tv Bloomberg Markets Asia Bloomberg September 27, 2022 10:00pm-11:00pm EDT
i'm rishaad with yvonne man and david a glaze. yvonne: retreating as fed officials gave up their hawkish drumbeat the u.s. 10 year yield approaching 4%. while the dollar keeps on climbing, growing energy added to this. calling damage to the nord stream pipeline, germany saying it is an act of sabotage. a bloomberg scoop, apple addition plans for iphone production as a surge in demand failed to materialize. plus, we have lawmaker robert lee with the city of hong kong's opening. is that enough to restore sentiment? rishaad: turning negative, beijing equities following to the downside. we have also the yuan in focus, stronger than anticipated. we also have on top of this a gilt market which is seeing further outflow and u.s. treasuries after a lot of hawkish fed speak. the ten your level not seen
since 2010. david: even then, yields are giving you about one percentage point lower. this time last week, anyone who told you 30 year gilts would get 5%, they would tell you to bang your head into the wall and check if there is something wrong with you. that said, we are here right now and property markets had a bit of a fall as far as the rally is concerned. as you can see, it has really accelerated and markets opened up in hong kong. the fact that you're getting a little bit of an extension as it pertains to the chinese currency faster than that. seven point 22 offshore, sick sense of one percentage onshore is back above 720. let's start with that. look, we have topped the 2019 peak. these levels before the crisis. the gdp it and that evaluation took place. that took many forms over the last 14 years or so.
the offshore rate started obviously not too long back, basically at a record as far as this is concerned. against the u.s. dollar, we have to emphasize that as well. yvonne: right. and can they do anything to at least change it or is it more about steady declines? we've been asking that question for 24 straight days now. the fed speak though, it has been busy this whole week in terms of federal reserve speak. 24 this week alone. overnight, basically it is loud and clear. higher for longer, they continue on this anti-inflation rage. it will build up before the fed president of new york did say you've got to be careful. do not overdo it. they think that, you know, if it brings down inflation, that's it. but in san francisco, fed president mary daly said this earlier this morning. >> we might have to do a little
bit more on demand because supply chains are sluggish. our supply is sluggish to recover. and that means that we have to get inflation down, because as robbie said, price stability is fundamental. it is also fundamental to help people live their lives. rishaad: and also, so aggressive because it was late in the process of tightening monetary policy. but the possibility of of a nord stream pipeline suspicions sabotage. this sends gas prices up. suffering a shop -- sharp drop. evidence of sabotage rather than a technical issue. we are having three pipelines that are almost the same. denmark is building up security around energy assets. another headline for the ecb. how do you deal with all of
that? it is beyond their control but hugely inflationary. david: yeah. absolutely. so all of these things together, mark cranston with the live team. everywhere you look, there does not seem to be anywhere to hide at this point in time. to understand what you're talking about, what we are seeing today anyway. mark: this morning, our colleague said it seemed, then we got a report that apple was going to reduce production. then we had the chinese yuan moving and everything else. we had this report from the white house. ever since then, it got a bit crazy. it just tells you where the weak side is for financial markets right now. people, although we have seen some things over the last week across risk assets, people are still very nervous. not too sure about bonds. they want to hold the u.s. dollar. these things have been
repeated in themselves for a few months actually. there is no sign of it letting up just yet. very interesting that the yuan was allowed to move so sharply today. i expect it was because of next week. it would've been much worse for china at the offshore yuan had risen while chinese on short markets where close. imagine the chaos. if they reopened after we could be enclosed close and they learned that the offshore yuan was at a higher rate than it was. a crewed measure. the yuan first of all, before a couple of weeks time. -- two asian currencies when the yuan is moving at this rate against the u.s. dollar, it is going to produce some angst across the rest of the world. good moves today. yvonne: gilt market is sparking all of this once again, mark?
