking ourselves questions. in the last two decades, government to government ties, good people to people ties, but we have been week indirect, bilateral foreign investment -- we have been weak in direct, bilateral foreign investment. we are looking at throughout the southeast asia region, in surber -- superannuation funds, australian investments at the present are 25%, overwhelmingly in listed assets in american and european markets. we want to start looking closer to shore as to where growth opportunities are. there is also alignment between our economic interests and the funds we are investing in, high-growth markets, so
exploring what opportunities are available in the indonesian market. juliet: an inquiry has been announced into former prime minister scott morrison. stephen: the attorney general is looking at the terms of that inquiry and an announcement will be made about that soon. it is important we get this right. one of the bedrock of australian democracy is responsible government. ministers come of the prime minister, all of us are accountable to the parliament and we simply can't work if we don't know who the ministers are from day-to-day. it is the most problematic thing about what the former prime minister has done, kooky and pretty secret maneuvers that were not even revealed to his own cabinet. how can you have government to come by cabinet ministers responsible to parliament of nobody knows from day-to-day to the minister is making the decision? juliette: going back to the
foreign investment fund, when you invest in opportunities like in indonesia, how much are there esd concerns being counted? stephen: that is one of the many factors we are looking at. the investments we are keen on doing are ones that i want to provide great come along-term returns to australian superannuation fund members, but also investments done according to the values of the fund and the country as a whole. in terms of esd, we know there are great opportunities looking at environmental, sustainable investments. the indonesian government as that as one of its core objectives, the transformation of its energy generation systems. this is something australia is developing and something the indonesian government and australian government are interested in exploring. our funds are big investors in
that sector in australia and are looking for opportunities offshore. shery: your government also made indigenous issues a key focus of your agenda. we know there is a big wealth cap that translates into how you enjoy your retirement. i do you plan to improve this? stephen: in terms of our first nations people, ensuring that we do the right thing about tidying up our constitution, accepting the very generous offer from our first nations people to walk with them on a path of reconciliation, getting the voice to parliament sorted, getting constitutional aberrations sorted. that is a project the prime minister announced we have dedicated to doing at we think we can and will bring the entire australian community along with us. corporate australia has been fantastic on this. they have been very forward leaning and see that as we are
growing our business, growing our economy, there is a values element that has got to be dealt with as well, ensuring that we deal with unfinished business with our first nations people he is a core part of that. juliette: the closed borders mean there is a job shortage. there is a johnson skills summit next week, how do you plan to work with unions? stephen: there is consensus around where solutions lie. a lot of people are looking to immigration as a fix to this, and there is no doubt that scaled immigration is going to need to ba art of the solution. -- need to be a part of the solution. we also need to look at our own participation rates and skill base and see what we can do to be lifting up our existing skills based to be sure we are training kids going through school and making sure we have the right education pathways. yes, immigration is part of the
solution, but enhancing scale capacity and -- skill capacity and skill-based, young australians and australians needing to retrain for a changed career has got to be part of the solution. that is a sustainable solution. juliette: great to have you in singapore, stephen jones australian minister for financial matters. shery: if you want to hear more from the big newsmakers, tune in to bloomberg radio, getting that analysis from our daybreak team broadcasting live in hong kong. go to radio.com. plenty more ahead, stay with us.
♪ >> we had the choice of wrecking -- backing a brilliant car designer, or a slightly crazy entrepreneur named elon musk. well, we made the wrong decision. but tesla did very well and so did a electric vehicles. shery: kleiner perkins chair john doerr on what he calls possibly the worst investment decision of all time, not backing elon musk. in south korea, the excitement
and loyalty to the company and elon musk avenue reached a new level. let's bring in our report are. why is elon musk and tesla popular among south korean investors? >> tesla is popular among retail investors around the world but in south korea, it is especially so. it is the most popular foreign stock among south korean retail investors. there are many tukey reasons. one is tesla's wild stock ride, roller coaster movements by shares that appear to present them this opportunity to strike it rich. when stocks tumble, they find it a chance to buy and when the stock surges, they see it as a chance to get rich and climb the financial ladder by -- financial ladder by betting sometimes their lifesaving.
