tv Bloomberg Daybreak Australia Bloomberg July 18, 2021 6:00pm-7:00pm EDT
>> asian stocks set to start the week lower as a global equities rally stalls over concerns over inflation and the delta virus variant. >> more covid cases in the olympic village, 55 infections tied to the games as we head for the opening ceremony. let's take a check of the markets. where have we been, where are we going today? you are looking at our board showing s&p futures starting to climb higher. this was after energy material led the market lower on friday. it had the first negative weekly close in a month. small caps hit hard, the russell 2000 having its worst closing week -- closing day since october. a lot of pain there. a lot of it has to do with inflation. the university of michigan preliminary look at consumer and sentiment, big drops, inflation expectations rising. you can see the u.s. 10 year,
that yielded down to 1.29%. began the year at 1.77%. the rally continues. the big numbers we are watching today, new york crude down about 0.8%. a couple weeks ago, when saudi arabia and the uae were unable to strike this compromise deal, oil spiked over $75 a barrel. sent crude a little lower. we will be watching that closely. we are looking deeply at this question throughout the show today. haidi: this is a question of whether the opec-plus deal impacts inflation. just a recap, the group reached an agreement to inject more oil into the global markets. >> it was important to decide
this today. it gives markets clarity, it gives the market direction, it gives the market a vision of where we will be heading, and therefore, it enables people to understand that supply will come and how consciously it will come. haidi: the spring in mike mcglone. we know this is not changed longer-term structural story for oil, but how does a change things in the short term? >> i think the key thing to think about is crude oil has been an enduring bear market and it does, the upper end of the range, opec finally disagreed to bring more supply to the market. there is so much optimism for more demand. the key thing is crude oil risks are more on the downside, following copper and lumber and corn and soybeans, and crude oil
has been the outlier. the high last week was around 75. we are see 71. a good way to look at the futures of crude oil, a year from now, i disclose to $64 a barrel. i think that is the greater risk. sophie: how do you see -- kathleen: how do you see the supply and demand balance? our opinion columnist writing that he thinks this is a short-term truth, it will not -- short-term truce, it will not last. how much oil can be pumped, how much supply can there be when there is a push back against that? mike: the big problem with opec as they are probably not going to agree and this is the greatest amount of discipline ever and we are expecting more supply. they are holding supply off the markets. the opec spare capacity is the highest in its history so that is going to come back. in the u.s., the price versus
the cost of production is the highest in our database since 2014. less free-market capitalism, maybe prices goes higher -- maybe prices go higher. i think it is unlikely to get above 100. one thing that is happening with higher prices is a supply reel come on from other sources, it will come back from shale, from brazil, eventually from venezuela, iran, iraq, canada. haidi: even when it comes to the post-pandemic surge in demand, are we reaching a peak for that? you look at decline bond yields, is that an indicator for what we could see in the oil market? mike: to me, that has been the best leading indicator. look at the trend in crude oil since 2008, it has been down with bond yields. the markets turning back over to deflationary trends, on the yields are the indication.
last year when the 30 or drops, that was an indication of risk off. -- the 30 year dropped, that was an indication of risk off. if crude oil does what i think it is going to do, the mean yield drops. good oil is dependent on the stock market, it is dependent on demand. there is too much optimism for that. people don't have to go to the office as much anymore, they are not going to be driving. i think that trend before covid is going to accelerate and supply, we got prices the highest levels in three years, plenty more supply and opec just signaled, we have more to bring to the markets. sophie: at least -- kathleen: at least for now. thank you so much. you can get more on other stories need to know in today's edition of daybreak. it is also available on mobile in on the bloomberg anywhere app
and you can customize your settings so you only get the news on the industries and assets you care about. now to hong kong for a look of how oil is maybe hitting the asian trading day. sophie: we are seeing pressure for crude prices. you had brent falling more than 1%. these are implications of supply visa visa delta variant. -- vis-a-vis the delta variant. there is expected underperformance on these overstated delta anxieties instead of just are not buying the view that the economic rebound has been derailed. as vaccinations improve, they are saying they see a boom year led by developed markets. as we kick off and new week, we are seeing caution here.