is this going to create a whole domino effect? mark: it is playing a role. it's a g10 bond market, you cannot ignore the u.k. market. it is not only the largest, of course the treasuries and the markets are more important, but it is a decent sized market. one of the things that is showing in a typical situation in a bearish market, where liquidity is not what you would expect. the trouble with all fixed income markets is that they are skewed toward a buy and hold strategy. it is very easy to get into a fixed income market, it is tough to get out when there is a panic. a closed portfolio in most trading decks are skewed towards holding bonds as part of their portfolio. very few people run a significant short positions. it is difficult using the futures market. these things are small in comparison to the size of the total market. people are stampeding to the exit and they find that the door is very, very small. that is why you have 100 basis points jump in just a couple of
sessions. there are not that many people, the holding power of people in money market is just not big enough to stand up. yvonne: mark cranfield. more on all of this news. it has been pretty busy this morning. and live blog is where you are going to get all of that. analysis, or question of the day, what is most at risk from the energy crisis? that is on bloomberg. rishaad: it's been a long time since we've had him on the program. head of global emerging markets and fixed income asset manager. great to see you. >> great to be back in person. rishaad: monetary policy pendulum has swung back globally, particularly with the fed of course. it has come back as a wrecking ball. where do we go next? fixed income even now is attractive
force on. >> around the u.s. dollar moving up, we are up in those all-time highs. initially, everybody cheers that the currency is weakening because it provides them with better trade outlook. but then you get to a point where it starts to become that wrecking ball that you are talking about and i think we are in that place now. this is definitely what we have seen in the u.k. market. this is about the largess of the u.k. market. monetary theories are coming into play again. then, you can see developed markets taking on emerging market like characteristics. i think that is what we are already starting to see in the market right now, especially when you're looking at volatility. it would have felt that the index would've been done around 30%. rishaad: larry summers when he spoke to me. yvonne: why do you think traders reacted so negatively to the fiscal plan? is it justified, seeing the move that we are seeing in the market? or is it a bit of an overreaction? >> you have a maturity date on the bonds you are purchasing. once you start doing what you're
doing now, you do not have the mature and and you start moving on to monetary theory. spend as much as you want until inflation takes off. we are going to take the money away from you both on the equity and debt side and that is going to put currency into a freefall. you're going to have to come back with more. david: so where is the valley now? how does a bond investor differ from a year like this? >> the front part of the yield curve, particularly the one to three has got income back down pretty its use in your favor, so you can take high rates now and still make money. we like that one to three year part of the yield curve. staying in investment grade sovereign bonds, not pushing up the risk because we are in a precarious situation. chinese bond flow, back to back two years, we are up against positive return, three points. david: following up on that, noticing hydrates.
-- high rates. why do you think? if we are going into a recession, why do you think that they're not? >> i think were going into a slowdown globally. it is clear for three months now. they will come under pressure and have been under pressure. they are holding at the moment because debt supply has been relatively low. as we know, a lot of companies have turned down debt. so there is no maturity that we're facing right now. that is relatively calm, compared to the last years we have been through. rishaad: getting back to china, more likely to cut then hike. but also hedging costs are lower. >> yet, middle of the year. chinese bonds hedge against the u.s. dollar, you lost money or you break even. it is completely flipped the other way now. it is actually positive. it came up around 100 the extra basis points.
chinese against the u.s. dollar, great diversifying asset in anybody's portfolio. we been talking about this for i feel like decades now. yvonne: we have to talk about record territory lows. offshore, lows for the onshore rate. seems like that pboc is being brisk in these fixings? >> we look at the other currencies, euro is falling. the bottom of the year, no doubt around 20%. it's around 10%, 11% to the u.s. dollar. still flat. so i think right now, the risk is exports have been holding up really, really well in china. that is the pace that is keeping the economy together. we've seen a global slowing. they need to make sure that there currency is still competitive. when you look at it against the korean yuan or the japanese yen, it is actually appreciating too much, so you need to depreciate it against those currencies as well. david: what do you think about
india? i mean, the whole inclusion, are they not going to be included? how do you approach that conundrum right now? >> really frustrating for us. we have been trying to partner with our index providers to get india. we get to the finishing line and sure enough, some of them say we are not about to change the tax. rishaad: capital gains. >> capital gains and this has been it twice in a row with two different index providers. we are not sure what is going on. they show all indications they want inclusion. that makes a lot of sense to us and they have an opportunity, but somehow we keep missing the finishing line. rishaad: great stuff. hayden briscoe from ubs asset management. let's bring you back to what is going on -- excuse me. we got first word news. reemerging after not being seen in central earlier this month, made revision and beijing on tuesday. it was about china's achievement, decade absence
conflicting with china's strict covid protocol which mandate seven days of quarantine followed by three days of total isolation. the bank of england's chief economist says the u.k. governments tax cuts in the market reaction that followed require a significant monetary policy response. physical changes of course and it significant weak pricing of assets. the best time to assess and react to the bank of england's next meeting in november. >> there is a rebalancing of the macro policy environment and in anticipation of new fiscal policy. i think it is hard not to draw the conclusion that all of this will require a significant monetary policy response. rishaad: a dozen u.s. banks have agreed to pay fines for a combined $2 billion for failing to monitor employees communications on unauthorized messaging apps.