in the second reason is, we can't talk about popularity of tesla without talking about elon musk. for a lot of investors in south korea, elon musk seemed to be the guy who single-handedly made tesla of today. some of these people followed elon musk and they seem to support everything elon musk does. it -- shery: when i was living at south korea come i would go shopping and there was one type of shorts one type of fields. is this just take that? who are these people, do they know the fundamentals of what they are buying? yougyung: the investors i spoke
to say they know the fundamentals and arthur of their investment in tesla. retail investors in south korea gather on social media or youtube live almost every night to talk about tesla to analyze what is going on with tesla and what elon musk must be thinking. a lot of these people claim to be committed for their lifetime to invest in tesla, beta leaving that someday, tesla shares will go to the moon and bring them the riches they are seeking. we believe it there -- shery: we would leave it there when it comes to south korean investors and the ev maker and elon musk. we'll be following everything to do with the markets at the opening knee, soul and tokyo, coming up one we have emerging-market asian stocks at a two-year low, concerns about a hawkish fed headed jackson hole,
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global business activity is slowing. david: when it comes to china -- >> look at the resilience of jd.com. it is an economy that is dealing with an energy crisis. let's look at how these risks are shaping up for the asian trading session. >> a lot for investors to contend with a few moments out from the opens in japan, south korea and australia. the 10-year yield holding about 3% at the start of trade. that was after the week housing data in the u.s. weakness we have seen, the moves we have seen in yields have been contributing to the yen weakness. but the implications of that, the bloomberg economic team is weighing in on that. they saw that as a positive initially, but now, it has become a tailwind growth because importers cannot take advantage
of the softer currency because of the global slowdown. it also means exports are not taking advantage either. that sets up bloomberg economics to cut growth reductions this year and next. the nikkei 225 coming online, pretty flat. we are in a watch and see mode. and the jay powell address is that jackson hole later this week. the minneapolis fed president neel kashkari, speaking about this, he said the focus is very much on inflation and bringing it down. this morning, the korean yuan still around the 13-year low. we did get dimension in the market from authorities morning yesterday that they were washing our offshore speculative -- were watching for offshore speculative factors ending meeting for the bank of korea tomorrow. australia, focused on the
property market data coming through showing more weakness in the most populous city, sydney, prices down 5% versus the national average of 2%. that is a negative for the economy because australian households are heavily indebted and very reliant on where prices of property goes. what oil is doing, a little bit weaker at the start of trade. shery: given the uncertain sees you mentioned, ubs wealth management is recommending adding exposure to more defensive areas of the market to build portfolio resilience. regional cio kelvin tay joins us. is this just a battle between fears of a hard landing versus a soft landing being possible? kelvin: yeah, the soft landing scenario, we think this kind of situation, we don't have
overweight assets and income. where asset allocation is concerned, we favor a modest posture. as you pointed out, health care stocks are one of the sectors to be in and have proven over time that they tend to outperform in the late stages of the cycle. valuations are attractive at this point in time and the sector is also not as leveraged. in a regular environment, they tend to do better. shery: is that also what you prefer value stocks with inflation still being i? this chart on the bloomberg is showing treasury rates are doing on the longer end, and we saw value stocks not forming the way they were expected to. that has given the upper hand to growth. when you are in this environment where we are not sure where we are headed with inflation also elevated, what is your stance on
value versus growth? kelvin: i think in the last month, we have seen and outperformance, because growth stocks got pummeled as a result of the interest rate environment. but the rally in growth stocks the past couple weeks is a bear market rally. we do feel it will go up even further from here. our forecast of the 10-year yield is 3.2 5%. for investors, that means a growth start -- growth stock is likely more vulnerable, at least over the next six months, so we think value stocks actually do better. values are pretty attractive. we do think where oil prices are concerned, this is a temporary reprieve. we haven't seen demand drop with the exception of china and we are entering the winter, so we think oil prices are likely to
turn back up to $120 to $185 a barrel and that should abide a reprieve for oil stocks. shery: supply chain issues continue, the war in ukraine continues, when it comes to geopolitical risk, is that becoming a more major focus when it comes to strategy? kelvin: yeah, in the last three years, we have seen geopolitical resistance. when president got -- when president trump got elected, that became a major focus for investors and they tried to shy away or reduced allocations to sectors where they think could be in the forefront of geopolitical woes. we need to focus on the fact that where asset allocations are concerned, we have to actually be more aware that geopolitical risks could increase the volatility and therefore, a more defensive stance could be worth
