what can we expect the pboc to do? chetan: the framework we are operating within china is the policy easing has taken place already on the monetary front. we should see more fiscal action , which the government has already highlighted, but for all of the policy easing to be affected, you need solution to the near zero covid policy. it's not about just the economic policy easing itself, now we need to see the economy gets going, freeing up restrictions on mobility, and expecting that to happen in the next few weeks. we think the model will be taken up across the country and most cities where you do regular testing and that allows you to avoid a lockdown. we are expecting policies to be affected gradually in the coming weeks, but the full effectiveness will take time to transition to living with covid. rishaad: looking into the implications of that data. as we move to the first word news and join vonnie quinn. vonnie: finland and sweden are set to apply for membership of nato in a dramatic change for the security landsca

the reference rate was stronger from the pboc. so, looking to see if we continue to do that given it is is seen as an indication of support for currency from policymakers. they are raising the weighting of the yuan. shery: we might see in the meantime some tailwinds coming from wall street. we are talking about u.s. -- spending in the s&p 500 on friday, seeing a huge rally, the nasdaq 100 outperforming major benchmarks. giants like amazon, microsoft and apple leaning those -- leading those gains. the 10-year yield over 9%. wit above -- wti above $111 per barrel continuing to see the squeeze on russian diesel exports continue to fall sharply. you have to take the u.s. rally in the context. of the bigger selloff we have seen. we are talking about the s&p 500 losing ground for six consecutive weeks, the longest losing streak since 2011 when it comes to the levels, we are talking about 70% dow -- 17% down, very close to a bear market. we have seen 20 six bear market since 1928 and that has come with a lot of volatility. but also becom

pboc governor and other officials called for improved delivery. it came after credit data for april showed loan growth that is the lowest in five years. india's central bank kept its -- raised -- kept its key interest rate at hold but raised reserve requirements for lenders in 9%. bank of indonesia says the move will absorb seven a half billion dollars from the banking system. they kept their rate at a record low to support pandemic recovery, even as regional piers, malaysia and the philippines tighten policy. core inflation is around 3%. russian opposition leader alexi navalny has lost his appeal against a new nine year prison sentence. he will be transferred to a high security prison that supporters say is aimed at isolating putin's top critic even further. convicted in march of fraud and contempt of court. that is a look at the first word headlines. david: let's have a look at the tech space against the backdrop of interest rates moving up substantially this week. so we had to mention a few names , obviously, new zealand just came out. you had

rishaad: three about the pboc then kathleen. what they have been doing. yesterday it was certainly evidenced by equity traders at least that it was a feeling that during the talk, but not actually walking the walk. kathleen: what else can they do? until the lockdowns are over, until covid zero passes because either the virus is extinguished or controlled enough that lockdowns are not needed or we get into october and xi jinping's third term is a done deal, the assumption is wide across china and all of the china watchers i have spoken to that covid zero stays in place. as long as that happens it is difficult to stimulate the economy. however, they keep trying. you have to give them credit. in the last day, pboc bank regulators, a statement came out that they had met with china's largest banks and told them that they need to step up. they need to take responsibility and do more lending. they particularly focused on property lending. they want to keep it stable. now, let's remember, just this past week, they cut the loan prime rate, the five-year rate, whic

this is on the back of the pboc move and a mixed picture when it comes to u.k. consumer sentiment. that sentiment survey suggests it fell below the early 1970 number sentiment taking a hit, but retail sales coming in with a surprise beat as british stocks are up. in terms of what is happening in the space, the german dax is gaining four points. you heard from the finance minister of germany saying that the g7 has agreed to an additional $18 billion of support for ukraine and he wants to see inflation getting back down to 2%. let's see how things are playing out across assets given the picture we saw stateside yesterday. futures pointing to gains of 0.5%. this is a mixed picture when it comes to the retail sales and consumer sentiment. 1.24 on the pound. the u.s. two year, 2.63, modest yields, up by two basis points. you are seeing risk on being articulated from the bond markets. iron ore, gains of almost 6%, linking that to what is happening on the back of the move by the pboc to cut the loading prime rates. the individual corporates, richemont missing with its earnings and pointin

pboc cutting its lower bound range of mortgage interest rates by 20 basis points. easing those rates for first-time homebuyers to support the home market which has been battered by the lockdowns and slowdown of activity because of the omicron and resulting lockdowns. but also if you go back months because of all the property woes . so, property has an absolutely battered and has been a drag, obviously, on economic activity. so the pboc will also be watching later this morning at 9:20, the mlf, and we're expecting some easing, relaxation, a modest reduction according to many economists. but later today we are going to get that data dump, and it will be probably ugly because it will be retail sales, industrial production, fixed asset, urban investment, and property investment year to date. i want to break them down quickly. retail sales will be off the cliff. the estimate for april is down 6.6%. it was down 3.5% in march. property investment is a year to date figure, it will not be pretty as well, down 1.5% is the estimate after a 7% growth. so that really shows, bec