lenders say the penalty includes bank of america, citigroup and goldman sachs. the exchange commission saying they failed to maintain trust by requiring them to use official communication channels and maintaining and preserving that institute. that is a look at the first word headlines. yvonne: still ahead on bluebird markets asia, hong kong lawmaker robert lee joins us and has insights on the financial sector. next, dramatic escalations and moscow's energy war with europe and a winter without russian gas looming. this is bluebird. -- this is bloomberg. ♪ at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan
russia's energy conflict with europe has escalated dramatically with three gas pipelines damaged by suspected sabotage. the last remaining route to western europe is at risk. energy editor of asia joining us now. rob, tell us more about what we know so far about the damage of these pipelines and what it means for gas supply going into the winter. rob: basically overnight, there were three explosions. three parts of the nord stream pipeline. there are two separate pipelines, nord stream 1 and nord stream 2. nord stream 1 has not been supplied for over a month, nord stream 2 was commissioned. a massive pipeline, about 1200 kilometers long. they world's longest undersea pipelines. and they are big. what we know is that basically, they will probably be out of
commission at least until winter. certain market players had hoped that there would be return next year. of these services. now, with the time it will take to investigate exactly what happened etc. what is going on at this point. rishaad: obviously, the oil market moving in the other direction, what is behind all this? playing a part in this in the u.s. stockpile. rob: that definitely does not help, so that will remain the fears of monetary tightening. and inflation. so, the demand distraction is definitely very high. yvonne: rob, thank you. rob on the energy crisis unfolding and the escalation here overnight. we are watching treasuries and
yvonne: we are checking the apple suppliers here this morning, all seem to be all in quite a bit here. 1002% in taiwan. the bloomberg scoop that apple may be ditching their iphone a production due to the demand picture that continues to falter. rishaad: as many as 6 million units in the second half of the year. companies produced about 19
million. let's get details about all of this. debi wu joins us. and basically, what are we talking about here? what can they really do, other than just the bare facts. exemplifying what is going on globally for the economy. debby: so, what is happening here is it was originally reported that apple was planning to build 19 million units of new iphones. and after that, it raised its forecast to buy an additional 6 million units. and they wanted to fulfill that, but due to weakening demand for electronics, apple has scrapped plans. and not attained the target of 19 million units of iphones. so what are clearly the
weakening demands for electronics everywhere, it is impacting apple's plan. and we can see that due to the inflation and the war in ukraine, and also the weakening economic conditions, actually they are slashing the growth target for the global market for as much as 6%. given this sort of bond picture of lukewarm customer demand, we can see why apple is being a bit more conservative about its goals for this year. yvonne: it is interesting, you are reporting from your sources that the demand for the premium model, the iphone 14 pro, is actually doing that are then, you know, the base entry model. so to speak here. does this hurt the most? debby: so for suppliers like --
that is making more of the premium models. they are doing better than suppliers that make lower models. and this is reflected in the wait time for the models. you can clearly see that the consumers who want the higher price models will have to wait longer than of those seeking the entry level iphone 14. yvonne: yeah. wait a little bit longer. all right, thank you for bringing us that scoop. our asia tech reporter debi wu joining us from taipei. let's get you the latest check of your business flash headlines, biogenic says their alzheimer's drugs and the results from a final phase trial are a major milestone for researchers who have been working for decades to find a treatment for one of the most common types of dementia. however, the treatment comes with serious side effects including brain swelling. they will apply for full u.s.