it. that is why we have been allocating a higher allocation at the outset of this come a particular private equity and private debt. we think that these asset classes tend to be a lot more defensive, a lot more sheltered from geopolitical risks that the public markets. haidi: do you like any tech exposure, particularly when it comes to valuations? kelvin: yes and no. we do think that where the market is concerned, if we look at valuations, the u.s. market is actually pretty expensive at this point. it is close to 19 times earnings whereas on a 20-year basis, the stock market is driven up about three and a half times. and going into this weekend, we think the fed is probably going to use this weekend to reinforce the fact that they really want
to bring inflation down. if inflation wasn't come off, the right won't come off and where u.s. equity markets are concerned, perhaps it is a little expensive than the rest of the market at this point. -- a little more expensive than the rest of the market at this point. haidi: the regional cio of ubs global wealth management, kelvin tay. we are watching moves in gas stocks. >> we did see fluctuations in the gas contract in the u.s. briefly hitting the $10 level and then pulling back from that with his around report. this is a key export terminal responsible for a fifth of the exports from the u.s.. because it is coming back online later than what was expected, mid november versus october, a lot of expectation that we could see more storage for gas as a result that would then be
weighing on prices. in terms of reaction, some the biggest gas stocks in asia are a little higher at the start of trade. another move we are watching is in the m&a space, olympus try to sell off one of its units, a new report coming through local media and japan reporting it could be selling it may -- selling it to bain, part of the olympus ceo's strategy to reduce external business operations to streamline the business. shery: i think they have been trying to focus on medical technologies for a while, the big movers in the session today. let's get to vonnie quinn. vonnie: directors of two of the fed' is 12 regional banks favor a 100 basis points increase in the discount rate in july. the st. louis and minneapolis bank governors voted in july for a bigger hike than 75 basis
points. it could be a sign of hawkish this. indonesia's central bank delivered a surprise, 25 basis point hike as it tries to stabilize inflation. it is the country's first rate increase in -- since 2018. the bank of indonesian a governor -- the bank of indonesia governor warned inflation was likely to exceed its 4% target this year. the former malaysian prime minister will serve 12 years in prison after losing his final appeal at the trial related to the multibillion-dollar when mbd scandal. the ruling prevents him from contesting in the next general election that must be held by september 2023. he will go down in history as the first malaysian prime minister to be convicted and imprisoned. tributes are being paid to julian robinson, the billionaire
founder of tiger management to has died at age 90. he became a mentor to a wave of investors known as tiger cubs. his fund had $22 billion in assets and annual returns averaging 32%. a wrong way bet on the yen led to losses. 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. ♪ paul: -- haidi: coming up, not? ask joins us to talk about emerging strategy. but next, business activity slumping and reinforcing recession woes. this is bloomberg. ♪
so with inflation the side, i am in the mode of needing to err on getting inflation down. shery: minneapolis fed president neel kashkari speaking in wharton, minnesota at the alumni club. haidi: economic activity weakening from the u.s. to europe and asia, reinforcing concerned that prices and the war in ukraine tip the world into recession. chief asia economic correspondent enda curran joins us now. these concerns are leading people to think that perhaps the fed will need to slow down. we have the chart on the bloomberg showing services slowing, not just manufacturing at we have the two-year yield taking a hit because of that. how concerning our the latest global numbers? enda: that doesn't seem to be a synchronized slowdown in manufacturing sectors around the world. in the u.s., weakness in new
orders and employment. that is notable given how strong the u.s. jobs market has been. in europe, it is about high energy costs that the stock traders on futures are dealing with, that is weighing in on their activities. australia, the sector is turning for the first time in seven months, the big actor up being the slowdown in china, the economy. so the impact and the weight of rising inflation and interest rates around the world is starting to weigh on activity. it is weighing on consumer demand, chewing through menu -- chewing through economic activity for manufacturers and that the service level. the global economy is in something of a slowdown in the question becomes, how deep is that slow down going to be? haidi: how significant of these votes we have been seeing by regional fed boards? enda: those speak to ongoing
hawkish news on interest rates in the u.s. we saw the fed boards in minneapolis and st. louis vote for an aggressive halt of the discount window by 100 basis points. that is different from the interest rate the u.s. raises in its policy meetings, the fed funds rate. but it speaks to the idea that the regional economy in the u.s. and those on the ground are saying, we have got the jack up interest rates and they are sending as hawkish a signal as they can to the higher ups in the fed to get on with the job. we heard commentary from neel kashkari talking about the neil for more rate hikes, we are the important speech -- we hear the important speech from fed chairman jerome powell at aspen this week, but u.s. interest rates continue to go up.