you talked to the need for liquidity out of china, and the pboc tightening reserves. there would say they still have plenty of dry powder to come out and support this economy. freya: they will have to create liquidity, but they will be creating it as a result of weak demand. and that type of liquidity which is created by demand for supply rather than demand for credit is a depreciation force for the renminbi. so when we come back to the impact of china's stimulus, it is deflationary, because it leads to further renminbi depreciation. but also the ability out the chinese authorities to actually generate a turnaround in liquidity growth in a benign way is very limited, which is to say that it is less effective than it has been historically, because the country is saturated with debt. and there is not the demand as they pushed on interest rates. they have only just started to push down interest rates. interest rates as controlled by the pboc are not the ones that flash up on the eco, they are behind the scenes. they are the interbank rates in markets as controlled by ope

pboc governor and officials called for faster loan approval. credit data for intro -- for april showed levels the worst in five years. the indonesian central bank says a move will absorb $7.5 million from the banking system. s&p rate at a record low to support recovery. philippines has tightened monetary policy. sri lanka looking for a bailout from the imf. they are in plans and talks with global creditors. they suffered their first default last week as that country struggles to stabilize the economy. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: the quad leader meeting in tokyo has wrapped up. paul allen joins us. china not exclusively mentioned in a statement. paul: the china does not -- the word china does not appear but there is an intention to set up joint monitoring of ships in the pacific. and there has been an uptick of chinese ships so it is pretty obvious why that statement is there. the statement says the quad oppo

juliette saly on the latest move from the pboc. let's go to japan and the yen with the potential to drop you levels not seen since 1990, as the policy divergence with the u.s. defense. he is known as mr. yen, japan's former finance vice minister. >> it will probably go to dollar 1.50, if it goes beyond that it would be [indiscernible] dani: let's now turn to the u.s. don't count on jerome powell to route to the rescue -- ride to the rescue of the stock market. the kansas fed president said the fomc will continue raising interest rates to cool be hottest inflation in a decade. let's go to our chief correspondent for rates, garfield, this is the theme i keep coming back to you. ultimately, does this not reached the fed's goals of tightening financial conditions? >> it would be hard to see how you would tightening financial conditions and yet have the stock market take a percent higher. -- tick 15% higher. which has usually been the expectation. powell has been more circumstance, focusing on the idea that you will hike and hike until

the pboc saying they are going to be lean on their banks to step up lending. we're focusing on what's happening in davos, the conversations we're having throughout the hour at the world economic forum. francine lacqua is standing by for us. francine: thank you so much, tom. i'm joined by the chief executive officer. thank you for joining us. i have a million and one questions on a familiar topic. energy transition, inflation. first of all, an update on russian operations. where are we? >> we are at the point in the company we have in russia is separated from us. we were in the last stages of selling this company. we are now restarting this process from scratch. so i think -- francine: selling to whom? >> we have to find a viable buyer or eventually an alternative which would be something close to our employees. there is no question about it. the companies today they consolidate and separate it in there is no direct relationship. remain an investor, that once a year goes to shareholder -- and that's its at this point. francine: when do you expect to go back to

at least that's are we expecting more from the pboc today? kathleen: medium-term lending facility rate cut, the lpr, the low dust loan prime rate is being fixed today and that is what we expect to see coming in lower. in fact, the one-year loan prime rate is seen down five basis points from the previous 15 last month. bloomberg economics think this could be more aggressive though. a 10 basis point reduction, while our investors are looking for the five-year prime loan rate to stay unchanged at 4.60. bloomberg economics is looking for a five basis point move and look, you see the economy getting worse and worse. we've seen the impact of the lockdowns on shanghai and other cities. this is the pressure on the pboc to make the move and of course, they guided the banks. the banks actually lower the loan prime rate, but the pvc sends the signal as you know and that is what we're going to be waiting for today. haidi: bloomberg's garfield reynolds and kathleen hays. in austria, we'll be going to the polls on saturday with latest opinion putting labou

apart from anything, it's the fact that you're seeing the pboc almost endorsing the yuan weakness, which tells you that they are not yet ready to draw a line in the sand and that just means other countries just have to accept it. there's not much they can do about it. unless they want to be very aggressive with interest rate hikes, which they probably do not. it's in that sense you have to fall in line until the chinese currency finds a stabilization point, which is very much in the hands of the pboc. rishaad: mark cranfield there, and live strategist for let's get to the federal reserve get a bit more on this. stock liquidity in the rising risk of instability. let's get to bloomberg economic editor kathleen hays. kathleen, what does the fed's financial stability report actually see? does it see liquidity being drained away at $3 trillion over the next three years? it's taken off the fed's balance sheet. kathleen: it they're not looking forward, they're looking at what they're seeing right now. they don't even mention that quite frankly because there's all kinds of things that are in the