check out the kiwi dollar, trading around the 70 level. the kiwi yen may be a good place to play yen weakness. haidi: let's get to tokyo now. two members of the south african soccer team and a coach have tested positive for covid at the living village. this as athletes arrive from all over the world. tokyo reported 14 hundred new infections on saturday, the most since january. let's get more from our managing editor. this is what people were concerned about with the olympics going ahead. what are we seeing? >> one key name that has come up who is not going to the vix is coco gauff -- not going to the olympics is coco gauff. she is 17 years old, 25 ranked in the world. she has contracted covid and not
going to the on the picks and that is just the sort of high-profile absentee that is going to knock things for tokyo. the olympics thrive on the idea of there being a big personality or baking or quitting -- or big king or queen. kathleen: let's turn to the u.k., there is another setback for bras johnson who made a u-turn on self-isolating. >> we do look at the idea of us taking part in the pilot scheme, which a lot of people to detect -- far more important that everybody sticks to the same rules and that is why i'm going to be self-isolating until the 26th of july. kathleen: what happened this time? the heat turned up on johnson?
james: certainly an odd one. it kicked off on saturday when his health secretary said that he had covid and he was having to isolate, and then it transpired that johnson had been in close contact with his health secretary. under normal circumstances, if you are in close contact with someone who has covid, you have to go into isolation and johnson's immediate reaction was, i don't have to, there is a way to get out of it. that prompted a backlash from politicians in his own party and in the opposition and generally from the british public. the clip showed he said, sorry, i'm actually going to isolate now. a bit of a back step for him,
especially seeing that in a few years time, he is going to be announcing this -- what has been dubbed freedom day for the u.k. or england in which a bunch of covid restrictions get removed and freedom day is not looking quite so free, especially for the pie minister. kathleen: thank you so much, james london. let's go to yvonne bana now for the first word headlines there would >> singapore has marked the highest level of coronavirus cases in three months, infections emerging from karaoke lounges and a fish market. health officials say 88 infections were reported, despite efforts at reopening with stricter measures for dining in being reinforced days after they were relaxed. in thailand, writes police shot teargas and fired water cannons at protesters in the capital.
thousands march to protest the handling of the nation's worst outbreak fueled by the delta variant. protests came despite restrictions on public gatherings of more than five people. he much of cases have exceeded 400000 and daily fatalities are breaking records. chileans had to the polls on saturday in an election to narrow a crowded field of presidential candidates. voters are deciding which of the two far-left candidates and four right-wingers will advance in the race. the election comes amid social unrest. presidential elections will take place on november 21 with a december runoff likely. maury, has won the british open, the only player to capture two different majors on the first attempt. he closed with a bogey free four under, 66 for a two shot victory to follow-up his victory at last
year's pga championship. the californian is the first player since bobby jones in 1926 to win two majors in eight or fewer starts. 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: still ahead, we discuss the impact of virus restrictions here in australia. coming up next, the cohead of investment is along with those to talk about the outlook for markets. this is bloomberg. ♪
increase oil production, higher gas prices have been adding to inflation. we are joined from new york by region atlantic's cohead of investments. in terms of a deal, i guess the question is how much lasting impact can it have and how much difference it can make in terms of inflation and that inflation expectations increases worrying investors. andy: i think what the deal shows us and what some of the rigmarole shows us is opec-plus is getting out of its honeymoon period. russia joined with the cartel to do two things, quebec shale production in the u.s. which was a competitive force, and secondly, to combat the effects of the coronavirus and a big
reduction in energy. what we are now seeing is now that they are done combating external forces and threats, they are addressing the threat of one another. that will be more challenging. everyone in opec understands that the world is moving to a lower fossil fuel future. it is produced now or leave that in the ground forever. what we are likely to see is more situations like this that will probably take the price of crude oil down a few notches. kathleen: we did see the first weekly drop in stocks in about four weeks. a lot of commentators say it has led to fears of inflation. michigan per luminary consumer -- consumer sentiment survey that hit hard. is this really driving stocks? andy: i think it is driving