haidi: our chief asia nymex correspondent enda curran. officials are breaking for hawkish talk from fed officials at jackson hole this week, but this guest thinks jay powell will signal a slower rate increase. >> i think the u.s. doesn't have the same headwinds as both china and europe and europe -- and china, you have zero covid policy and the property market downturn, which is a multi year development. in europe, you have the gas issue, nothing to point the same degree we have in the u.s. that it is going to be a slow growth environment, below trend. the fed wants below trend. that is why financial conditions are where they are, because the fed is tightening aggressively. and you have the fiscal right, so plenty of headwinds, but i don't think it is quite as bad as in china or the euro area. >> how do you expect german
powell another gate that this friday? >> he will be balancing between two things. he will lay out a case for slowing the pace of increases, you have two 75 basis point moves. our expectation would become a barring significant data surprises, that the september move is 50. i don't think he will be specific about the number, but i think he will be saying there is a risk of over tightening and therefore, it makes sense to go a little more slowly than these outsized increases. but he will make clear that the job is not done, inflation is way too high. they are very committed to bringing inflation down to 2% or thereabouts. it will be a balancing act. >> there is a mix of themes and
we saw bloomingdale's do well and macy's really struggling, or it could be john taylor of stanford visiting bloomberg in the last 24 hours saying sustain, sustain a higher yield environment. are we getting our time wrong right now? do we need to look out two years or three years or five years of elevated inflation? >> a year from now or two years from now, inflation will be much lower because there are some drivers, commodity prices are clear. a good sector in general. i think that is going to come off a lot. the risk is on the services side, where we have seen less indication that things are slowing. rents are still growing very quickly. that is still going to be well above normal into 2023 and maybe beyond. i do think that there were going to be improvements, but not everywhere.
shery: the goldman sachs chief economist speaking with bloomberg's tom keene. bloomberg subscribers go to tv , it is also available -- go to dayb , it is also available on the go and you can customize it to get the news you care about. shery: a heat wave swaying energy grids across china, our coverage of its power crisis. this is bloomberg. ♪
flap when it comes to euro stocks, futures, the euro down by .5%. not a lot of upside momentum, german dax futures as well. we saw a little loss of momentum when it came to the u.s. dollar overnight thanks to the pretty bad u.s. business activity numbers that came true, the second straight month where we have seen weakness. and that has become a key dynamic for dollar trading. when it comes to the euro slide below parity, it has given very little encouragement for the business outlook given that we are still contending with an energy crisis and recession risks. all of this is continuing to weigh on european assets. in the previous session, we saw euro equities treating to the lowest -- retreating to the lowest level in four weeks. we continue to see concerns about energy security going into the winter season at play. we saw energy outperforming
media and health care as some of the biggest losers. shery: fears of an economic slowdown in europe have almost translated to european gas prices that earlier this week went to a record high, not taking a breather given findings that soaring economic -- soaring energy costs will cripple economic output. japan, south korea, taiwan, backing the market for lng and this is going to boost competition with energy stocks in europe. when it comes to european natural gas, surpassing the $10 level for the first time since 2008 and here, we also have fears of a shortage this winter. we had a very hot summer, leaning to supply concerns given that we continue to see the downsize from russia's invasion of ukraine in the markets. haidi: let's get you caught up
with business flash headlines. cito reported an 82% jump in first-half profits bit the chinese battery makers on net income of $1.2 billion that beat estimates and a bounce back from a disastrous start to the year that size first drop in quarterly earning. shares of catl is ramping up global capacity. jd.com reported stronger-than-expected avenue growth after chinese -- revenue growth after chinese consumers flocked to online retailer. the company beat the average forecast of 38.2 billion dollars. income stood at $634 billion -- $634 million. china's largest insurer by market value posted an unexpected rise in profits. income rise to 3.9% -- income rising to three -- in palat
income rising 3.9% from a year earlier despite lockdowns. technology has turned a profit despite china's economic malays and competition. second quarter revenue growth of $3.2 billion is above estimates. why shall kuaishou--- shery: china is giving rise to a power crisis in a new test for president jie zheng ping. let's bring in our bloomberg asia energy reporter from beijing. dan, how bad is the situation? dan: it is brutal. i was in wuhan last week. it was so hot, you could not sit
on the steps outside a building. it felt like your funds were cooking -- buns were cooking. the heat and drought have been shriveling rivers. the yangtze is at its lowest level since 1865. that has had wide repercussions. there are power threats to most industrial companies there. factories that are suppliers to companies like tesla, solar panels, lithium battery makers for ev's have had to reduce or shut down production because of this. it is wider than that. shanghai, other provinces that get power from the dams at the three gorges have reduced electricity use. shanghai shut off its famous fund size scraper lights -- fund skyscraper likes to preserve power. hopefully, this is going to start getting better in the next couple days but the weather is