, coming from the deputy or should i say face governor of the pboc, saying we will be increasing support for weaker links and targeted areas and guiding interest rates as well. they are blaming what is going on with the authorities in the covid zero policy for what has happened in terms of china's macro picture. the authorities now are trying to bring daily cases down to zero. let's bring in benjamin cowling, professor at the university of hong kong school of public health. give us a sense of this policy and the controversy it is causing right now from a health perspective. ben: china did well in the first years of the pandemic. very few severe cases and deaths, but the virus is changing, getting more transmissible. omicron is more transmissible. that means it is more and more difficult to stop. we can see that in shanghai, where the authorities have had more drastic measures and never before, and this is what will happen in the future, more and more challenging to maintain zero cases. rishaad: so, it is a policy which, of course, has limits. shanghai, taking the example hong kong also,

a lot of it will point to a further stimulus we can see from the pboc. monthly activity data dump coming through monday expecting to show the impact of the lockdowns on the economy. it could lead to a trim to the mlf. manus: thank you very much. assessing clean done in 90 seconds -- so singly done in 90 seconds. it will drag the markets. 10:00 a.m., area production. more data from the u.s., including the export price indices. that is followed by the university of michigan consumer survey. mortgages at 5.3% in the u.s., i wonder if it begins to bite. russian cpi. later, the bank of new york posts climate change implications for macro economic symposium. investors front manager for global equity income joins me with his view on the markets. and the u.k. chancellor -- speaks on brexit and the cost of living crisis. this is bloomberg. ♪ manus: this is "bloomberg daybreak: europe." stocks pointed to a higher open at this juncture. the worst since january. that as jerome powell pushed back on the speculation of more aggressive rate hikes. analysts are divide

where the pboc is encouraging banks to lend more money into the economy. the feeling is people just don't want to borrow, the appetite is not there. the state price and the runt pages carrying the message that the government is serious about making sure the economy does not fall into a hole. the survey of economists shows how much of a goal there is between the government's official target, and what is happening on the ground. tom: we're going to be watching the credit data coming out of china, to what extent they have been successful on leaning on the banks to lend more. but when it comes to that covid zero policy, these videos online of people having their homes turned upside down by the "big whites" as they call them, the covid zero still remaining restrictive, and a lack of clarity still. enda: that's right, tom. the policy differs in different parts of the country. but the broad approach is still pretty aggressive, containing covid. a lot of analysts are saying how can that be sustained given the transmissibility of omicron? that's a lot of people are

do any of the measures that xi has announced or verbally talked about or easing from the pboc, do those shift your mind? marija: there are two reasons to avoid china, particularly in the equity i have to say -- equity space. there has been a lot of words and not a lot of actions. we are waiting for that. there are a lot of question marks. the second is earnings and they are still struggling. looking at earnings season in china, or than half of the companies missed expectations. with this covid wave, companies kind of restarting growth. the pboc action, it is very welcome, but nobody is going to borrow as long as we are under covid restrictions covid is the first thing that needs to be resolved and reopened and then we can take advantage, companies can take advantage. but you cannot look at the current and expected growth. this -- it is still too early, and looking at stock connect flows, they are very timid investors are not coming back here. dani: what about investors and companies with china exposure? we were showing a graphic before this one that had the companies mentioning china in

without any stimulus from the pboc, i don't how they will achieve it. alix: what about fiscal? jamie -- damien: we know the 10-year is at 282 here we could ceos go higher. the china u.s. yield differential tracks closely we know what is going on. it would be surprised to see dollar you on at --yuon be a. guy: first time buyers, .2, but that felt more tangible than some of the other action taken. damien: it will not have any material impact, because lowering a funding rate and having people access and borrow is another. if you look at the data over the weekend, less than half of what we saw in the prior month and they didn't announce loans, medium and long-term loans to households. that is a data point they usually announce. the reason being is that it was probably really bad. the fact of the matter is, lowering the rate is one thing, lowering the floor which is what they did, but people need to borrow. it is only for first time homebuyers and i don't see a stimulus impact on that. alix: in 2009, china came to the rescue for the oval economy with fiscal. is the opposite true? da

it continues to weaken, even though the pboc has set the fix stronger for, i think, eight to nine days now. it does look like there is no support for the yuan. garfield: all of the pboc could do in one's to do is slow the pace of its decline -- wants to do is slow the pace of its decline. everything regarding the economic slowdown, about potential increases in unemployment, about the need to make policy easier, all of those feeds the idea that the yuan should decline, however yuan, they don't want the to decline to rapidly, again, because that causes turmoil and you could have an accelerated movement further down, even more than what would be justified by what i said are fairly dire fundamentals. haslinda: bloomberg's garfield reynolds, thank you for your insights. breaking news out of china. shane hi does shanghai aiming to achieve no community spread in may. what might that entail? that's get perspective on how china and asia is looking with the head of treasury research and strategy of the oecd. it does seem like china insisting on its covid zero policy? >> it does. there is nuance.