dispersion among different sectors. what we have seen is an increase in tech shares as much of the rest of the market struggled, especially small caps. also the big reflation trades that are sensitive to whether prices are transitory or baked in for some time. i'm in the camp that too few people are worried about permanent inflation. i'm not of the opinion that we are set for long-term high-priced growth, but we cannot dismiss it. a lot of the recent price growth is individual. used cars. what you are seeing anecdotal evidence of increasing wages. wages only go one way without demotivating your workforce. wages are the biggest input. that could drive inflation higher. haidi: you say you are a secular
long-term bull but you want to give the sector some breathing space. looking at the nasdaq 100 and the blue tech -- blue-chip tech stocks teen -- seeing the first decline in nine weeks. if you look at small taps -- small caps, the russell 2000 having its worst week since october. what does that tell us about the secular rotation and our valuations in tech enticing enough to get back in? andy: so valuations in tech are not bad. when you look at the companies, you are paying a high multiple but paying it for fast growth in companies that are likely set for the next three to five years in terms of being able to grow their profitability. here is the risk, and i think the real risk is continuation in the rotation trade. this year, big cap tech is likely to produce a lower profit growth than the rest of the index, and particular value
segments and small-cap stocks. that is going to attract investor attention away from them, give them some breathing space in an environment that is starting to look better for the rest of the market. haidi: do we need to give breathing space when it comes to the reopen trade, particularly as you see the pettiness of vaccinations in the resurgence of delta? -- patching us of vaccinations -- patchiness of vaccines and the resurgence of delta? andy: i think what we are seeing with delta is that it is very very lynch -- it is very viru lent. when we have seen it lockdowns in the past, they have been not in response to infections, they have been in response to hospital capacity. as long as the hospitals have ample ability -- capacity, we are unlikely to see a relapse
into lockdowns. that is important because that is what is going to drive the near-term future of the economy as well as the sex -- as well as the success of the reopening trade. kathleen: what does it say for earnings season? we did see the banks ticking often there was a mixed read from investors. what are you looking for and what will it tell us about the staying power of the row they come out the economic expansion? andy: the most important thing to look for in earnings this season is look for companies' comments about price growth and price increases as well as their ability to pass that on to the end consumer. we are experiencing an environment where a lot of costs are skyrocketing, sometimes in response to logistics, sometimes it is a permanent increase. the ability to pass that onto consumers is going to dictate whether investors are going to
haidi: let's take a look at the day ahead when it comes to australia. we might see further restrictions, case numbers high in sydney. 105 new look lee transmitted cases despite lockdown measures. telstra on watch after a dental deal on pacific. the telco giant has offered $2 billion for the pacific island arm of the firm. a revised capital structure proposal aims to reflect. kathleen: let's get a check on
the latest business flash headlines. an investigation by the washington post found that an israeli company's spyware was used in hats on 37 smartphones belonging to journalists, activists, and business executives. the wives and fiance of jamal khashoggi were targeted as well as journalists from the cnn and associated press. nso denies his technology was used against jamal khashoggi. moving onto facebook, pushing back on president biden's comments that social media networks enable the spread of misinformation about covid vaccines. the social media giant's vice president of integrity posted a blog saying that seen acceptance among facebook users in the u.s. has increased. joe biden said social media networks are killing people by allowing misinformation to spread. the mnc founders found efforts to build domestic chip supply chains could push of costs.
morris chang reached out about the ability of governments to identify suspicious self conductor industries. he has -- hcfc bank posted a smaller than expected profit as a stepped bad loan buffers. india's largest private sector lender saw a net income of about $1 billion in the three months through june and is the first major lender to report results as the nation emerges from a second coronavirus wave. coming up -- haidi: coming up next, the city lockdown could leave thousands unemployed. we will be hearing more on the outlook. victoriano 2013 local cases over the past 24 hours. this as we tour yet remaining
(announcer) back pain hurts, and it's frustrating. you can spend thousands on drugs, doctors, devices, and mattresses, and still not get relief. now there's aerotrainer by golo, the ergonomically correct exercise breakthrough that cradles your body so you can stretch and strengthen your core, relieve back pain, and tone your entire body. since i've been using the aerotrainer, my back pain is gone. when you're stretching your lower back on there, there is no better feeling. (announcer) do pelvic tilts for perfect abs and to strengthen your back. do planks for maximum core and total body conditioning. (woman) aerotrainer makes me want to work out. look at me, it works 100%. (announcer) think it'll break on you? think again! even a jeep can't burst it.
