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tv   Bloomberg Daybreak Asia  Bloomberg  August 25, 2022 7:00pm-9:00pm EDT

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shery: you are watching daybreak: asia live from sydney, hong kong, and jackson hole, wyoming. haidi: we are counting down to asia's major market open. shery: the top stories this hour. investors assessing gains in u.s. stocks and treasuries despite a hawkish drumbeat at jackson hole. elsewhere progress in talks between beijing and washington to avoid the delisting of chinese firms from new york. plus, we talk supply chain challenges and the green transition with the nissan ceo. haidi: let's look across u.s. futures as we count down to hearing from fed chair jay powell speaking at 8:00 a.m. local time on friday from jackson hole. the question is, can he sound more hawkish than what the markets already pricing? s&p futures abide .2%. nasdaq futures a little softer.
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we saw ballets in u.s. equities. all 11 sectors in the green. gains of almost 1% for the dow. stepping back from weakness earlier in the week. volumes were strong going into this by the end of the week. we are also watching u.s. bond yields given the move in yields also drove the rebound in the equity session. new york crude just under $93 a barrel. let's get us set up for the friday session in asia. haidi: it is the last day of the trading week in asia looking toward a muted start. nikkei futures like this. australia last closed and new zealand online. the focus this morning is what we get from jay powell in jackson hole later this day on friday.
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what will also be a big sentiment driver today in asia is progress between the u.s. and china towards averting delisting around 300 companies at risk of being kicked off u.s. exchanges. we will be hearing from sources that they are being told by accounting firms in china to be prepared to bring auditing papers to hong kong for inspection by u.s. regulators. that is something we will watch today throughout the session. keeping an eye on the bond space this morning you mentioned moves in treasuries. we are seeing yields dropping for qe and aussie bonds -- kiwi and aussie bonds dropping at the start of trading driven by what we are hearing at jackson hole. the focus is on inflation. they are near the peak or at the peak and the new zealand economy is in a strong position. shery: that leads us to our next special guest who served as
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president and ceo of the kansas city fed for two decades. his retirement in 2011 he was the longest tenured member of the fomc. joining us here in jackson hole a place he is very comfortable. tom: i am in the spirit of jackson hole now. kathleen: you have a hat and boots and everything. jay powell's speech, markets are concerned he has not been clear enough about commitment to fighting inflation. what do you see so far and see is a challenge for jay powell? >> i think jay powell, even if he knew what to do, he would not say. he will be very careful tomorrow. i think the challenge is there is so much sorrow now on the supply side. you mentioned tension with china , trade issues, economic problems. europe is a mess now.
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they have inflation worse than us. in the u.s. we have inflation's and our own supply issues. we have major spending even though the government says they will reduce the deficit, it will increase and all of the money in the system has to be taken out. it will be a very tough call and interest rates have to go up. how quickly is the question. kathleen: anticipatory from that point, as the fed it did so long with inflation, waiting to see what happens. has that been one of the shifts at the fed? has it that contributed to a surge in inflation? thomas: i think they have been more ambivalent last minutes. chairman powell's last press conference, the market picks right up on that. he will have to be pretty clear that they have to raise interest rates significantly yet. there is enormous excess demand
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in the system. it has been only made worse by -- for whatever good reason, student debt will increase pressures on inflation. yes to be very firm, i think, if he is going to people to understand inflation is a priority now. kathleen: as hard as it is to calculate, for the fed to figure this out, say you were sitting at that table the next meeting to make this decision, how aggressive of a hike, how restrictive. taylor rule a couple days ago told us the fed probably will aim for 5% or maybe higher. what do you see? thomas: i know he would say that. i would say by year-end we need to be in the 4% range at least. that is a big increase between now and then. they have to keep doing it. the risk i know they are worried about is startling the markets. upheaval.
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but, they have to face that. otherwise inflation, i think, will be running higher than their 6% or 7% for some time. kathleen: 7% at the december 21 meeting, does that make sense? thomas: if you want to get there quickly 75 basis points in september would make sense. if you follow those minutes you will say, 50 or 75? i think they need to be at 75. you need to get above 3.5% and closer to 4% by year end to really get the markets to understand that inflation does matter and we have to bring it down. we have some challenges. haidi: we were talking to a governor. you have a track record of knowing the risks of the financial system and the broader economy. central bankers are more
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comfortable with the risk of inflation, knowing they have the tools to get it down, then risking deflation. is the risk you end up in the same place anyway? thomas: if you are worried about deflation, i don't think that's an issue. i think the real issue is being sure and confident that you have to get inflation down. that is the priority. you have to raise rates to do it. remember you have an economic system the last 15 years globally that has created an equilibrium around zero interest rates and enormous quantitative easing. you have to reverse that now to some significant agree. that is not painless. i wish it were, but it's not. they have to commit to it and bring it down. the more they do that the more likely they are to get people to understand inflation is coming down and you will start affecting expectations more effectively if you do that. shery: how do you assess the productivity of the easing?