the pboc has been careful and have not been dramatic. they have the federal reserve is a super bank that has been promising more dramatic moves, and they finally did the 50, so it is interesting to see they are getting dramatic, the pboc, at least today, in a different direction. and finally in terms of having to slow down the fed has made it clear that they will front load rate hikes, 50 basis point rate hikes, and they will see what is happening. it is sort of baked into the cake. i do not have a plan to be ex-wife receipt by july 2020 3 -- x, y, z by july 2023. juliette: thank you. up-to-date on all the central-bank action. let's stay in new york and get first word news with vonnie quinn. >> thanks. president biden offering support for the bid to join nato by finland and sweden. he met with them at the white house after they applied to become members. the u.s. and other countries must broker an agreement with turkey, which opposes their bids over claims they support kurdish militias. >> this is about the future, a revived native with

guest: we think a week rmb is not in the pboc interest. china could suffer from capital flight. the stimulus program could not look effective overall. based on that, the renminbis could not be allowed to depreciate too much in the one-way direction. and the pastor could depreciate toward 6.8, then intervention could come by and look at the china growth cycle that is in the second half of the year. perhaps towards the end of the year, remedy could be around 6.6. shery: that's good to have your insight. despite the potential stabilization later in the year, so far we continue to see turbulence in the property sector. china's fourth-largest developer faces the end of a grace period. let's bring in our editor. anymore insight? reporter: investors are watching this very closely to see whether or not we get a possible default. sumac and other larger developers were hit by the second wave of stress. investors really thought it was too big to fail, would not be allowed to fail. that is what investors are looking at very closely. if we see a substantial failure, it would be an important

to one side -- boj and the pboc to one side? myles: the outlook has been denied because of the strong growth we have had. are not seeing a lot of stress. even within the high-yield market you are not seeing a lot of dispersion. if growth falters, that is where you're going to see stock pick value created. at the moment it is about an increased risk premium across all assets, but it makes sense. in the past decade it has been central banks lowering risk premium across all assets. francine: what do you do with the u.k.? it feels like a basket case of what could go wrong. if we see stagflation, we could see it in the u.k. first. myles: i think so. the u.k. is historically a high inflation economy. we have got a central bank that is pivoting concerns to growth one the labor tightness and the labor dynamics are different from the past decade. we do not have a labor supply with people coming in and out of the eu like we have had the past decade. even if real wages are down, you may find that nominal wages are rising at a faster rate a

. >> how is the pboc doing? >> well, i think the pboc has a very different problem. china is probably the only major economy that will be seeing interest rates go down because they need to continue to step on the gas pedal to make sure they can hit the 5% goal they set for this year. i think overall, they are really between a rock and a hard place right now. i think xi jinping has cornered himself somewhat. te a -- he's taken quite a dogmatic approach to the zero covid strategy, hampering the ability of the central bank on the micro side. you can listen all you want. if people can't by the cars in the homes, there is not much you can do -- buy the cars and the homes, there's not much you can do. >> when it comes to the property sector, which continues to struggle, how would that guide your call in the entirety of asian credit at this point? >> yeah, so, just stepping back, looking at where asian credit is, it is a really tough time, both due to [indiscernible] and sentiment. we are seeing growth spreads in the u.s. buying as well. china and asia certainly is not the

the pboc has been restrained and how they are approaching this economically but it speaks to the fact that authorities are coming to the rescue of the economy, not necessarily with stimulus. but they are pulling levers now. they want to underscore what is happening. shery: we continue to see anxiety play out across risk assets. bitcoin continuing to fluctuate widely. at one point it fell below the $30,000 mark. more than 50% loss when it comes to bitcoin price from the november height. this as we see it drop below the 30,000 level for the first time since july of 2021 and really the broader crypto asset sphere down to percent. ether lost more than 11% at one point. this as we continue to see the narrative of what happens with tightening monetary policy in order to combat inflation and what happens to liquidity and investors really moving away from speculative asset across global markets. solana has fallen more than 20% in the new york session. bitcoin has been fluctuating between gains and losses in the asian session but we continue to see accelerating losses not only in crypto but al

>> i doubt, as far as yields are concerned the pboc has more reason to do. the damage to the chinese economy during this quarter is pretty significant. they are looking at annual growth will be down, the pboc will do a lot more work. the yields will go down a bit further. in terms of the yuan they will be happy for it to stay relatively soft, they need to keep their exports as high as possible and get the economy back on track. today's numbers do not tells a great deal about what will happen to chinese markets in the future. >> mark, like strategist, let's bring in our chief correspondent looking at these pmi numbers. when you take a deep dive into them and look at the more outward looking figures here, they do not really make for happy reading, do they? >> it is still contraction territory for manufacturing and non-men fracturing/services sector -- nonmanufacturing/service sector. essentially, it really points to the fact that april was a terrible month. we knew that, the lockdowns in shanghai at the other restrictions elsewhere. the grinding to a halt of m

there's very little chance of the yuan appreciating when the pboc has more easing to do. shery: always good to have your insights. let's get to vonnie quinn with the first word headlines. vonnie: germany says it is ready to house eastern european nations -- ready to help eastern european nations weaned themselves off of russian oil. the chancellor made the pledge after discussing with the checkpoint minister. the covid-19 death toll climbs to almost 50 million people in two years -- 15 million people in two years, that is about one in 500 people globally. the figure is higher than the official number at includes deaths indirectly caused by pandemic disruptions. data from governments put the number at just over 6.2 million. hong kong retail sales fell 13.8% in march from a year ago, the first bank to back contraction in more than a year as virus restrictions crush consumer spending. the tumble was worst than economists fear, though not as bad as the drop in february. the city imposed strict social curbs during those months to contain a covid outbreak. global news, 24 hours

