tv Bloomberg Markets Asia Bloomberg August 23, 2022 10:00pm-11:00pm EDT
david and yvonne. yvonne: weak economic data growing, indicator show activity slumping in asia, u.s. and europe. the swamp against the dollar is weakest in a must to years adding to a precarious balancing act for beijing, plus how the power crisis triggered by china's historic drought, posing new threats to president xi's economic and political ambition. rishaad: wyoming, jackson hole, nothing is being said to what jay powell will say on friday. we have to wait and see. in the meantime yields on the 10 year up 30%. the dollar has leveled. the euro is below parity. david, we are looking to these darkening storm clouds economically. david: literally too. here in hong kong, we have the typhoon on track to barrel into hong kong. we heard from -- we're looking
at the markets first. we just had an update, the government is considering issuing a t eight signal between 6:00 and 9:00 p.m.. if it continues into tomorrow, that could mean market disruption. we're looking at a hang seng index, right side of your screen. 19,000 339. that is the lowest level since march 15. the reason that is important, thus the day beijing came in and stabilize the market during the market. we are not near the lows of that day, but we are taken out of the main lows. that takes us back to mid-march. yvonne: some breaking news before we get to more of this. the nikkei is claiming japan is considering building next generation nuclear reactors. this is according to the nikkei. there has been some talks about this, restarting more reactors to prevent power outages, that
we have seen around the world, not just china but even japan is saying this is something they are considering. it aims to double the amount of a reactors on the grid as early as next summer. the country's power needs as well. it is being felt across the board. rishaad: also let's have a look at what is happening economically speaking. we had the horrible u.k. pmi number. let's also not look at the glasses being half-empty. if you look at the service side which is the main of the u.k. economy, managing 70% of it, it was better, 32.6. there you go, that is the u.k. one, 36, david. david: also the u.s. too. apart from germany, all of those lines are lower than the previous months. the glass half empty in germany's case. we heard from -- >> inflation is 8% or 9%, we
have run the risk of on anchoring inflation expectations and leading to very bad outcomes that would cause us to be very aggressive to then re-anchor them. we definitely want to avoid allowing that situation to develop. with inflation this high, for me, i am in the mode of it, we need to iran making sure we get inflation down -- air on inflation -- making sure we get inflation down. david: that's the dove, right? yvonne: the former dove. david: that's the story we were talking about earlier. yvonne: when it comes to the narrative now, when it comes to asia in the last few weeks or so, that hit the skids. it seems like the market is contending with -- the fed is going to have to continue on with his hawkish path, the fed pivot, we had just imagined in
our minds. money going into em asia. we are heading into near those two year lows when it comes to asian stocks. definitely want to watch. rishaad: i am just going to get our asia economic correspondent. give us a sense of just how this has become synchronized globally and it is getting more synchronized. >> the u.s. in particular, the weakness on new orders and on unemployment, that is interesting, u.s. jobs have been strong. the u.s. job markets may weaken. in europe we know factors are booking underweight, skyhigh energy prices. it is also have an impact. asia, the ongoing sign of weakness and laid japan -- in japan. we know what is going on with chinese manufacturing story. it speaks to the story that. the economy is under pressure.
perhaps consumers are shifting their spending patterns. it is all about the weight of starting inflation and starting inflation -- interest rate is putting pressure. yvonne: how important is what he says and what we will hear from jackson hole from jay powell? >> this is where we are at now. the fed has remained determined to raise interest rates. jay powell's speech on friday will put to rest that there is some a fed pivot. he will say inflation is too high and we've got more work to do. he will not signal much of interest rates. there will be one reason -- commodity started in deflation's -- inflations. we know ultimately the data will decide what they do. there is more work to do but he will not say by how much. rishaad: give us a sense of
china. there are cracks in the economy that are emerging. there were not the same ones we had before. >> obviously broad-based softening there. the crisis is not turning the corner yet. we note the impact from covert is zero and consumer sentiment, one aspect to keep an eye on is the weakness in the yuan. by how much more weakness they will allow to fall. what kind of financial stability -- instability of people, trying to get their money out will it trigger broader instability in foreign-exchange markets? the interest rate differential will not mean the yuan will fall much farther here. what happens to the yuan and what it means for china. yvonne: we just seen a fixture. perhaps they're not quite ready for that continued weakness for now. thank you, our chief asia
correspondent. let's bring in our chief strategist at jefferies. there's a lot of bad news. you are a bit on the others of that. >> i am. to some extent this is what you would expect from a rate hiking cycle and all of the mounting pressures you have had from the big person commodity prices, nearly 12 month ago. also the fact that, services have only just started to recover from the covid lockdowns. they themselves are suffocating from some of the general demise of some of these embassies. i am not surprised things have panned out as we have seen through these pmi's at the moment. you've seen that to some extent through some of the data as well. rishaad: you are looking at all of these equities. what are earnings, what is the forecast painting for you as economic fixture globally? >> perhaps the best way to say
it is the bulk of the earnings cuts that was on the u.s., post the season were from the consumer sector. it wasn't from the tech, it wasn't from manufacturing, it was from the consumer. 75% of the cuts came from consumer related sectors. which is the economy, to that extent, things are playing out as you would have expected. so i'm not -- i don't think this is the downdraft of being that bad to make difficult cuts in the estimates. during the pandemic or during the josie -- -- david: we might move into the dollar strength, are those assumptions you are making that might for some challenges or not? >> that's a very good question. we have all focused on interest rates and the jackson hole speech.