>> days are set for next year, so we are looking for -- we are sure to make good progress. >> i strongly believe it is quite significant to hold the olympic and paralympic games. it will become a light of hope for everyone in the world. >> we are undertaking, are satisfactory and will be safe and secure. >> i outlined controls to ensure
a safe and secure environment for the tokyo games. i received strong support from all g7 leaders. we need to step up virus prevention measures. i will be issuing a state of emergency in tokyo. >> there were many factors such as a strain on medical services as well as winning the public's understanding for holding the games. that's how we arrived at the difficult decision to partially ban spectators at the games. >> we are preparing, whatever the circumstances are. kathleen: key officials speaking in the lead up to the tokyo olympics that begin later this week. despite the prime minister's pledge for a safe and secure olympics, challenges remain. tennis player coco gauff has been ruled out after testing positive for covid, and three members of a south african
soccer team and coach tested positive. sophie jackson joins us. what impact does this have on the olympics as a whole? is it, take it in stride, we are in a pandemic and move on, or is there a potential figure problem? -- bigger problem? sophie: it is certainly, the organizers would say, to be taken in stride. we just got in the first positive cases from inside the village. there had already been positive cases of support staff. this with a stringent testing regime, everyone gets a test at the airport and then further testing in the mini quarantine you have. it is a good sign that testing is picking up on some cases. organizers might not want to say it out loud, but we would expect
the least positive cases to slip through the net. athletes that cannot participate at all have tested positive in their home countries like coco gauff. haidi: what is the sentiment when it comes to the games come a given they are going ahead? sophie: lukewarm at best. it is too late to turn around and we are counting down the days to the opening ceremony friday local time. a good proxy on how people are feeling about the olympics and the virus is to look at approval ratings for the prime minister. over the weekend, we had polls showing his approval rating is continuing to tank, even after tokyo entered another state of emergency. this is the fourth state of emergency, not a hard lockdown, designed to get people off the streets to reduce the spread
from the olympics and summer holidays. the prime minister has a general election coming up, and he has to fight the leadership of his own party. previous states of emergency saw an uptick in his cabinet approval ratings because people are happy he is counteracting the virus. this one has not made much of a splash and public opinion. kathleen: as you mentioned, it seems like almost from the day he took office, his approval ratings have been struggling to stay steady and have declined for a number of reasons. are we looking at a possible change of government in japan? sophie: he did inherit a difficult situation with the virus and postponed olympics, taking power in september last year after his long-running predecessor had to bow out for health reasons. a change of government in japan and the elections in october, it seems unlikely, his party has
held power for most of the postwar period. we have an indication in the tokyo metropolitan assembly election, but some of the swing voters want to send a message. maybe they are keen to vote for the lbt in the upcoming elections but they want him to smarten up about the virus. possibly people will just stay away from the polls if they are dissolutions, which we have seen in japan many times. . haidi: sophie jackman there. lockdown measures across sydney have been tightened as they struggle to contain the variant spread. all construction site work is banned and hotspots are subject to movement restrictions. in melbourne, lockdown continues with hopes fading it will end on tuesday. we saw victoria reporting 13 new
local cases in the past 24 hours. let's get a sense of the economic impact. we are joined by our guest. previously there had been a brushing off of the impact of long downs, and the recovery has been very robust. what do you see, particulate as we get construction and the fall on effect from construction activity being shut down? gareth: good morning. i think the risk of the lockdown impacting the economy is very big, given the lockdown is going to go on a lot longer than the previous lockdown. i think the economy can weather pretty well, this is a much longer lockdown. another two weeks for the lockdown. based on where the cases are the moment, i think it will be longer than that. and that will have a large impact, on gdp and also
employment, and the momentum we had. i think the extent to which we bounce out of this will be conditional on how much support they put in through the period. haidi: does that change the outlook for the rba? when you look at the 2024 bond, it suggested the markets are pricing out quicker than expected tightening we had previously been looking at. will this be lower for longer? gareth: i think on the qe side, the reserve bank two weeks ago announcing they are capable for purchases in september of this year, they are holding up or meeting this week. they would not announce that taper. there is a good chance the reserve bank at the august meeting says they will no longer be tapering based on new information, and they keep
extending the balance sheet the way they have been. it is a little too early to say what impact it will have. we just don't know how long the lockdown is going to go for. it is worth saying it is not the entire country. i think if it turns out to be the case that we get on top of the covid situation well enough and the lockdown does not go on for too long and the economy snaps back, the inflation pressures out there, there is still a good chance of emerging. there is so much uncertainty at the moment and it is hard to make a call to my given we don't know how long we will be on lockdown for. i think markets will be focused on what additional support the government provides through this period. we heard over the weekend that the entire construction sector has been told to stay home.