pboc talking about normalizing policy as it pertains to its happening. then you have the news on the sec and you have falling yields this morning. compared to this time yesterday, may more support. back to you. haidi: let's take a look at some stocks we are watching as we get the reopen. looking at the names of companies forced to do list, jd.com, billy billy, ne-yo. essentially coming under more pressure. shery: this is interesting because we have the golden dragon china index gaining ground, more than 2% given the broader rally we saw. this is after an 8% gain last week, but interesting that these names are under pressure given the uncertainty over the crackdown in the u.s., not to mention in china, the revelatory crackdown. -- regulatory crackdown. haidi: as you have been saying, just the headlines of negativity, the bad news continues to come through for china. watching this reopening after the break we saw from trading, what to expect on these tech stocks facing possible delisting in the u.s.. will be talking about the fed. what it could do next aft

we are positive, we do have more -- francine: speaking of china, we are seeing this report from the pboc, they're still having the zero covid policy. what do you buy in china? marko: we think that for the two-year china market is under pressure, a lot of obstacles. that makes her high call back in december and january -- we were surprised with the reaction, the focus on shanghai. we think china does emerge, the gdp target means more monetary easing, more physical easing, -- more fiscal easing. overall, we like china. francine: what do you think about europe? it is at the forefront with inflation, ukraine, russia, are we going to see a recession? marko: there's a good probability for that. [inaudible] that is certainly a risk impossibility. francine: a good possibility? marko: i would have to really guess. if there is no model or track record, each recession is different. [indiscernible] we are more than neutral on europe. nothing lasts forever. european valuations have adjusted, i think we are at the point where we start to see a resolution of the geopolitical situation in europe could r

shery: what are we seeing in terms of action coming from the pboc? we continue to watch perhaps a little bit more support coming from china, but investors seem to be continuously getting disappointed at this point. are there any opportunities you like across the country? dan: in china, we are very active with partnerships focusing on nonperforming loans. we are primarily focused on real estate in china. i think there are real opportunities there and we have a very large, trillion plus level type of real estate issue in mainland china. i don't think the approach on omicron is helping that any. i think there will be a really long-term opportunity there to really rationalize the property sector in china. haidi: and you were also involved in small-scale npl's when it comes to hard assets. what are you seeing across that sector? dan: you are seeing the confluence of inflationary pressures and the realization in the commercial real estate sector of the long-term effects of covid. you see a lot of transitional property opportunities whether it is nonperform

on the other side of the economy, the pboc skipped an opportunity to bring down the one-year lending rate. because there is enough money in the financial system that will go towards helping the real economy. there was a signal from xi jinping about the critical importance of taking risks out of the economy and making sure there are jobs in the economy. that speech from december serviced in the press today. more measures will be expected on the spending side of things in the coming weeks. francine: enda curran with a fabulous background. futures are seeing a lot of pressure where there is a repricing and they are trying to find a floor. tom: nasdaq futures are lower by 1%. later this hour we will be speaking exclusively to michael sonnenshein, the ceo of grayscale investment. stay with us. this is bloomberg. ♪ francine: welcome back to the open. we are 30 minutes into the european trading day. lockdown havoc, chinese industrial output and consumer spending sinks to the worst level since the pandemic began. germany will stop importing russian crude by year end even without a ban. gra

the pboc pledged more support vowing to keep the financial markets and the currency markets stable. some houses have turned positive on china. that has seen a rise in the afternoon session. one house -- blackrock is coming through with a bullish call. they came in modestly overweight in china in october. since then you have seen the msci index -- they are citing ongoing concerns of covid lockdowns. we did not think we would be and this position in may 2020. they are turning neutral on stocks and bonds in china. tom: blackrock adjusting their views on china. juliette saly in singapore, thank you. hungary says progress has been made in talks on imposing an embargo. this is after a visit to budapest by bonder leiden. what do we know about how close we are to a deal on this russian oil embargo? what does the timeframe look like? maria: we know they want a deal and that is the reason why she went to see viktor orban in good oppression is asking her for more time. we are talking about concessions to a package that has not been approved yet. that is the context. the other big issue is it i

i remember speaking to the pboc governor in 2019, the level there was around 6.85, the question was whether seven is a line in the sand. or is it about the pace? kamakshya: i think the yuan can we can further. if you look not just on a dollar basis, but on a basket basis, the cny is actually not that week, it is not a pretty strong level. given the weaker growth momentum and lower rates compared to rates going up everywhere else in the world, there is no mystery about the cny weakening somewhat. it is the pace, they are never comfortable with a rapid pace, and i think that will slow down relative to the last two weeks. but we expect the cny to weaken further on a basket basis. francine: speaking of baskets in terms of currencies, what do you do with japanese yen right now? kamakshya: the yen is an interesting one. a stronger version of that is true in the case of the case of the yen. you have the central bank very committed to yield curve control which is meant to have its most significant impact exactly when the rest of the world is moving on in opposite direction. this is what yield curve