but the reality is a 10% move in the trade-weighted dollars, equivalent to 50 basis points. you had reasonable credit spreads. we have seen some relief from oil prices. that all is a form of choking of growth. it is all a cap on growth. looking at things holistic, the federal reserve, financial conditions are pretty tight at the moment. that plays into the fact that we're not going to have nasty inflation surprises here on end. it is more of the fact that the rates have changed. david: that's a given for the next 18 months. favorite sector, market and why? >> i have to say the u.s. is a much cleaner story for investors. you are coming into the peak narrative on rates and the rate tightening cycle.
the curve is inverted and historically, the next move will tend to be some form of easing. whereas of the rest of the markets, i think europe is still in a more difficult place in terms of tightening into a pretty difficult inflation environment, possibly in this region, the story is -- that is starting to unfold with better economic data and cheap currencies is japan. for me that is the best market to look at coming into europe -- year end and it is one that is manifesting, reopening will provide a nice tailwind for earnings. yvonne: i want to ask about this . sean darby, chief global equity strategist at jefferies. rishaad: let's have a look at the first word news. two of the most branches favorite of the increase in july. minneapolis banks on july the
14th for a bigger hike in the 75 basis point that was delivered. discount rates from the fed director can be symbolic as a sign of hawkishness from the separate benchmark funds. have a look at china, entry restrictions as of cash easing entry restrictions as of wednesday -- easing entry restrictions as of wednesday. beijing has an -- has wanted to normalize at some aspects of the economy with the covid as their approach. the former malaysian prime minister is serving a 10 -- 12 year prison sentence after a scandal. the next general election must be held in september next year
and he will go down as history as the prime minister to be convicted and imprisoned. the u.s. is investing in aid to ukraine. it will be the largest single installment of u.s. securities to assist ukraine since russia's invasion six month ago. germany also finalizing a shipment of additional weapons and admonition, more than 500 euros. yvonne: still ahead, singapore has moved to repeal a law criminalizing sex between men. what an honor -- what a non-movement. david: we will give you a snapshot of the earnings season so far in corporate china. the bar has been lowered substantially. the upside, the downside hong kong, hang seng index is the lowest since march. 2% in hstech. real estate is a big drag today. this is bloomberg. ♪
jd.com, castle,, exxon, a bit more of -- more of a bit of a story from ev makers. it went down 10% on the back of that. rishaad: global equity strategist at jefferies. >> i think at the moment, china is working on so many different levels. when he tried to think you found a flaw on the economic data, you then get a curveball coming through, such as the droughts and the implications of that on policy. it's very difficult space at the moment for investors and for me, you're going to have higher food inflation affecting cpi. prices are not dropping, which is some say there's a spill of a risk to deflation and that the policy rates should be hiked
even further. it's a difficult narrative for investors to position their portfolios because, at the moment, economic numbers will come down further. you will probably find much more deflationary -- deflation which is solely in the real estate market for the bulk of this year. yvonne: would you have to wait for congress for that clarity or what sort of catalyst are you looking for? >> that's partly one issue with the market, that wants to see the end of. the basis is there still running a covid zero policy. only a couple of weeks ago, you had the lockdowns in the resorts in southern china which goes back to this problem that you are still suffocating the service sector which is creating the bulk of the jobs and the unemployment rate between the 16 and 24-year-olds is arising further.