approval by the end of arch 2023. twitter is accusing elon musk and his lawyers of not handing over text message exchanges with morgan stanley ceo james gorman and also chairman larry ellison. they have subpoenaed the text ahead of the trial. morgan stanley was chief financial advisor while ellison said he would back the deal. hong kong asset manager value partners are expecting to double their headcount in singapore. they're planning to hire or relocate staff and investment management's to the city state, where it now has fewer than 10 staff. value partners cochairman says you're following the money. network cofounder and ceo is stepping down of the crypto start up as it forces its way to bankruptcy. chris ferrero has been named interim ceo. they were one of the casualties of this year's crypto market meltdown, user withdraws and
closing a billion dollar deficit. rishaad: here is a look at what is happening. gaining stocks, at one point, we are looking at the possibility of seeing them open up. today, it is down to reports about revenue tightening. the past $309 million ringing -- really not helping these equities very much. that was the 11% of people endemic numbers, also there are reports that we've got a reluctance from chinese gainers. energy stocks also trailing with the recent fall back with oil down. wti 1.8% to the downside, brent crude trading about the same margin lower, 84 for a barrel of brent crude it wti at $77 and $.12 as we speak. that is a look at what is happening with energy. let's have a look at the ev side of things. yvonne: they have been up along
with the last few sessions or so. we are seeing dramatic losses, down at some 8.2% or so. we have pricing going here for the ipo at the bottom of the range of trade. it will be interesting to see how that plays out on thursday. coming up, currency reports. offshore weakening to a record low against the almighty dollar, despite what we're hearing from the central banks and their attempts to halt the slide. the latest when it comes to the fx market coming up next and we have sterling continuing to see more weakening here. millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there. and this is the perfect time to join them... add a line to your existing plan, or see for yourself how easy it is to save
>> 1129 -- 11 39:00. a challenge for the global economy as we see equities under pressure. >> absolutely. stronger yields stronger dollar is limiting every move to rally. we talked about this a couple minutes ago. with the 10 year yield touching 4%, we have not seen that in years. some of prices we are getting. onto the dollar story, acceleration. tuesday was a reversal of the dollar strength. 1360 right now at the bloomberg dollar index. here is one index to watch. hong kong, attack index. down 100 points.
3565. below that, we are back a little bit since inception of the asia index. asia has accelerated across your screen. equity markets, commodities are pushing up. as you can see, 1400 on that one. a lot of levels to watch coming through. >> yesterday, the balance in sterling, you are seeing that right now. we saw the thresholds and we are screaming above that. that is a record low for your rate.
we are watching the sterling. 106 point -- 1.06. let's start with what we saw at this hour. that stronger bias that we are seeing, that seems to be at the smallest in two weeks. what does that signal to you, david? david: even with the spices we have seen so far, do you want been weakening. interest rates and differentials keep widening. we have to remember, it is not just that you on the is weakening, it is everything that is weakening against the dollar. these have been flatlining recently. when you go against the dollar, the worries are towards 7:30.
they like big numbers. you notice as it goes to decline , it does not want the one way decline. >> is it a one-way? that is the thing. how bad are things likely to get? the key risk is how much pain the federal reserve will afflict -- inflict on their economy? l --david: a lot of that has been priced in. thackeray's and what they do, we had apple coming out with a new story. that will add to worries about u.s. earnings coming into earnings season.
our season start to disappoint, that is bad news. the earnings in u.s. stocks disappoint. more dollar strength. going forward, u.s. rates or equities, i think are relevant of what the fed does at the moment. >> thank you. david finnerty there, our fx and rate strategist. with the currencies, a 16 year low. at this rate, 40 seems like easy work. it is really the size of it. we could get a bigger one. there is a smaller portion of the economists that take us up to one and a quarter. >> that is it.
now, let's have a look at first word news. three nord stream pili names -- nord stream pipelines have been dissed -- it -- nord stream pipelines have been hit. the gas route to western europe has been hit -- is at risk. they want to replace him as prime minister. we already oversee major portfolios. it may remain head of state. u.s. vice president dividing north and south korea. becoming the first white house
official to visit. the mice -- they might also meet with the south korean president. they are looking to freeze bitcoin assets. about $67 million of current prices into the stablecoin ecosystem the collapse. he is making no effort to hide it. central vietnam, more than 400,000 people have been evacuated at the storm's arrival. the strongest storm they have seen in decades. they are warning about flash floods and landslides. the world's second-biggest coffee producer, that is a look. >> focusing on expanding into
new areas, oey trying to become profitable. the ceo of the company told us more. >> they have one of the biggest populations in southeast asia. a lot of that is actually tying to the super out. in indonesia, we have a competitive mode. that is how they have been able to drive mobility. now as we get into grocery deliveries and on-demand delivery abilities, we actually have financial services.