. >> some of the outliers when it comes to monetary policy diversions are the pboc and the bank of japan. what do you see within those markets? it's difficult when it comes to china. there's a lot to look at in those areas. >> looking that china, it's really about the growth story. the omicron lockdown. we have just taken down our china forecast to 4.3%. it's about omicron in china right now. the valuations are getting more attractive across the board, but we could see this volatility stay with us for some time. >> valuation has been attractive especially in the energy sector. a lot of the buying in that space, could we still find some opportunity? parks i think you will still see opportunities on the commodity side. we do see oil remaining high. perhaps going all the way up to 120. we have ruled out worst-case scenarios, because a lot of this russian oil will get rerouted. non-opec producers will come online. you have to member that the energy still does have an upside. it is only 3% of the waiting in the index. small energy holdings compared to the last cycle where it was a 12% rating.

policy divergence we see being put into place by the fed against the bank of japan, the ecb, against the pboc, china. you also have growth elements that favor the dollar currently, including strong growth in the u.s. economy, labor market report, hat tip to that idea but when you move overseas, you do see weakness in china. there are concerns about the zero covid policy approach in the marketplace and concerns about the growth expectation channel favoring the dollar. guy: do you still think we are underpricing the fed? how far does the fed have to go. you have people talking about the fact that we need to deliver on the guidance laid out by chairman powell. how high do rates in the united states need to get in order to deliver the demand structure the fed needs to see? matthew: guy, that is a problem that is multivariate. if i just look at the u.s. economy, i think the fed could very easily get back to where it was in 20 18 without causing much command. morgan stanley is looking for the fed to go higher and it is appropriate at this stage. when you broaden the lens and look outside of the uni

tom: that divergence in the policy response from the pboc and fed as well. mitul: i think the most resilience is in economies that depend on domestic consumption, rather than trade. trade has been a major strength in asia. chinese trade growth has been tremendous in the last couple years. that is helpful for the likes of korea and taiwan. that is fading now. economies are opening up, those that are finally getting rid of the shackles of covid, are finally seeing some resilience. anna: china is committed to the covid zero policy. there is a line across the bloomberg from the chinese national health commission in the last few minutes, china is bowing to build more covid hospitals. i wonder if that tells us about their plans for how they manage covid, and therefore how it weighs on growth assumptions? mitul: i think china is going to ease covid restrictions quickly. there is a sense that restrictions are softening as cases decline. outside of shanghai and she len -- jilin cases have not been significant. there is a push to avoid cases as we go into the party co

shery: with the exception of the pboc. they seem to be going the complete opposite direction but -- they really want to boost the economy. >> every day, another meeting from the state council. the latest in the last 24 hours, the people's bank of china, other bank regulators talking to the 24 biggest chinese banks, urging them to speed up lending. keep the property loan growth staable. they are concerned about this. they are saying that big banks need to shoulder their responsibility. in other words, you have got to get some loans out there. there telling banks to focus on small businesses, green projects, energy, infrastructure, tech innovation type lending. of course, remember, we just saw the social lending report loan growth fell in april to its lowest in five years. they have also taken -- they've been so busy, remember, a couple weeks ago they cut the lower bound of the mortgage lending rate then. this -- this week they had the five year loan rate -- cutting it to 4.45%. it was not widely expected is certainly not ou

tell us what you are looking out for with the likes of the pboc and boj. >> it is all encapsulated in the move in dollar-yuan. we had a big jump in the exchange rate. it tells you everything you need to know. the chinese currency shows you the authorities have a very tough job. they are probably not moving quickly enough, as far as investors are concerned, in trying to stimulate their economy. investors are very concerned the covid policy has gone on for too long and growth is slowing rapidly. so they need a weaker currency to offset that. if the yuan is in that condition, most of asia, indeed, most currencies around the world will respond. it is a very significant move in dollar-yuan going above 6.70 already. that is the level people were thinking they happen towards the end of the year, not the second quarter. so we see everything brought forward. so much fun loading of interest rates, front loading currencies as well. these levels will ripple around the world. no doubt about it. dollar-yen as well, we will be looking closely at the yuan. we will see this play out in terms of bloomb

got stimulus and from the likes of xi jinping in the politburo, we had other stimulus pledges by the pboc, the central committee of finance in the state council. but in still -- until zero covert relaxes and goods could get out of the warehouses, you are going to have tough times for the economy. shery: no wonder we see tough numbers when it comes to data out of china. stephen: we got that shot in the arm on friday and markets rejoice, but the very next day we got the pmi numbers, manufacturing and services. the number was horrible, 41 point nine. we were expecting the estimate for 46. anything below 50 means pessimists are piling up quicker than the optimist. we saw inventories of finished goods rose to the highest levels in more than a decade. products are piling up at the warehouses because of the supply chain bottlenecks at ports and the trekkers in the legs. the economy is going to be facing extreme pain. one economist said in the second quarter we could see negative growth. until zero covert relaxes, and i won't relax until the numbers come down, we are going to have continued pain