policymakers cannot get it out of. rishaad: it is key for every economy when you look at that. one story bloomberg had yesterday, the banks saying how much money they are loaning out. if that goes on, it waters the m oney doesn't it? >> the paradox is that the banking is a swapped with the deposits. housing deposits have gone up a -- above trend. repo cuts -- there is little demand for the money in the system. the pboc does a quarterly survey. loans are near record highs. the money in the system, there's no one that wants to draw down that cash -- the credit from the banks. yvonne: i'm wondering, if you are seeing the bond market,
that where you are putting your money? >> the bond market is doing very well. coming into the rate move on monday, the bond yields dropped further. the lows of this cycle. this comes down to the fact that we have a more deflationary bison the economy. unfortunately, the cut we saw in the low prime rate is will be enough to avert a more deflationary backdrop for profits and for overall loans. rishaad: it is tinkering. what do they actually need to do? >> i think the three things outside of lifting covid, they need to go out in recapitalize the asset management companies and come to a solution about cleaning up the real estate sector. the last one has to be a real cut in the primary rates. still have positive real lending rates. people are not going to are the
money. those are the three that they need to press at the moment. yvonne: japan, we teased it. what does that mean? >> i think everyone is looking at the automation theme in japan based on the demand from china. there are two other anchors at the moment. one is the big reassuring seen in the united states. second one is this productivity boost given inflation that has experience at company level. it has a lot further to run. looking at the backlog of orders for the automation stocks in japan they can eat into the earnings, there's a lot of room to eat into earnings in the next 12 to 18 months. yvonne: always great to have you. sean darby. speaking of japan we will see reaction about the nikkei report about these reactors that they are considering restarting here,
given the power shortages out there. david: next janet nuclear power plant's, to your point -- nexgen nuclear power plant's -- power plants. we are up, really starting to see market reaction on the back of it. 20 minutes back. we will continue to stay on top of the story. there's a lot more movers to hit. this property in china, a lot of big earnings coming through as well. and a couple of ones in korea. we will tell you why and we will show you what happens in that market in a moment. you're watching bloomberg. ♪
climbed nearly 4% from a year earlier to $8.8 billion beating estimates of $7.7 billion. it 17% from the year earlier despite pandemic induced lockdowns. australia supermarket operator cole's has a 4% jump in earnings, to $726 million. it filed a dividend, up to percent -- two cents from last year. inflationary pressures are impacting its expenditure base, as wages, rent, fuel and supply chain cost increases. elon musk has been ordered to hand over information about potential investors in the $44 billion buyout of twitter. he is seeking to cancel. it is seen as a win for the social media company that is suing to make them consummate the deal. the judge overruled the leaners objection, as his lawyers complaint twitter is casting too wide a net.
it is said to plan a new bank plan in the u.s.. the lenders los angeles-based unit, will soon launch venture to solve personal loans and other financial products under the brand name genius bank. japan's a top banks are building overseas. david: let's --as you can see substantial moves, we're looking at chinese property names. there's a full story on this. the gist of this is china's investigating a number of executive of state owned real estate companies. the chairman, who was suspected of law violations. the latest shares, substantial losses, we will keep on top of the story. on the back of that, logan group, will resume trade today. a lot of it was a cash down story.
50% over four months, 80 trading days? six cents of 1% day? this is the etf you want to watch. this is the one listed in mainland china. this is what has been brought up on the back of the power shortages story. this is an etf to look out for. it has been pushing highs and seek weakness today. we have been talking about this earlier, the nuclear story out of the nikkei. this is nexgen nuclear reactors going into the break, there we go. rishaad: just checking in the fx, four days of gains. you have the cnh, the yuan suck. it is almost going to years, adding to the pressure on beijing. they are trying to do that
amidst of the dollar strength. there should be healthy exporters in the long-term given that the value in the yuan goes up. yvonne: yup. that's how it is. when it comes to the dollar story, how it pares to commodities, of course, we are continuing to see gas elevated. brent, where back below $100 for the contract, lower by .4% in the asian session. we're talking about the historic drought in china. this is bloomberg. ♪ pst. girl. you can do better. at least with your big-name wireless carrier. with xfinity mobile you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year on your wireless bill over t-mobile, at&t, and verizon. wow. i can do better! yes you can! i can do better, too! now you really can do better! switch to the fastest mobile service - xfinity mobile.
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look a lot better a year from now, i think it will still be significantly above the target and ultimately they do want to get back down to pretty close to 2%. >> there we go. the head of economics trying to look into his crystal ball over the next year. equities, trading, slightly sideways. you are not getting a lot of volume coming through here. the hang seng is back to 19.3. you understand, it is the summer low. we are going to something happening in wyoming. >> this is something that is engendered, further dollar strength given. we have that you on mid tier. the dollar looking below.
stuck in that 136 area. this is dropped back to about a five-year low at the moment. >> you to bring in the volatility. 13 year those. we are seeing a little bit of stabilization. some more gains there. let's talk about the renminbi. it looks like we are getting close to 690. what do you think are the near term drivers right now? >> i think the yuan has underperformed all asian currencies. we have the china lockdown. it sort of makes sense. i think a lot of these bearish factors were with pricing the yuan.