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the productivity of having that much excess capital? the risk in china for example of a liquidity trap is what we are concerned about. is there an element that the longer you ease, in a lot of these economies, i guess, the last transmission you are getting? thomas: there is always that risk. liquidity is coming out of the system. that is the goal of quantitative tightening which they are in the process of doing. it will affect emerging markets. it already is. we see that. it will affect the treasury market and we are already seeing that. but to do otherwise, you will have inflation 8%, 9%. that is a very difficult tax for the consumers, especially the middle class to swallow. i think it would be very destabilizing to the economy over any reasonable timeframe. you have to address the principal problem. you cannot be hesitating. you can't lose your nerve in this situation. kathleen: the markets have been
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very quick. if you get a break in the cpi and it comes down a couple percentage points, if you see retail sales cooling. maybe they will slow down. maybe they will pivot. what do you see in terms of recession. ? can it be avoided? do you see one coming? is that what the fed has to be able to risk? thomas: i think the fed has to be able to risk a recession. i think we will have a recession. with rates over 4%, you will slow the economy. on the demand side, you will wash excess demand out. but, it will hurt. especially on wall street, there are many who will be feeling a lot of pain and that is why they are hanging onto every dovish discussion they can find to try to convince themselves that maybe the fed will be more relaxed about it. i think that is a mistake. kathleen: if anyone talks about
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lessons learned over the past three years at jackson hole, specifically, the new framework is to wait until inflation is above target. do not anticipate. wait until employment is at maximum for you even start looking at raising rates. do they need to go back to the drawing board on that? thomas: they need to go back to practicing what a prie -- practicing what they preach. the fact is when you push that much money into the economy, when you have that much spending, you know things will take off. it is not point you have to pull that stuff out or you end up with 9% inflation. you end up with a lot of uncertainty. people do not know which way you will go next. you really have to get focused on what the priority is. that's not easy because is not popular. that's because it is not popular. it is always popular when we vote for decreases in rates and i don't ever remember it being
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popular when we increase rates. that is the life and responsibility of a central banker. kathleen: thomas hoenig thank you for joining us calling on your 20 years of experience at the kansas city fed. mercatus center distinguished fellow former kansas city fed president. i love being here and here people who have been there and done that talk to us about it. haidi: of course, stay tuned for more special coverage with kathleen out of jackson hole. we will have the fed chairman jerome powell's speech live at 10:00 a.m. new york time friday to talk p.m. hong kong. now let's get to new york with su keenan for the first word headlines. su: a federal judge in florida ordered the justice department to release a redacted version of the affidavit that lays out the government case for searching former president donald trump's mar-a-lago home. the judge accepted the doj request to keep secret the
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identities of witnesses, law enforcement agents, jury information, and other sensitive data. doj hasn't affrighted to file the documents. in russian president putin ordered his military to increase troop numbers by 137,000. the decree did not explain whether that would happen with a draft or by funding more volunteer soldiers or both. the department will not deploy conscripts in what it calls the special military operation in ukraine. president biden signed an executive order to fast-track the implementation of the $52 billion law aimed at boosting domestic semiconductor production designed to help the u.s. compete with china's dominance in the chip industry. the directive establishes a committee to help agencies coordinate efforts. and, hong kong exports plunged in july, the third consecutive month of decline. the worst since march due to
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disruptions along the border with china and demand across the growing our economy. exports fell 8.9% over last month from your earlier. imports -- from one year earlier. imports fell almost when he percent of the worst since 2020. global news powered by more than 2700 journalists and analysts in over 120 countries. i am su keenan. this is bloomberg. shery: south korea will take steps to stabilize the fx market if needed including to the south korea finance minister. they are closely monitoring the fx market on concerns of moves and will take steps to table lies -- to stabilize if needed. earlier in the week we heard from south korean policymakers that it had fallen to a 30 year low. we see a rebound of the korean currency on the back of the be ok.
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--bok lifting the cpi forecast. if they are looking at speculative offshore factors. we saw the lowest levels this week for the won since 2009. in addition we have seen fx tensions via south korean authorities. that's not usually disclosed until three month after the fact. ahead, nissan ceo joins us to talk about the push towards ev, the green tech transition and how they will fend off growing competition in that space. said officials keep up hawkish talk ahead of jay powell's moment in the spotlight. this is bloomberg.
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shery: the bank of new zealand governor was speaking to us a few minutes ago. >> now, really we are in a more comfortable position. we think there will be at least another couple of rate hikes. then, we hope to get in a position where we can be data driven and adopt a normal
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position of watching, learning, and waiting. shery: the asian session this friday looking for a steady start. gains in u.s. treasury yields and the dollar falling formed part of applied pressure for equities. let's bring in contributor garfield reynolds. what are we seeing? volatility was not hefty in the last trading session. garfield: we need to take the last couple sessions with a grain of salt or 10 given the volumes. what governor orr was saying now is keep. the aussie bank has been ahead of the pack on rate hikes. he said a couple hikes then we can watch and be more data-dependent. that is the undercurrent for risk assets. going into jackson hole part of the reason why they may not be as offensive as you think they
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would be is even if powell is hawkish, even if the match is what bullard and other extreme hawks have been saying, the key is the strong expectation that the faster the fed and other central banks hike now, the faster they get to the endpoint, or at least, the risk point. so fewer hogs going forward is what equities -- fewer hikes going forward is what equities and bonds are looking for. that helps explain relative calm in the face of strong expectation for a hawkish towel and hawkish comments -- hawkish jerome powell and hawkish comments from other central bankers over the weekend at jackson hole. shery: you get the sense that markets are realizing a little more that the fed does not have an exact endpoint? it is already written in stone that they will see how aggressive the numbers themselves are on inflation. at the same time i think maybe
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this is the key thing too. jay powell has acknowledged they have work to do and they cannot stop until it is done. that is why maybe this quick pivot when things start lighting up a little bit will not hold. garfield: there is a lot of potential volatility. what you have laid out kathleen is on the money. for what we are expecting. in particular, markets are still addicted to central bank forward guidance. even when central banks say they are trying to move away from forward guidance, they have so many policies themselves, the dot plot, the rest of it, to keep it on the agenda. markets are looking for that. where will be the endpoint? in a lot of ways what jay powell and other central bankers need to do is persuade them that know, we don't know. we are a year away from jay powell setting us up for extremely volatile years we have had. he will not want to do that. there is a lot of potential
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volatility because markets in many ways need to be disabused of the idea that the federal reserve is in the business of holding their hand. it has bigger fish to fry. kathleen: i think the transitory statement will go down in the history of the central banking. that is bloomberg's chief rate correspondence for asia garfield reynolds. next, chinese stocks in the u.s. surge to the most in two months. our chief north asian correspondent now stephen engle is joining us from hong kong. what do we know and what does this mean? stephen: this is a major development, obviously. i have been telling bloomberg news that chinese regulators instructed major audit firms to bring audit papers to hong kong.
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these are many u.s. listed chinese companies under scrutiny. there is a list compiled by the securities and exchange commission for potential delisting over 200. the clock is ticking. the development of confirmed would alleviate a lot of fears that have gripped the market about chinese adr entity u.s. of a potential mass delisting of many of these companies. already, alibaba established a second primary listing in hong kong. other companies such as estate owned enterprises like china life, petrochina, sinopec, they are likely to delist from the u.s.. again, these stocks have been under pressure for the better part of a year if not more because of this overhang. congress mandated a deadline of 2024 for these hong kong and chinese companies to open up their audit books to stay listed in the u.s..