the pboc. using the comeback for the oil price. down 8%. treasury yields, little changed. the dollar at the highest level since 2020. people looking at what loretta mester had to say, fed governor, john wayne's as well. that's is what is going on at the moment. -- john williams as well. that is what is going on at the moment. let's get back to that, we -- read we had half an hour ago. >> we saw it down from the rate in march, but above estimates, 7.8%. the core inflation coming year on year, also above estimates. we were looking for 1.8%, up from 1.5% in the prior month, so still a lot of costs elevated. were seeing price pressures, concern about the war in ukraine in the china lockdowns, and complicating the picture for policymakers, as we hear this morning from who, should china be abandoning covid zero policy. >> we will come to that in a little while. all about cpi, consumer price index from the u.s. later on. it is arguably one of the most important reads on inflation, the market on a knife edge. so what happens if it comes in hotter than anticipated? this is the ques

what about the debt side the pboc has pledged more support for the economy. >> we think the currency is a little bit overvalued. last year, we had a lot of out performers as one of the strongest currencies in the world. that was a function of the fact that global growth was strong and that led to a big boom in exports. now global growth is slowing and a little bit of supply chain pressure in china that is c complicating the ability to get exports out of the door. i think given that slightly weaker export growth outlook, it would make sense to have a weaker currency. from current levels with the basket, we see it too strong we would expect it to be in a down turno over the rest of the year the issue is what currency do you short-term it? the long dollar against cmh makes sense. we see that dollar and mib p we look at the dollar rally to slow down and the weakness would be reflected more against the euro and against the yen and against the other trading partners big picture? the trade weighted index should keep declining >> james, thank you for joining us james lord, growth head of fx

is the pboc on the right track to get china's economy growing at a faster rate? faster than they were expecting a few months ago? >> a lot of problems in china. they are struggling with the whole system. i think we are seeing in some of the distractions that lower rate, we may have a little bit of that and higher rates. i think that is an issue. you have a question about what is going on with russia. there is more uncertainty that is fair and important for china, unlike the united states. shery: professor of economics at stanford university. 20 more to come -- plenty more to come. this is bloomberg. ♪ shery: brazil hike rates as expected, what was not expected that they see a rate hike of a smaller size in june. we wonder if the end the tightening cycle, one of the most aggressive in the world. the key rate decision was unanimous. they see consumer cpi continuing to surprise negatively. they see further deterioration in the global outlook and they cite the global -- covid wave in china and the war in ukraine. discussing the fed's rate decision with the equity i

point and when it does, they will be -- there will be very supportive, very stimulatory policy from pboc. that is going to help, and it will be very focused as well. i think the chinese policymakers have kind of learned from frat boys going to vegas. what happens in china will stay in china this time, so it will be very focused policy this time. chinese consumers and chinese domestic-focused companies will be the ones that benefit from that. the mantra is still there is something good coming. it probably mostly affect chinese companies and domestically focused companies, but things can still get worse from here, far worse from here before they get better, so keep nibbling. if you are looking on a medium-term view, this is going to look like a really good entry opportunity into chinese small caps. next month, we might be having this discussion again. rishaad: yes, we likely will be. you said china is reenacting its historic isolationism. every time we kind of see tech seemingly come out of the woods, it gets whacked over the head again. would you buy tech with these valuations now if you

vonnie: china is six investigating a former pboc individual. he was removed from his post as head of the monetary policy on monday morning. the goldman sachs ceo says clients are preparing for slowing growth amid a drop in asset prices. he sees a 30% chance for next one to two years. he made the comments just months after his top deputies said the fed was not acting quickly enough to slow inflation. the galaxy digital founder has spoken on the terra ust meltdown, calling it a big idea that failed. he said the coins collapse ended confidence in cryptocurrencies and decentralized finance. he warned that the tougher times for cryptocurrency will continue. global news, 24 hours a day, on air, and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn, this is bloomberg. haslinda: still ahead on bloomberg markets: asia, sri lanka's impending default in $12 billion of overseas bonds. an investor from asia securities joins us for that. rishaad: hong kong lifting more restrictions despite

beijing has signaled policymakers will step up support for the economy, as evidenced by the pboc on sunday cutting mortgage rates for first-time homebuyers. china's national bureau of statistics also admitting that covid outbreaks in april had a big impact on the economy, but claims that the negative effect will be short-term, and that economic activity should start recovering gradually. still, the economic shocks from xi jinping's zero-tolerance approach to virus containment are obvious, pushing china's ambitious full-year growth target of around 5.5% further out of reach. stephen engle, bloomberg news, hong kong. taylor: our very own stephen engle. now of course talking about those supply chains ahead of the port of los angeles appears consistent despite the ongoing pandemic. here is some of what jean is telling bloomberg. gene: this is going to take some time. there's an episode just about every day that impacts us in the supply chain, whether it is on the ground, the atrocities in ukraine, impacting energy and agriculture goods flow, the lockdowns in shanghai, 8.3% inflation, producer