>> let's look at the yuan here. we don't really see a lot of downside. it is really a dollars story. we see higher yields than 6.9. >> what is china likely to do? it is between a rock and a hard place some extent. >> fiscal stimulus, more monetary easing. we may get a triple are cut and something like 25 basis points. more rate cuts could be on course as well. in any case, more stimulus and more support from china. >> that meant a more narrow yield differential. we had one month of inflows into
the market and you don't think that will continue now? it is a one-off that took place in the gilt markets. >> yes. inflow in this edps. if you take away the estimate that is happening every month, that could be active reduction. the market could be very cautious. you see the gap widening between china and all of them. >> just given that term is it, is there any way that they can put a floor on this or is dollar strength the rating high? >> not really. this is actually the worst asian currencies so far. even worse than the yuan. it is so sensitive to higher u.s. yield and the stronger dollar. especially now.
they are running a trade deficit. this is even worse for the fundamentals of the currency. we saw that south korea mentioned they are monitoring this. it is likely they will interview to support the work. it could only stabilize in the near term. as long as the broader market strength is higher. >> what looks undervalued and overvalued to you? >> we have the longer term fundamental fair value. all of the asian currencies are undervalued against the dollar. the u.s. dollar is overvalued. it does not matter for traders or investors. that will continue as long as the hawkishness stays. don't expect anything like that right now.
click thank you so much. yes. what about that water? it is not just the volatility we are seeing it comes to currencies. when it comes to extreme weather, we are very much focusing on what has been going on. we are talking about 40, 41. it actually felt a 40 degrees out there. you were just there. >> what does it all mean? xi jinping is in beijing. extreme weather. it is the last thing they need given all of the other problems they have. >> you are exactly right. the extreme weather is hitting china into different ways. it is increasing air conditioning demand.
this is drying up in the rivers and reservoirs. there is a hugely of this. since one has cut off power to all industrial users for the past 10 days. it spreads to places like wuhan. they are producing electricity use. shanghai has shut down all of the lighting and beautiful skyscrapers. so far it has been contained in terms of gdp. >> what is the core impact?
>> we have seen companies like toyota and the world's biggest battery maker shut factories for at least a couple of days. they have had their production impacted. tesla has claimed that some of their suppliers are in the chengdu area. they say if we can't get power back up there, we may have to slow down production. yet another supply chain problem in china. as you guys know, the supply chains here have been bettered around all your by covid. this is the last thing that china's economy and xi jinping need going into the party of congress this fall. >> people don't understand the impact. it is the population of germany in terms of the economic size of it.
can you walk us through a little bit more about what the longer-term implications are? especially when it comes to the hydro project of the region. >> even when the weather starts to cool down, it is not likely is hydro dance will immediately replenish. hydropower generation will probably not recover. compete with european countries that are trying to wean themselves off of russia. then you will have the cascading effect on the energy markets.
>> let's have a look at the first word is. you have the u.s. holding its meetings next month. the economic framework will be used to discuss trade, supply chains and clean energy as well. a court in pakistan has asked them about this next week. the court will review remarks he made about a court case. the class to commence the imf to release the $1.2 million -- $1.2 billion load.
it was only predicted by the economists surveyed. they took on a more hawkish tone as you want of inflation exceeding the 2.4% targets this year. the billionaire manager of tiger management has died at the age of 90. by the late 1990's, they had $22 billion in assets and returned 32%. in led to losses and he closed the fund in 2000. that is a look at the first word news. >> in terms of quality, we are talking about that repeal of the law banning gay sex.
just a look at the cross markets in southeast asia. weaker against the u.s. dollar. weaker across the equity markets. those are the surprise rate hikes. bank in danger, yes. let's stay in singapore. >> the city state scrapping this colonial era law that bans sex between men while there is broad public support for gay marriage. but that is an entirely different story. around 55% of respondents said they did not support same-sex marriage. 51% said they did. >> our next guest is an organizing member of pick.. -- pink dot. how big of a breakthrough do you
think this is for singapore? >> thank you for having me. i think no matter how you want to like this, this is undoubtedly progress. the generation of trauma is being recognized. they have taken steps to get rid of this colonial era law that we inherited. it has given me a sense of overwhelming relief. >> what is next for you guys? >> our focus is coming together as a community and processing this news. many of us did not think this day would arrive even in our lifetime. there is a lot of generational trauma that we have to heal from. also there are things getting a
little uglier. there was a segment of society that was very upset about this news so we will be watching the debate very closely and making sure our community's mental health is prioritized. these organizations will be addressed. this is everything from bullying and harassment in schools to discrimination in the workplace. >> baby steps. this has been a long time coming. it does open up a lot of other questions with regards to the recognition of legal terms when it comes to a man and a man and a woman. you are an ex-pat, you may have a partner. can someone who is a partner of someone who is in hospital and see them? these are all huge gray areas.