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what we are hearing is the chinese companies would provide their audited papers and bring them to hong kong for u.s. officials of the pcaob the u.s. public company accounting oversight board. those officials will be able to review them and potentially satiate the demands of the securities and exchange commission. the sec has not confirmed this. we have a not gotten a confirmation from the chinese securities regulator or the pca ob. we have to wait to see this confirmed. one analyst, a senior market analyst, is it saying this is a fascinating development. i will read what he said. "an official confirmation is needed but expectations --
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expectations were growing that they will get this done as both countries deal with economic fragility." that might be the impetus for something to get done. haidi: chief north asian correspondent stephen engle with the latest. get today's edition of daybreak. terminal subscribers can find it at dayb . you can always customize the settings so you get the news on the industries, assets, for you. this is bloomberg.
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♪ haidi: counting down to the start of trading in tokyo and seoul. tokyo august cpi is due within the hour and experts point out
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japan inflation is running about the boj's target of 2% for a fifth straight month. the ruling party is looking to double defense spending over the next five years, which could make japan the third-biggest military spender behind the u.s. and china. the government reportedly may lower property tax for japan railway operators struggling with falling ridership. the bank of korea governor is attending at jackson hole, wyoming, and we will be speaking with the governor on the sidelines of the symposium. he says the government is ready to take necessary steps to stabilize the yuan and is closely monitoring the currency this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going? yes!! and once in a lifetime moments.
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♪ haidi: we have tokyo cpi for
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august, 2.9%, a beat on expectations of 2.7%, a year on year number and rising from the prior 2.5%. excluding fresh food, a gain of two .6%, better than expectations. if you strip fresh fruit and energy, very volatile elements, we are still seeing a gain of one 4% accelerating from the previous 1.2%. we have seen higher food prices, electricity as well as prices of important, durable goods potentially weighing into that basket as well. but elevated inflation would point to that nationwide gauge running above the boj 2% target for a fifth straight month. we are also seeing an impact on imported products from the weaker yen, the big issue being the bank governor has been
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resilient, and if inflation is above the 2% target, he says these are not the type of sustainable reflations he wants to see. most recent study shows most boj watchers think the policy will stand even if we get 3% inflation. nissan has launched a sustainable finance framework aimed at financing next-generation ev's end batteries and frameworks and projects such as renewable energy and a thomas driving. for more on this, we are joined by ceo makota uchida. great to speak to you and this is where the opportunity is at the moment as we see that transition opportunity for automakers and many other companies. how do you? deal with the competition? value -- how do you deal with the competition? how do you frame nissan's
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advantage or disadvantage? makota: thank you for having me. i would like to start by saying how nissan is innovating ourselves. we have a corporate purpose, innovation. nissan has been doing the ev for the past 11 years and we decided in 2013 to produce 15 ev's. we have announced our sustainable financial framework which would enable investment of electrification. in the next five years, we would like to go for ¥2 trillion of investment to help speed up this.
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but the speed of this electrification, the difficulty we will have is out we can adjust to each country's pace and speed, and for the electrification to evolve on the open market. in japan, we introduced a segment that represents 40% of the japanese industry of the automotive market, we already have 25,000 orders taken. so step i step, we can demonstrate our ability and what we have been doing at nissan for the past 11 years in the experience of ev's. haidi: supply chain struggles have largely been because of the chip shortage.
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do you see supply chain issues as well, given global demand for batteries and battery metals at the moment? makota: i think the current situation is still very challenging. we are carefully monitoring how the supply can recover, and in every day discussions with our partners and suppliers. the world has become more difficult in terms of this environment, external factors and how we can sustain our operations. at nissan, we have a core market in the u.s., china, japan and europe and we can see how we cooperate with our partners to make a sustainable supply chain, that can be valuable to each company as well is our suppliers and stakeholders. i think that is most important
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with the difficult external factors we are facing today. nissan -- kathleen: i am wondering how nist on -- how nissan is doing. it seems like you are struggling in the u.s. how is your new car going? makota: nissan has shifted to value rather than volume. how we can have our value reached to the customer. i think our ev customer acceptance is high and the share in the u.s. is getting to the right level and pricing acceptance is also there. so we are step by step making our planned values to be accepted by the customers. as a company, we need fundamental volumes that, with the supply chain issues are
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making difficulty. but we will make sure that our presence will be there in the market and i am quite confident because our value is starting to be accepted by the customer in the new vehicle we are developing. kathleen: there are some things you control and some you don't, like the u.s. clean energy act. are you concerned about that? makota: we will support all the government positions taken. that will make the penetration of the electrification more widely accepted by the customers. but we have to make sure we have the penetration there in the markets. we are talking about carbon neutral and every country is aiming for that and that is what we are doing as an enterprise. and the transition time is five years, so in the next five
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years, we will see how we can cooperate between the governments and the private sector and make sure we have a cleaner, safer and more inclusive world. and this is what nissan will likely implement because as i mentioned, the corporate purpose makes the world cleaner and more safe and inclusive. that is what we have announced as our ambition. haidi: what is the profitability outlook? you said you would step down if you didn't return to profitability within two years. are you confident that will happen this year? makota: we have announced a four-year plan. every quarter, we are demonstrating what we have materialized in the market. under this difficult environment facing come of profitability is gradually increasing and i am very confident we will ca 5%
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level -- we will see a 5% level. haidi: we have a new study suggesting that nissan is one of the top-three japan automakers at most risk climate change disruptions. we have seen the location of auto making factories, including nissan's, be at the mercy of weather-related disasters. is that something you can mitigate or risk manage? makota: we have our internal risk assets and are always monitoring what could happen in the market. we will have to anticipate this kind of climate change and how we can incorporate that, not only by nissan, but together with our partners, especially suppliers.