looking like it is going to cool maybe tonight, tomorrow and friday so hopefully, we will put this behind us. but it has been another struggle for this country as it tries to recover from covid. shery: dan murtaugh, coming up next, the anxiety of the fed's hawkish tone rattling markets. millions have made the switch from the big three to xfinity mobile. that means millions are saving hundreds a year on their wireless bill. and all of those millions are on the nation's most reliable 5g network and most recommended wireless carrier. that's a whole lot of happy campers out there. and it's never too late to join them. get $450 off any new purchase of an eligible samsung device with xfinity mobile. or add a line to your plan today at xfinitymobile.com
♪ vonnie: this is "daybreak: asia," and first word headlines per the u.s. plans to announce $3 billion in additional arms to ukraine. that would be the largest installment of u.s. security assistances the invasion i russia. additional weapons and ammunition worth 500 million euros are also under consideration.
ministers from 13 indo pacific nations are meeting. the u.s. trade representative says the gathering will be used to talk about trade and clean energy. the group is designed to counter chinese influence in the region. a pakistan court asked the former prime minister imran khan to appear before it next week. the board will review whether remarks he made at a rally merit a contempt of court case per the legal drama threatens to undermine the pakistan press. a tropical storm is bringing heavy rains and high winds across the northern philippines. the storm could cause flash flooding and landslides in northern areas of the island nation. it is forecast to strengthen as it heads toward hong kong by thursday morning. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn.
this is bloomberg. ♪ haidi: let's look at markets, -- >> 30 minutes into tray for japan, australia and south korea. a slight lift across the board but trading looking in. a wait-and-see mode ahead of the jay powell address at jackson hole this weekend also, the question is, how aggressive get the fed continue to be? just heard from minneapolis fed president neel kashkari in the previous hour, saying the focus is still very much on fighting inflation. still, we got weaker economic data for the u.s. coming in overnight. look at the direction of the dollar and other currencies. the dollar index now trading fairly flat. but off that, we are keeping watch on the yen this morning because bloomberg economic downgraded their growth forecast
based on weakness in the yen. importers have not been able to take advantage of the rising costs there and exports at the same time because of the global slowdown also have an been putting out as many goods. we also watching the korean yuan at a 13-year low, that complicates the outlook for korea meeting tomorrow. the aussie dollar and kiwi dollar looking flat this morning. shery: the strong dollar is weighing broadly on emerging market stocks as well, especially when it comes to asia ems. >> that is right, it really does show how different a few months can make, or what a difference they can make. because we came in to the year and it looked very different, a lot of questions about whether we could finally see emerging-market assets in this region outperforming developed markets. but it was a very different scenario then, we didn't have
the war in ukraine come of the chinese economy was looking more healthy come other factors at play including valuations looking a lot more attractive. but now, a very different story and you can see where they are looking for the emerging markets, the asian index nearly back at two-year lows, testing what we saw in july. more strategists are saying we need to take a more conservative approach. it is very difficult to take any profit from here. you can also see what is happening with investor lows, also just retreating the past few weeks. haidi: our next guest says asian fx is likely to trade weaker across the board and is leaning bearish on the euro. with us is gavin chia of natwest markets and look at this chart when it comes to risk reversals involving the yuan. i wonder what this tells you
about the interest in the yua and whether we will see continued weakness given the pboc have not pushed back on the continued weakness? ngavin: that is a really good point. the work we have been doing lately, we are thinking the y is moving into a new frameworkuan what we have seen this year is bouts of weakness mixed with sideways trading. after this recent bout of weakness, we are going to be moving into a higher range, up to 685. but if we continue to see more dollar strength or expectations on chinese growth, our credit market entrants continue to spread, that there is the potential really that that could which even higher. but the pboc isn't pushing back, i think the markets can very much go with that absent any official pushback. haidi: it has also caused concern that depreciation might
be one of the only tools they have left to address economic weakness, even if it risks outflows, is that a feasible strategy and what does that mean for the rest of the emerging-market complex given the anchor role of the chinese currency? galvin: that is one of the big debates we are having at the moment, whether the yun is a casualty of the pboc. we have seen the pboc focus on the credit side with special bond issuance, more so than things like price-based measures like a policy rate, the rrr, and if we look at what had been typical indicators about whether the pboc had to intervene, looking at the daily fix versus the estimates from people like ourselves, we noticed that over the last two or three months,