yesterday after the market closed, we did see the pboc, central bank of china, coming out with policy support. they are going to take steps to boost confidence and step up support for the real economy and that could explain the dollar pulling back versus the chinese currency cnh and cny brian. >> chery kang, thank you now to the trade in europe which is looking better this tuesday morning. julianna >> it is, brian. one of our twitter followers asking why are you and brian always stating bad news? we have ghave green across the . the size of the gains is not matching the size of the losses. stoxx 600 ended 3% lower yesterday. we do see some healthy buying taking place cac 40 in france up 1% german market catching a strong bid. up 1.5%. similar for the italian market the uk market and ftse 100 is up .80%. modest gains and green across the board. from the sector perspective, we see strong appetite for cyclicals. banks up 2%. autos, chemicals and industrials all performing well. on the down side, we are seeing less demand for health care which is up six basis points oil and gas taking a b

kriti: perhaps not observable by a foreign government, say the pboc, which is launching a digital yuan, but observable by the u.s. government if we are talking about a digital dollar. you have chaired congressional subcommittees on national security. if privacy is a concern in the digital dollar essentially removes the layers between the private citizen and the u.s. government, shouldn't that be something that americans are concerned about? rep. lynch: not really. the digital currency that is in our bill as we have envisioned, and we have charged treasury with the actual architectural design and let them make the choice, all of the current anti-money laundering and terrorist financing legislation that is in effect that covers cash would also apply to the digital currency. all of those know your customer requirements and suspicious transaction reports would still be generated and triggered by the use of digital currency. there would be transparency at certain levels. right now, we have a $10,000 limit that triggers a cash transaction report and that brings scrutiny. it would be the same

will take some time despite really positive comments lately from senior government officials from the pboc, from the vice premier just earlier this week. despite, of course, the upgrade from jp morgan on the sector. the results now are bad in the first quarter. this might not even be better in the current second quarter because of the shanghai lockdown. that really hammered commercial payments and martin lau, the president, warned about online advertising in the current quarter that could be way down. obviously, because people are locked down. essentially, this overhang, this regulatory overhang will take some time to work its way into their direct policy. that has been some of the criticism of comments coming from leo hua. they talk in broad brush strokes but what about specifics? what policy action will take place. martin lau says that those for -- that from the most senior level we conceive support but this will take time. obviously, there will be a time lag. essentially this was the lowest revenue growth since they listed in 2004, 0.4% growth in revenue, net income down 51% that's a pr

futures for june giving back gains but major base metals except for nickel climbed more broadly after the pboc cut interest rates in new mortgages over the weekend. a market slump. commerce bank is expecting the rise in metal prices suggesting things will improve in the chinese market space -- property space. you can read more about this on the bloomberg. shanghai is on the brink of meeting the goal of three days without community transmission of covid. this is a condition or authorities require before easing virus curbs. let's get more. i feel like we are jinxing this. if we get three days of zero transmission in the community, what can we expect? >> authorities have laid it out as a condition for them embarking on a more meaningful easing of lockdown. we have seen steps towards easing and making it easy for factories to get back online but we could potentially see a reopening across six markets and people able to move around more freely if we get a third day, which would show they are on a good trajectory when it comes to nailing covid in the community. so a positive short-term outlook for s

policymakers in beijing after we got policy assurances from xi jinping on friday, we got assurances from the pboc as monday on liquidity and the central finance committee on infrastructure spending and then we have the state council promising jobs creation. all secondary to zero covid, obviously. haidi: our chief north asia correspondent stephen engle. china's covid zero strategy has manufacturers across the globe scrambling to move out of the country but the citigroup ceo says it is not a quick process. or an easy process. she discussed the challenges with bloomberg at the conference in los angeles. >> i think the most interesting piece is what our clients are telling us. generally, you do not want to have single sources of dependency anymore. you are trying to build up resiliency. the just-in-time becomes just in case. it is hard to move away from china and we are seeing chinese imports to china -- to the u.s. has been rising. why is this? scale, efficiency and they are good at a lot of what they have done. i am a mother of teenagers. they care about their footwear. it will take 5-10 years to m

you had the pboc meeting with banks telling them to get out and lend, but the overall sensible people is that the economy as not get to bottom, and it feels like it is a long way away from the growth target of 5.5% this year. shery: whether the expectations? a few days ago i saw an article that bloomberg economics is expecting for the first time since the 1970's grow more slowly than the united states. >> there has been a feeling that maybe april woodmark the bottom for china part of its economy, but that has been changing. perhaps may will look bad given the ongoing covid zero impact. the meeting is around 4.5% now, well below the growth target. the question becomes what are authorities going to do with the growth target? it seems to be getting downplayed, it will be difficult to meet that given the obvious adherence to covid zero. it is the view of some that it is not that significant if they do miss it. the question becomes in the coming weeks, months ahead of can they navigate away from that? it is not about the growth target, it is about maintaining dividends and covid zero and m