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we have been placed in many unfortunate incidents we can sustainably make our operations existing there and this is something that we are growing, this has not been a situation in the past, but this is a situation that we face. haidi: what change does japan need most desperately right now, the most important change? makota: we are in discussion with the government about the competitiveness of japan. japan also declared carbon neutrality and that is very challenging. and we are trying to make the world and also ourselves at nissan with this lifecycle in order to reach the level of carbon neutral which we have committed to, but this roadmap is very important in making sure
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how we can materialize it and it is something we are working on day-to-day. this is not only a challenge for japan, but a challenge for every country. and this is something we really have to do in the current situation we are facing. given all the challenges we are facing as an automotive industry. kathleen: that was makota uchida , nissan ceo talking about sustainability. coming up, our interview with governor adrian orr is coming up next. this is bloomberg. ♪
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♪ su: this is "daybreak asia," i am su keenan with first word headlines. two key measures of u.s. growth have pointed in different directions in the first half. inflation adjusted gdp decreased between april and june, but gross domestic income rose by
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1.5%. that gdi calculates all income generated from producing goods, but emergent gdp and gdi suggest consumer spending is resilient amid a slowdown. beijing and washington are said to have made progress in talks to avoid delisting chinese companies from the u.s. stock exchanges. according to a bloomberg source, officials expect firms to be audited by american inspectors in hong kong. chinese companies face a deadline for audits or to be delisted. former minister imran khan has been barred from possible arrest until september 1. he is facing a complaint about comments he made about officials and a judge during a speech.
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khan has drawn you crowds -- drawn huge crowds at his rallies. unvaccinated tend to start novak djokovic will not compete in the u.s. open. the decision means the former world number one could risk falling further down the ranks. this, despite criticism that rules were inconsistent. there is no maxi -- vaccine mandate for u.s. players or fans to attend tournament. 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 su keenan, this is bloomberg. ♪ . kathleen: reserve bank of new zealand governor adrian orr said pushing hard against inflation could take countries around the world close to zero growth. he spoke at central bank and set the central bank is likely to deliver more rate hikes. adrian: we know we have to slow
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the economy. we knew he to be 3% to even begin the slowing journey. we are in a much more comfortable position. we think there will be at least a couple of other rate hikes but then, we hope to get in eight -- getting a position where we can be data driven and be in a normal position of watching, waiting and worrying. kathleen: what are you worrying about and waiting for the most? >> signals of inflation expectations and actual inflation declining. we do see that. we are on top of it. we don't need to be chasing inflation all the way down, so we are watching for signs where we could be confident in the economy and confident that the data is credible and feeding into inflation expectations.
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kathleen: you watch all measures of the economy and they consumers one of the big drivers of any economy. with our retail sales for new zealand, the yearly rate negative for the second quarter in a row and we just saw first quarter epa little negative. so now, -- first quarter gpa a little negative. so now, people are saying, are we going to see a second negative quarter, a technical recession? adrian: we will not see a technical recession. there is reasonable doubt. we need very low consumption, and that is almost flat, real consumption. for us to see retail sales come off like that is not a surprise and is a good signal that monetary policy is working, that we are doing our work. but many other things are driving the gdp figure. drake remains strong. tourism is coming back.
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the country has reopened. construction activity is still very strong. so, consumers will be taking a significant part of the brunt of the slowdown because we are and open trading economy and our monetary policy is mostly focused on domestic spending. kathleen: a big question is big services inflation. are you willing to push that hard? you had a little surprise on retail sales, but if things move quickly, what if you are heading into a recession? adrian: slower growth is a necessary position that we have to see. it doesn't have to be negative growth, it just means economic activity rose slower than the potential growth of the economy. so that potential growth is a positive. we can have positive economic growth with declining capacity pressures. the biggest capacity pressure
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globally is the shortage of labor. if we could make the supply side of the economy move quicker, we would be fine. we can't. kathleen: are you willing, though? if you have to push that hard, are you willing to do it? adrian: pushing that hard is going to take most countries close to zero economic growth. we are certainly -- or certainly below potential economic growth. in other words, not doing their jobs. given the uncertainty come you can see it is likely some countries will get to quarters of negative growth --- two quarters of negative growth. in new zealand, we don't see that. conditions show pretty anemic economic growth because of what we are doing. haidi: to that point, there is some criticism that the rate hike cycle is incentivizing the
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kinds of investment needed to solve supply-side issues. it is a blunt instrument. are you balancing and looking at the necessary peoples -- necessary evils? adrian: the biggest problem for enemy economy -- biggest problem for any economy is high and variable inflation, and a central bank that does not have ability to control inflation. you cannot have maximum, sustainable of women about low and stable inflation. that is target number one. the second part is that, on the supply side, investment is very strong. the construction sector is going through record investment. i saw one regional bank in new zealand talking about a bigger supply of housing by this time next year. haidi: reserve bank of new
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zealand governor adrian orr speaking to us at jackson hole. the kiwi and the aussie artistic couple currencies being whipped around when we have this kind of volatility. >> and picking up on what adrian orr sad around the need for consumption, retail sales are starting to bite. that points out as a catalyst to push the kiwi dollar lower. what else adrian orr sad is the impact of the u.s. dollar and what it means for its biggest trading partners, we are seeing the aussie dollar decline this morning. we are watching the offshore yuan, fairly steady. we did see the strongest fix for the currency from the pboc since february 2020. the korean yu around a 13-year
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lowan this morning, a few signs from south korea this morning, they are watching developments in the fx market closely and are concerned about what could be one-sided moves in the market. and south korea is pledging to watch jackson hole very closely. kathleen: like so many central anchors around the world. we will be talking with the governor the bank of korea the next couple days as well. stay tuned for more from jackson hole with interviews from the fed presidents of st. louis, philadelphia, cleveland and atlanta.
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♪ haidi: twitter has been ordered to hand more information to elon musk about bot counts. twitter must turn over information about 9000 count surveyed last year. the social media network said could deny access to the data on legal grounds. elon musk's has a $44 billion acquisition.