the fixing errors have been very small and hardly constitute any sort of signal. on that front, there is no indication to us that the pboc is actively wielding the yuan. it is very mechanical and very much market-driven. shery: when it comes to export oriented economies, the idea has been that the cheaper the currencies, the more competitive they are overseas. how much is too cheap? the korean yuan at a 13-year low prompting the president to come out and talk about the fx impact? galvin: there are a few dynamics at play. on one hand you have, is this weakness caused by global factors? or is it speculative pressures? most central banks in the region, korea, india, the philippines, thailand, they are saying we are ok because of this
global move, because of the dollar, but we are not ok if there is unwanted speculative pressure. taking about the export side, we don't think china has got much to benefit from a cheaper yen. this benefits the low-end, the manufactured goods, the factory floor type products that china used to be making 15 years ago. that is not the case anymore now, they are making more sophisticated products, manufactured goods, electrical goods, that stuff doesn't really benefit so much from fx depreciation. so there are limits to this interpretation that trade to ken be beneficial under a weaker yuan outlook. shery: when it comes to the korean yuan, we saw the slump in the selloff exacerbated when we got the 20-day trade numbers with the deficit rolling. how much of the outflows we are
seeing, whether the korean yuan, or the malaysian currency which is at a 2017 low, has to do with rate dynamics and portfolio flows? galvin: right now, both are between a rock and a hard place. you have both of these negative factors backing up with each other. markets, they are covering fact that people are thinking about recession, and demand are slowing, inflation means people aren't spending as much so on this cyclical outlook, you have bearish signals in malaysia and the korean you want -- korean yuan. but outflows are driving these to the downside in the short-term. you think about the dollar being high in the market being volatile, this is not an environment where investors want to put their assets into risky assets like emerging markets. that combined as pushed currency
weaker, without limits to where they are venting. shery: we saw some of the commodities related currencies including malaysia's and indonesia's remain supported to given the dynamics right now. and oil prices are still high. are there any currencies right now across asia that still may benefit from some of the macro economic changes we are seeing? galvin: precisely. there are two we have been looking at closely. the first is the indonesian rupiah, not because of trade flows, but because we have noticing that bond flows in foreign on purchases are starting to pick up. the macro story is, the growth is still good, there is credit entity from the central bank. so i think there is reasonable conviction from foreign investors that they want to buy
bonds, and the indonesian rupiah should benefit. the second we have been looking at is the singapore dollar, not versus the u.s. dollar, but the singapore dollar in its trade-weighted basket. in that context, it has been benefiting because it performs as a safe haven during times of market stress. this time is one where it has been benefiting. shery: galvin chia, good to have you with us, emerging markets strategist at natwest markets. high yielders have have been jittery -- yielders have been jittery. just over $18 billion in hard currency debt sold by high-yielding nation, surprising given we are heading to september. it is historically the busiest
month for high-yield sovereign bond sales. that is because investors are coming back from summer break and there is strong demand for rebalancing their portfolios. ahead of jackson hole with worsening liquidity, we are really watching some of these sovereign debt stories, and perhaps some of these countries could go in a different action, whether it is gonna -- ghana turning to the imf and egypt owing to private placement as well. haidi: and quite a bit of uncertainty around southeast asia because southeast asia dollar bonds, this rally has been with the best in the world, the longest since april and such a strong outperformer compared to their peers. still, global slowdown risks are at play, a more hawkish fed, potentially weaker domestic man, potentially a commodities rally that is started benefiting so many economies in this region, that has slowed as well. but we have seen spreads
narrowing for the fourth straight week, the total decline certainly much more when you compare it to broader asian emerging architect read as well as the global peace. but there is this concern that if we do see the global slowdown and more aggression from the fed, that this could end. coming up, and unexpected rise in third-quarter profits for china's biggest insurer. this is bloomberg. ♪
♪ shery: chinese insurer ping an posted better-than-expected earnings for the first half. let's bring in chief north asia correspondent stephen engle hong kong. how did to get this? stephen: a lot of earnings zipped through ping an ping an and's wasn't a surprise return to profitability in the first half are china's largest insurer by market value, net income up .9% -- up 3.9%. a common theme in earnings we got today was withstanding the lockdowns. a lot of these results are coming on the back of shanghai lockdowns that pinched sales.