>> wanted to point out is that the government has since clarified -- one thing to point out is that the government says this thing they are proposing is very specific in nature. but they will not do is enshrine any sort of definition of marriage between a man at a woman into the constitution. that is something singapore has been campaigning for very strongly. that is not the case. if such an outcome had passed, that would be very alarming. what the government is looking to do with this amendment, that remains to be seen. we don't have the text in front of us. we don't know how what it would look like. we will be paying attention to that and obviously, any attempts
to hardwire discrimination into the constitution would be very disappointing. we will withhold judgment for the time being and see help the government does. >> can you elaborate a little bit more on that? those comment you made on hardwiring discrimination into legislation, are you seeing any signs of that about to come? question certain religious groups continue to campaign for enshrining the definition of marriage into the constitution. that is concerned because the constitution is secular in nature. any attempts to hardware religion into it, we don't want to see that debt we will want to see the hands of any future parliament be bound by religious moratoriums. >> there were something we mentioned about how people are feeling about same-sex marriage
and it is actually quiet interesting. a majority actually imposed same-sex marriage in singapore. i have to get what your take is on this. how have the additives changed and is there anything the corporate community can do about changing those perceptions? >> i think there is still some ways to go in society and singapore to tackle other issues that the community faces. 377 a, that is a testament to how long the shadow of 3778 has loomed large. it has been this thing on our back for so long. it has been the linchpin for so much of the hurt, trauma and the lack of progress in this country. now this is finally done and we can all breathe a sigh of relief. we can reflect on all the work that has been done but then the road to equality, we know it is long. there is a lot of discrimination
that we will face in this country. but the government has done with repeal is take that resounding step forward. we are cautiously optimistic about the future even though we are not there yet with other areas of consensus. things will change. >> how do you change hearts and minds? getting back to the point i was making earlier, sex between men is recognized but it is the relationship between men which is not. >> that is one of the things in the current state of social discord and rhetoric that i do feel a bit disappointing that this talk about how they want to protect the institution of families and marriage from gay people and it is like i have a partner to. i have a family too. i don't necessarily see it as opposed. it is something we all yearn
for. all humans that you're for connection, yearn for stability, have loving relationships that even if you want to be recognized, this is a matter of dignity. this is a matter of something that needs to be questioned, not reimagined for ourselves. >> we will be checking markets after a very short break. this is bloomberg. ♪
>> what we are seeing is a correlation between what is going on in the index and i think we passed the peak for geopolitical tension that we have reached for now. >> if there is any reason to buy the hang seng today, it is probably the fact that there are so much early prices in these markets. bad news is actually good news. it could be just today that we
are seeing that. we are men seeing big tropical storms headed our way. >> they have increased this from a t-1 to a t8. i think it is a bit longer term and how this hong kong story evolves. maybe we could normalize this anyway. >> went someone previously said this, i thought that was the airport. now we have is typhoon signals. >> back to hong kong, here we go. the hang seng index is 235 points. we are now back to the levels of march when beijing came in and intervened verbally and with a lot of promises to come out and stabilize the market. here we go, back to those levels. we are guided headed into the
weekend. it is almost like going into a tunnel, not knowing if there is an exit. >> meanwhile, we have the bank of thailand coming up. they are talking about no unusual capital flows. the thai baht depreciation, we know about that. they see limited risks coming from the fed there. tightening. they are not behind the curve. >> no unusual capital flows. there is something -- that could be a bit of resilience when it comes to thailand's economy in the face of a very hawkish fed we might be continuing to hear. we will get more. we will have our exclusive interview. don't miss it for the bank of thailand governor coming up in the next hour.
>> before that, a brief look at markets right now. and some of these big names there is a story within the visa property space. we will get to that in a moment. .9%. we are talking about the hang seng. commodity markets are seeing more today. the contracts are back to about 100. equity futures are mixed. volumes are not there so much. we see what happens then. there is an exquisite interview with the back of thailand governor coming up in about 20 minutes from now. stay with us, this is bloomberg. ♪