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china's big -- biggest offshore driller is seeing a double in revenue, beating estimates by 84% to almost $30 billion. cnooc also announced a hong kong dividend of $.70 per share. they benefited from global energy prices. the big driller says the government could lift chinese oil demands but is cautious, citing risk of inflation, interest rate increase and geopolitical tensions. one of the first legal challenges over corporate greenwashing as accelerated a case as the center for corporate responsibility raises questions about santos company pledges. it is being watched as a major test of greenwashing. kathleen: coming up in the next
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hour, standard chartered explains conditions they are looking for before confirming we are in a bear market rally. and imf managing director john lipsky says the market -- says the fed is too late in raising rates. this is bloomberg. ♪
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kathleen: this is "daybreak: asia," counting down to asia's major market opens. we are leaving jackson hole at the annual lc retreat, waiting for jay powell's big speech. we have had many great conservator -- conversations today, concerned about whether they're going to go harden fast enough, concern about whether they started to late, concern about whether jay powell and signal a turning point. haidi: one source, telling us inflation is like a marriage and you don't want to be stuck in this marriage. let's get you a look at the market open. >> japan, australia and korea coming online. 10-year yield of the start of trade sitting at the 3% level
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after the strong u.s. option in the previous session. a focus very much on jackson hole this morning, how hawkish jay powell will be in his address ride a. inflation is in focus domestically today because we got tokyo cpi figures in the last half-hour rising 2.6% on the year in august, slight beat on what economists were expecting. korea, we are continuing to monitor reaction in the local currency, the korean yuan around a 13-year low but officials coming out against that in the last hour, saying they are pledging to closely watch the fx market and are concerned moves in the market may be one-sided. equities, we are eyeing the kospi, mega caps in the previous session, nasdaq futures looking fairly quiet this morning. turning to australia, earnings season is continuing, wedge
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farmers is one of the highlights, that starts talking to trade -- that stock starting to trade in about eight minutes in a staggered start. china and the u.s. have been making a little progress in the push to avert china's companies listed in the u.s. being kicked off u.s. exchanges. currency this morning, take moves following the interview with the rbnz governor adrian orr. he is concerned about retail sales and low consumption and he says currencies are getting a catalyst to push them lower. haidi: one conversation coming up in jackson hole is why this is a market that continues to second-guess what policymakers are seeing. our next guest will be able to determine if this is a bear market rally, if we are at a peak inflation, let's go to
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audrey goh, senior investment strategist at standard chartered bank. the fed decided it is more likely than not a bear market pause? audrey: if we look at u.s. equities, they pulled back. a bit higher would signal an extension of the rally. today probably means we get another like down. the equity market is testing the moment. there are key variables that we are monitoring. a key is the dollar because we need to see a weaker dollar for risk assets to be sustainable, but the dollar has been strengthening in the past couple of weeks. it is not at its highest level,
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but other major currencies -- so jackson hole will be key to watch and given the rise in equity markets and we see financial conditions easing, we are expecting chair powell may push the idea that we should not see a right hike anytime soon given financial conditions have improved. but there is inflation and pricing pressure in the months ahead. there are other factors such as oil prices, inflation peaking, but it is going to be quite challenging. haidi: china is the other big factor that needs to be addressed as we deal with an
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additional one trillion yuan in funding. is this enough when it comes to emerging asia and china in particular? audrey: we are constructive on china. [indiscernible] china is probably the only other major economy that is easing policies rather than tightening them or even cutting growth. to us, [indiscernible] they have also cut the loan prime rate as well. [indiscernible] kathleen: i want to look at oil prices. i had a conversation with a former fed official in front of my cabin and he was expressing all kinds of concerns about the
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fed. one was oil prices. he said yes, they are down, but they are odds they are going to move higher. there are so many geopolitical factors. what do you see with oil prices? if it does move higher, does that hurt economies? does it make it harder for the fed to back off? audrey: energy prices, they will continue to pose upside risks. the moderation in oil prices is a function of demand. [indiscernible] and the fact we have major tensions elsewhere, whether it is russia-ukraine, and you see slightly lower oil prices in the short-term. but longer-term given the structural shift to de-c
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arbonization, we believe in the upside. kathleen: the dollar popping, that is important to many markets across the globe and many kinds of currencies. audrey: short-term, we expect the yen-dollar to continue the extension of the rally. it will depend on what jay powell has to say in jackson hole, but we see 1.0447, the current range at an elevated level for the time being. in the near term, i am probably biased to the upside. haidi: we appreciate your time, audrey goh, senior asset manager at standard chartered bank. su: we start with president
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biden, who signed an executive order to fast track boosting semiconductor domestic production. it is designed to help the u.s. compete with china's dominant industry. there will be a steering committee to help agencies coordinate their efforts as companies look to apply for funds under the act. a federal judge in florida ordered justice department to release a redacted version of the affidavit lang out the government case for searching former president donald trump's home. the judge accepted the doj request to keep secret the identities of various people. the doj has until friday to file the document. beijing on washington are said to have made progress in talks to avoid delisting chinese companies from u.s. stock exchanges. according to bloomberg, u.s. officials are considering a plan that would see the firms audited
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by american inspectors in hong kong. 250 chinese companies face a deadline to submit paperwork for u.s. audits or be delisted from nasdaq. hong kong exports plunged in july any third consecutive month of declines in the worst since march. that was due to disruption on the portable china and cooling demand -- disruption in china and cooling demand in the global economy. imports fellow must 10%, the worst result since 2020. 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 su keenan. this is bloomberg. ♪ haidi: let's look at early movers. the japan defense spending news, are we seeing any moves on account of that? >> pretty mixed this morning at the start of trading. it is major news here.
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essentially, japan could be set to approve what would be its biggest military increase in spending since the start of the war. it would put it as one of the world's top military spenders, behind china and the u.s.. it is calling for a doubling of defense spending not only for new equipment, but also ammunition, spare parts and logistics. but that is the reaction for those stocks at the start. as we have been discussing, australian earnings season is underway, getting towards the end. but in terms of movers, aussie minerals is one of them. we saw the company reporting results with a half-year profit decline. still though, they are pledging to boost copper production. westbound is another company we are watching, strong results, lifted their dividend, confident in the outlook for their biggest
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retail -- grants, bunning are among them. haidi: we have an exclusive interview with a managing director breaking down earnings and supply chain issues and giving his outlook just after noon hong kong time. still ahead on "daybreak: asia," ahead of fed chair jay powell's speak at jackson hole, we will be speaking with former imf managing director john lipsky. also, measures on u.s. growth pointing in different directions in the first half of 2022. we discussed what that means for the economy. this is bloomberg. ♪
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>> we are in a much more comfortable position. we think there will be at least another couple of rate hikes, but then we hope to get into a position where we can be data driven and get back to our normal position of watching, worrying and waiting. >> the fed used to be much more frontloading, to make sure you are ahead of the carrot.