new business value fell 29% in the first half, in line with estimates. but those covid lockdowns definitely disrupted sales for insurance policies. also, they had fewer impairment losses on the big loss last year on the china fortune land development. parent losses fell 17% a year ago when they booked that big loss, less than what we saw before. the company in their statement is saying, we did very well in the first half, but we also got a comment from the chairman peter moss, he is much more cautious about the outlook, says there is substantial uncertainty that will remain regarding covid. the country has a floating zero covid policy. he said they face severe challenges, we still have far to go in reforms. remember, they are having a
reform in their core life insurance business that they are working through, and they need to improve innovation. shery: what about the platform, jd.com? >> surprised for jd.com and wang swell. alibaba reported his first-ever drop in quarterly revenue a couple of weeks ago. jd.com seems to be doing a little better. sales in the second quarter beat estimates. it returned to profitability on net income of 4.4 billion yuan after three quarters of losses. it is not facing the regulatory pressures alibaba had been, it has avoided a direct hit from beijing regulators. still, jd.com along with other chinese adrs still face possible delisting from the u.s. and all these companies face a slowing chinese economy.
there are headwinds, but a positive result from jd.com. why shall -- kuaishau also turned profitable after revenue beat estimates while the global net loss was narrower than work as. overall, this is the bytedance rival, better-than-expected results. they are doing cost-cutting. they have a new reality. a lot of these tech platforms are in an area of cautious expansion like kuaishou. shery: definitely a turnaround from the start of the year. >> they had a derivatives liability that hammered in the first part of the year. the results were really bad. so, to pull out its first half surge in net income, 82% up the world's biggest ev battery maker, revenue up 156%.
jeffries was just out with a note on see atl -- catl saying they raised the recommendation. they are essentially saying ev sales will likely slow or b-flat in the month of august because of supply shocks to the ev and automotive sector because in part because of power shortages that we have seen in southern china. also, they are trying to navigate volatility in raw materials prices, particularly nickel and lithium. they are ramping up global supplies, level capacity, new factories in china and a new partnership with mercedes-benz building ev batteries in hungary. that is positive.
xpung, a worse than expected loss after the shanghai lockdown and supply chain problems hit many automakers. the second quarter net loss widened. shery: a busy week, thank you. those are some of the stocks we will be watching at the market opening in hong kong and china, but also, big names in earnings we are keeping an eye on today, petrochina, aec tech. we talked about metals stories, shares linked to lithium and that drought and power cuts across southern china continue to threaten supplies. china traded etf striking a group of energy firms are on track for record highs given the power prices and supply concerns and prices rising.
billion budget, handing a victory to prime minister prayut chan-o-cha, who had a no-confidence vote last month. his eligibility to stay in office is being challenged? >> you are right. talking about his popularity, the latest survey shows 90% of those polled say he should step down. remember, this started about two or three years ago. that accelerated and last month, he survived a no-confidence vote. today, the constitutional court decided he can stay in power. the maximum time for a prime minister is eight years. and just yesterday, august 23, that is his eighth year. but is supporters say the year
should become to from 2019, when he was reappointed prime minister following the party making that coalition after the election. so, it begs the question, when do you start counting the eight years? is that when he took office after the coup or in 2019 after the election? so far, there has been no indication from prayut chan-o-cha that he is willing to step down. he remains in power. policies are intact. we wait to hear from the constitutional court, when it rules today. shery: you are at an investment conference, what is stopping the agenda? . >> it has to be the economy. this economy prior covid was among the fastest-growing in southeast asia. but today, as it grapples with
recovery, it is going at the slowest pace in all of southeast asia. so, the economy is front and center, growth is front and center. some say it is overvalued by 3%. it is not a reflection of the fundamentals of the economy. when you look at the stock exchange, we see an inflow of about $1 billion, the biggest inflow it all of southeast asia. that has to do with the fundamentals of the economy and given how export-raven the economy isn't -- export-driven and tourism-driven the economy is, it also depends a lot on china. china accounts for 40% of tourism, 20 billion dollars in terms of revenue and that isn't coming. shery: joining us from the stock exchange of thailand's investment conference in
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