>> what are you seeing with the consumer as we are starting to see some of the strain left -- lift? >> in the last years we have been in trouble balancing areas parts of our countries. people are starting to get back to the offices and the communities are starting to go. we have a lot and people are going out when they were not before. there is a lot of buzz.
we also know that there is a lot of uncertainty so we are taking steps to make sure we have it and are being cautious. overall, the buzz is one of excitement and people continuing to really take advantage of the economy reopening. >> oey talking to ed ludlow. the impact of the financing of member robert lee is up next. this is bloomberg. ♪
we see how that competition plays out. now it is actually rising given the amount of foreigners. >> we have to compare where we are right now. >> about 1.6%. the outflow with more than 700 finance professionals moving to hong kong. this is also being seen as a brain drain we will have a look at that. >> let's bring in our next guest and see a hong kong will be facing. can take a look at the index and how much optimism there is and if we are going to see the delivery of good news that these restrictions will ease. >> this is the hong kong
reopening which i think is down 12%. it is obviously not doing substantially better, to the point that the three of us have been in hong kong during the restrictions. things are ok in hong kong. depends on how much earnings actually earn from us. really, getting visitors back in. >> certainly, that is the key issue. we still face days of monitoring plus you will see -- deal with a lot of tests as well. there will be happy to go along with these rules as well. they also represent stockbrokers in the territory. i'm sure the last 72 hours or so
you have been checking. what will be the response to the easing of restrictions? robert: so far, the feedback has been audited. it has been the past two half years or so. they have been under strict restrictions. we are starting to see them gradually easing and we are going to keep the pressure on and hope they are subject to the actual situation as long as the medical silty precious for opening up. a lot of businesses see it as a good sign. we want to resume as soon as possible. for a lot of businesses, we need to see clients at investment
period is positive so far. >> any kind of positive feedback a window. maybe we have next month this relaxed? robert: if the trend continues, there is hope that the trend will continue and i think it is in the best interest for the world. to continue with this business going forward. a lot of the competition in singapore makes us stronger and try to do better.
i think, for us, we are moving forward and i think a lot of is this is an resume back to normal soon as possible. a gradual opening up what move that long. >> that is one order, what about the other one to the mainland with a lot of the main businesses and brokerages in the mainland, where are we with those? robert: i think it is very segment -- scientific about it. they are really balancing children and things of that
i'm to be realistic and we can see that first and do that afterwards. >> a much do you think hong kong is a test for mainland china on whether china reopens? think there is a correlation in that way? robert: the strength of hong kong, as much as it is, as long as we continue to open up aspects will remain the same. generally speaking i think countries and regions -- hong
kong will still be the place to be a viable financial center. >> we can see that with equities traded in hong kong. more than just the financial hub for offshore you on, you have to bring the whole package together. what do we need to do to get people interested in this region? >> we are in the mist of a week assessment measurement. i think we are more up with
i think you will see the people who look for opportunities. i think that is where that attraction is >> -- attraction is. >> we will leave it there. you have taken us to a new topic. thank you for your time, robert lee. speaking to his last point, a very weak sentiment. we are now about 1300 points from the low we hit in 2011. as about 5%, 6%.
target and that regime is at risk. >> we are committed to restoring price stability but we also recognize that there is the risk of overdoing it. >> i don't think they are being realistic about the pain that will cause you will climb up to or .4%. i don't think it is that simple. >> comments earlier from some fed officials supporting of the strong dollar story we are seeing today in many cases up 1% with 1.2% on 7/10 of 1%. >> there is a lot of pain.
some key levels being crumbled across these markets. take a look at were sentiment is right now. we are seeing is a push of the -- we are seeing the asia-pacific stocks right now. >> the program starts next week. even bigger losses. it is really a catch-22 position. >> down 8/10 of 1%. that brings us to the lowest level of 2020 -- since 2020. ♪
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