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i would not worry about overshooting interest rates for a while to build up credibility. >> it is very clear that is very important -- it is very important that we are clear about our destination, to get interest rates higher to slow demand and bring inflation back down to our target. haidi: reserve bank of new zeeland adrian orr and others, speaking to us earlier in the government's main measures of u.s. growth pointed in different directions the first half of your, adding to the debate about the health of the economy. let's bring in chief asia economics correspondent and the current for more. let's start with jackson hole, a big event, waiting j powell's speech. but when you look at the actual data, do we see conflicting signals? enda: we had a technical read on
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the economy overnight. we had inflation-adjusted gdp slowing less than expected. that is good sign. on the other hand, gross domestic income, a measure of income, goods and services, that was weaker than expected. normally, these gauges, the gdp and gdi go together and move in sync. not this time. there is diversions. the takeaway suggest that there is a weakening in the u.s. economy and weakening in consumer spending as well. nonetheless, it doesn't seem as though the weakening is broad-based at the moment. consumer spending is holding up. the jobs market in the u.s. is holding up, so that backdrop is expected to feed into chairman powell's speech. i am looking for commentary from the fed that inflation will remain elevated and the fed will continue raising rates in the near term.
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there is a question of the magnitude of the rate hikes from here. haidi: it is a question of magnitude for as well, what do the minutes tell us? enda: the minutes overnight, it looked like most of the ecb council members were on board for 50 basis points, but a few were saying, hang on, we signaled 25 and should go with 25. but the hawks one out -- won out. it is still a hawkish outlook for the ecb, looking at 50 basis points. in two weeks, they meet again at there will be all important europe inflation data before then. i don't think anyone is expecting a dramatic cooling and prices, so pressure will be on the ecb to continue hiking despite slowing growth in the euro zone. the other side of the conversation about the ecb is
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that they have a mechanical tool to keep down boring costs. there is conversation about how the tool can be rolled out. the hocks are not necessarily a fan of rolling out this tool, it is essentially intervention in the bond market. there seem to be, -- there seem to be complications about how the ecb will intervene in the bond market. haidi: the rbnz governors pushing hard against inflation and says it may take countries around the world to close to zero economic growth. he spoke to us earlier at jackson hole, saying the central bank may be nearing the end of its aggressive tightening cycle. >> for now, we had to slow the economy. we knew that we had to be 3% or plus to begin that slowing journey. now, we are in a much more comfortable position. we think there will be a another
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couple of rate hikes. but then, we hope to get in a position where we can be data driven, and get back to our normal position of watching, worrying and waiting. kathleen: what are you watching, worrying and waiting on the most? >> we are looking at significant signals of inflation expectations and inflation actually declining. we are seeing the beginning of that strongly. i feel confident we are on top of this. we don't need to be chasing all the way down just as we let it up, so we are watching for signs where we can be confident we are slowing the economy and confident that that is critical end is feeding into inflation expectations. kathleen: the consumer is a big driver of any economy. we sell retail sales for new zealand, the yearly rate negative for the second quarter in a row. and we just saw the first
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quarter gdp a little bit negative. now, people are saying retail spending is pretty important, are we going to see a second negative quarter, the technical recession? >> our core view is no, that we won't see a technical recession. there has been a reasonable bounce back in economic activity in q2 this year. we need very low consumption. in fact, our outlook is for almost flat real consumption. so, for us to see retail sales come off like that is not a surprise. it is a good signal that monetary policy is biting, that we are doing our work, and there are many other things driving the gdp figure. resumes coming back, the country has reopened and the investments particularly in construction activity is still very strong. consumers will be taking a significant part of the brunt of the slow down because we are an open trading economy and our
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monetary policy is mostly in domestic spending. kathleen: i think a big question for central bankers facing surges in inflation is, are you willing to push that are? what things slow more quickly? what if you are heading into recession, is that a necessary evil? >> slower growth is certainly a necessary position we have to see. that doesn't have to be negative growth. it just means economic activity rose slower than the potential growth of the economy. the potential growth is an economy, so we can -- the potential growth is a plus, so we can have a growing economy -- we could have going economic activity without the potential growth of the economy. kathleen: are you willing, if
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you have to push that art, are you willing to do it? >> pushing that hard is going to take most countries around the world close to zero economic road. or certainly below potential economic growth. in other words, not doing their job. you can see it is likely some countries will be having two negative quarters of growth. specifically in new zealand at this point, we don't see that. haidi: reserve bank of new zealand governor adrian orr speaking with us. stay with us, coming up the fed governor some st. louis, philadelphia, cleveland. this is bloomberg. ♪
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♪ haidi: chinese stocks listed in
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the u.s. surged by the most in two months as talks to avoid delisting the companies heat up. sources say concerns are being readied for u.s. officials to inspect in hong kong. let's bring in stephen engle in hong kong. what do we know? stephen: the clock is ticking on these companies, more than 200 or so chinese companies listed in the u.s. are on a list to potentially be delisted by the sec as they explore long-standing rules that companies need to provide audits to stay listed in the u.s. chinese and hong kong companies have for the better part avoided doing that, and more recently, because of national security concerns out of beijing. but the push in the u.s., including congressionally-mandated deadlines now for 2024 to have these companies potentially delisted if they do not open their audit books is coming fast and hard.
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this is news which is not been confirmed yet by regulators in either country, or the public company accounting oversight board declined to comment, but sources telling us chinese regulators have asked that accounting papers be organized and sent to hong kong, where they would potentially then be given to the pba -- pcaob, for review, for u.s. officials to review those audit papers. one analyst said, it is a fascinating development. we have the full screen quote if you want to bring it up. and official confirmation is needed, says ed, but expectations were growing that they would get it done as both countries deal with economic fragility. so, it is a positive
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development. already, there has been some momentum for companies to re-do micile back in hong kong or china and delisting from the u.s.. >> economic fragility but political pressure, i would imagine beijing would want to get some things off its plate going into the party congress. does mean -- does this mean a potential rebound given how much pressure there has been for chinese equities? stephen: at least we had a rebound in the shares overnight with alibaba and others going up at least a percent. -- at least 8%. they have been under pressure of the past year because of the threat of delisting. alibaba had already moved the second primary listing back here to hong kong, perhaps as a hatch if they are kicked off. but we also had big, state-owned enterprises announced they would delist from the u.s., either
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because of beijing's urgings or their own volition. they announced they will delist. we all know about didi global, that was perhaps more the urging of beijing to delist. but again, this was a tsunami of potential delistings and will alleviate the fear of a mess delisting. haidi: our chief north asia correspondent stephen engle. treading water when it comes to asia markets as we move to hear fed chair jay powell speak at jackson hole. this is bloomberg. ♪
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♪ su: this is "daybreak: asia," i'm su keenan with first word headlines.
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two key measures of u.s. growth pointing in different directions, adding to the debate on the economy. inflation-adjusted gdp decreased between april and june but gross domestic income or gdi rose by 1.5%. gdi calculates all income from producing goods and services. the divergence suggests consumer spending is resilient amid a slowdown. pakistan's former prime minister imran khan has been granted preemptive bailed barring him from possible arrest until september 1. he is facing an anti-terror complaint over comments made against senior police officials and a judge during a speech in islamabad last weekend. he has been drawing huge crowds to his rallies tends being ousted from power in april's no-confidence vote. russian president vladimir putin ordered his military to increase troop numbers by 137,000.
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his degree did not explain how that would happen, either by drafter finding more volunteer soldiers or both. -- draft or binding more volunteer soldiers or both. and unvaccinated tennis star novak djokovic will not complete in the u.s. open. it is a decision that means the former world number one risks falling further in the rankings. the u.s. upheld its vaccine policy. there is no vaccine mandate for u.s. players or fans who want to attend the tournament. 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 su keenan. this is bloomberg. ♪ haidi: let's get back to jackson hole. we are watching all the action at the global central bankers symposium.
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ahead of jay powell's speech, we spoke with kansas city president esther george, outlining the battle against inflation. >> the german will deliver opening remarks. i previewed his remarks and i can't tell you what is there. but i can tell you from my own perspective, it is very important we are clear on communication about the destination we are headed. that destination is important, which is we have to get interest rates higher to slow down demand and bring inflation to our target over some time. kathleen: let me ask, esther george, are you willing to keep hiking rates if you see unemployment rising or the economy slipping into a recession? are you willing to stay on that path if inflation is still too high? esther: we have to, by mandate,
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bring inflation down. the unemployment rate is running below what most believe is the natural rate of unemployed. so, the labor market is too tight. and by bringing demand down, we should see the labor market loosen up. we are already seeing early signs, some of that consumption, some of that demand leveling off, but you are not speaking fully to the inflation data yet. it is still very broad based and there is more work to do. michael: the general consensus among you and your colleagues seems to be raise rates to a respective level and leave them therefore a while, rather than start to bring them down again. what is your level and how long do you think it would have to stay there? esther: knowing the exact level, the exact number, is go to be a process. i couldn't tell you where we are today. it is not restrictive yet. we still have high inflation. i think that tells us we have more room to go.
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we would bring those rates down quickly and i had seen that in some of the forecasting and it is remarkable to me. it will have to hold. mike: over 4%? asked her: it could be over 4%. that isn't out of the question. you won't know that until you begin to watch the data signs. michael: you have been doing this for a long time. the old adage was, don't fight the fed. why are our kids fighting the fed now and not listening to how serious you are about taking on inflation? esther: i don't know what drives the markets, i would not be well-positioned to say that. it is important for our communications to be clear because we want financial conditions to tighten along the direction we are moving around policy. i think it puts a premium on being clear in our communications, of having resolved with the end game. and the end game is to bring inflation back to our 2% target.
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and that is challenging in the environment we are in. we are coming off an impressive dented perio -- calling off an unprecedented period and i am sure markets are thinking about that as we proceed with this interest rate hiking cycle. haidi: kansas city fed president esther george. do stay with us. lots more coverage from jackson hole including the crucial speech from fed chair jay powell happening at 10:00 a.m. friday if you are watching in hong kong. the chinese market today, grappling with covid restrictions and a property slump. next. this is bloomberg. ♪
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♪ haidi: we are looking ahead to the open of chinese markets on the friday session in the next hour and wrapping up a frantic week on the earnings front. let's go to markets coanchor david ingles, who joins us from hong kong. anything specific that is piquing your interest? david: the energy plays. we have some of the big names, petrochina reporting and that is
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where you are seeing not just earnings beats, but substantial growth in revenues and bottom lines. when you look at sic, which is half industrial, half consumer, you are getting a little bit weakness. when you look at what is happening today, an indication that perhaps the trend in recent days, this lift, earnings coming out today, this is to give you a sense of this week. i think we have seen 2000 companies in shanghai and shenzhen, can we change this graphic, please? not this one. in terms of the list coming out. within the meituan story, solid is how analysts are describing what we will probably see from
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its recovery in the second quarter. it is 10% higher in revenue and 60% of that will come from food delivery. watch for that closely. in terms of a summary for the week, almost half of the companies that had estimates from analysts basically came in short of earnings estimates. in lying were roughly 12% and the rest were earnings beats. aggregate, down about 6% in terms of the negative surprise. unsurprising giving the weak economy. desk given the weak economy. more disappointing is that the bar has been lowered substantially, so you are getting actual etf's falling and you are getting projected etf falling alongside that. there we go, the white and yellow lines. not the best. haidi: david ingles in hong
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kong. he will join us more over the next hour. let's get more on what we could expect out of the china trading day, joining us china markets correspondent sofia horta e costa. given how much for a lot of chinese companies, the revaluations have already bottomed. sofia: what illustrates negativity in the market right now is the market reaction to castle earnings, the big battery maker in china, those earnings were a beat. but the market focused on the margins being squeezed, and the stock fell. so even when companies do better than expected, you see the stocks reacting negatively. this really shows nervousness in the market. i should point out that intel ariba, their earnings were
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better than that is a beat let's see how the market reacts -- were better than that -- were better. that is a beat. let's see how the market reacts. when earnings come in better-than-expected come of the market reacts accordingly. haidi: the relief rally we saw on chinese tech in this delisting update, cannot continue? sofia: clarity is, will u.s. regulators except this? first, we need confirmation this is actually happening. this is one way to avoid what is a legal requirement by u.s. regulators for on-site inspections. we all know that chinese borders are shot, the mainland, you can't going and that makes it difficult for u.s. auditors to go there. so how many people actually go to hong kong and inspect the papers where we are, that will facilitate that, and that is the
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clarity people are looking for. but we did see that big rip higher yesterday and a lot of short interest as well, so morgan stanley warning people to be where of the short squeeze risk in hong kong. and we saw what can happen when you get caught on the wrong side of that trade. haidi: sofia horta e costa, our chief china markets correspondent. some things we are watching, this company is among companies in the wealth management sector that is in focus because china is tightening internal controls and as a news that management rules. the oversight story means the regulatory risks are very much the story. you can hear more from the day's
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big newsmakers and get in-depth analysis from the daybreak team broadcasting live from our studio in hong kong, and you can listen on bloomberg radio plus or
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romaine: haidi: our bloomberg
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event -- haidi: our bloomberg opinion columnist says the fed should not blame when it comes to inflation. >> the fed has to focus on inflation and has to do it in a more committed fashion than so far. >> it has been trying to sound committed. it has been saying inflation is the number-one issue they are facing. why is the market not hearing it? >> two reasons. one is the fed itself. chair powell stated we are at the neutral rate. the minute the market heard that, it moved insignificant fashion. all the talk started being amplified. that is one reason communication has not been consistent and that has been a problem for the last year. the second issue is, the market is looking at the impact on growth, the pick content -- the potential impact on markets and
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it remembers the fourth quarter 2018, april members the fed blinking, so he believes one push comes to shove, the fed is going to blink again. >> you don't think the fed will blink anytime soon? >> i don't know, john. i know that they should not blink, but it has been very difficult to call this fed. this fed has failed at analysis, failed at forecast, failed after medication, so it is difficult to say what this fed is going to do. it is easy to say when it should do, but much harder to say what it is going to do and that is when you get this tick -- this disconnect you have been talking about between the markets and the fed. >> larry summers called the comment analytically
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indefensible. now we know what inflation is and where rates are now. >> i have been warning against precision. there are many structural changes going on. they are changing liquidity regime. i asked if we are going to a world of deficient aggregate supply? that is the world we are in now. no one knows where neutral is. you have to figure it out as you go along the way. and this risk position, the market is going to jump immediately to conclusions and you are going to half to undo it. fed officials have walked back that comment. it didn't take many days. haidi: our bloomberg opinion columnist. u.s. futures, tepid training -- trading given we had two sessions of really good gains. take that with a grain of salt.
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a lot of investors are on the sidelines ahead of what we might hear from fed chair powell on friday morning in the u.s.. futures looking flat at the moment. another 2% put on overnight, now softer by about .1%. we saw the doubt putting on 1%, and is trading neither here nor there in the futures session. we are seeing defensive positioning when it comes to fx, witness across the kiwi dollar as well as the aussie dollar as we get risk aversion ahead of the jackson hole speech. we have seen hawkish this continue with fed members we have spoken to going into fed chair owl's crucial remarks. trading in asia, steady, nikkei 225 up, a strong print on tokyo cpi earlier, unlikely to move the dial for the boj policy step
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in the kospi is up .7% with modest gains in this part of the world, australia and new zealand. let's get back to kathleen hays on the ground in wyoming, jackson hole, and kathleen, i hope the brisk weather volatility isn't an indicator of market reaction when we finally hear from powell. kathleen: it is a good metaphor, because at jackson hole, you have to be ready for anything, hot sun, sudden storms and maybe that is what the market is thinking because they don't know what jay powell is going to say. is he going to be more aggressive? john lipsky joining me now, johns hopkins university, former debbie managing director of the imf and head of national bureau of economic research. what is jay powell's message
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going to have to be in light of the fed performance the last couple years? john: the economy itself has performed in ways that were unexpected, not just to the fed, but market participants and scholars in general. so, there has to be a recognition that they need to look more closely at how the economy is going to be performing, and reacting more rapidly to signals they see. the problem was that they waited too long, they have acknowledged that, and now they have to enforce credibility or at least gain credibility they may have lost with market participants, with the sluggishness of their reaction last year. kathleen: move faster, does that mean continuing 75 basis point rate hikes? does that mean that they have to
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open the door that their terminal rate a be higher than 4%? john: all of the above. they have to show that they will be watching the data closely, making sure what they think -- making clear what they think is important and making clear how they will react. there is no point in thinking they know exactly how they are heading. kathleen: it is it -- is it important to say we also want to have a soft landing? to some, that muddies the water. john: it suggests they are serious about policy goals and clear on how they intend to achieve it. if you had a crystal ball that could see the future with perfection, he has to make clear what he is looking out at how they will react. kathleen: how worried are you and how worried is the fed? kansas city fed president esther george mentioned the slowdown
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seems to have gotten worse, they are doing more stimulus, what does that mean for the global economy? john: for the global economy, a slower u.s. economy is not good. but a more aggressive fed creates problems elsewhere in the world. the fed and other u.s. authoritie will say we have to restore the health of the u.s. economy that is in everybody's interest spirit but near term, there is going to be concerned about whether the fed can produce a soft landing. kathleen: [indiscernible] john: absolutely. i don't know if it makes it tougher in terms of combating u.s. inflation. in terms of understanding how the global economy is evolving, that is going to be more difficult. kathleen: how worried are you about china's economy? john: they have to do some serious rebalancing. the tools they have typically
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used when they face a slowdown in their economy are not the ones that are necessarily useful today. they have encouraged real estate development. they encouraged local government infrastructure spending. that is not going to work. nor is an attempt to boost exports further. the chinese have a significant problem, not to say they couldn't deal with it, but it is going to be the international picture that much more cloudy. kathleen: central banks in general, some would say they have egg on their face. they did a good job putting a lot of figures income of but did not get at it fast enough to slow inflation. a lot of criticism of central banks right now, how does that affect the future of central banking and central bank independence? john: that is going to be front and center in discussions here in jackson hole. it is not just central banks,
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but in general, the economics profession has not done wonders with their ability to project economic growth and inflation, things that are critical, nor understand how policymakers should react. there is going to be a big reassessment all the way around at the central banks and others are going to regain credibility, and it is going to be shall we say on horseback, by producing results. kathleen: central banks and markets, in other countries as well, what does it mean? john: the markets are paying close attention to what the central banks are going to do. it is not that they look to the central banks to make it clear what the economy is going to be doing, but they need to know how the central banks are going to react because central banks have fallen behind their job in keeping inflation low and stable
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and now, we have to figure out how they are going to go about trying to restore that. kathleen: and will that restore central bank credibility? john: well, they have got to produce and what they have got to show is more accurate awareness of economic developments and eight clearer expression of what they will do about it and when. kathleen: john lipsky, thank you so very much for joining us here in jackson hole. we have a lot more to come. haidi: that is it for "daybreak: asia." we have the china open almost upon us as we count down fed chair powell's speech. this is bloomberg. ♪
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