that will require more support, given how significant that sector is to the national economy. haidi: the rba in conjunction with the rbnz going gangbusters give some despite -- respite to the aussie dollar? gareth: that is the case and also the markets are looking at the bigger picture. it is kind of putting the spotlight on how important it is to roll a vaccine out. i think by the end of this year, with the country, the majority of the people vaccinated and the economy reopening, there is a lot of stimulus and the economy and i think it will do very well next year. it is probably worth highlighting that last week on thursday we got the unemployment figures for june, they flew under the radar, but it shows
the unemployment rate in june in australia was a 4.9%, a decade low. well it lower than the reserve banking sectors. had it not been for going into this covid lockdown, all of the attention would've been on those dom figures. -- jobless figures. but it highlights how quickly the economy can improve provided gives clear from covid. kathleen: what does this mean for scott morrison? the treasurer of australia saying he expects a 1% hit to gdp in the second and third quarters. what is the implication on the government side, the spending side? gareth: they will probably the revising that figure quite a bit, given the lockdown. it is hard to put a figure out there, what gdp will be, if you don't know how long the lockdown will go on for. i think one of the highlights is
the economy is going to need ongoing support from the government. in a lot of ways, they can't do anything to cushion the gdp, that is just a national -- natural consequence of telling his gnosis to stay-at-home. -- telling businesses to stay-at-home. but what they can do is make sure when restrictions are eased, economic activity resumes quickly. so that things rebound quickly. we were successfully doing that last her, which is why we got such a strong recovery in the economy. i think the government will be cognizant about wanting to provide as much support as they can so we snapped back quickly. you can't be accused of doing too much in the current circumstances. better to do more than you need and not enough so you get a strong recovery. kathleen: gareth, thank you for
>> time for morning calls ahead of the asia trading day. after opec's very public renewal of vows, commodity strategist expect oil prices will stay elevated in the current range, noting that last week's ugly stretch of time spread provides a telling sign. flipping over the board at j.p. morgan, the team arguing orchids are consolidating into midcycle conditions, which makes for better risk reward in the region now that it has all year. they are testing a 10% upside for the msci asia index from here, should the benchmark reach the top end of the range. with momentum seeing -- momentum as value. energy stocks are looking attractive and asia. haidi: sophie kamaruddin continuing to watch the
inflation outlook on account of oil. let's get the first word news. >> opec and allies have struck a deal to inject more oil into recovering economies. saudi arabia met halfway to increase output, overcoming an internal split that threaten the cartels control of the oil market. it means monthly supply hikes of 400,000 barrels per day starting next week -- next month. an about-face in the u.k., prime minister boris johnson has agreed to self-isolate until july 26 after being exposed to covid-19. both he and a chancellor had initially said they would not enter quarantine after coming into contact with the u.k.'s health secretary. the change came amid a backlash one day before the u.k. is due to lift many virus curves as daily cases hit a six month high. mexico says it wants to restart
diplomatic and commercial ties with north korea. the country's foreign minister made the statement on the sidelines of a un security council meeting. mexico cut ties with north korea under the previous administration, in line with international laws sanctioning pyongyang. and military exercises in the waters off of taiwan after a second u.s. military aircraft landed in taiwan in the last two months. the paper said the drills should be seen as a warning and deterrent to the u.s. and taiwan. it is reported more complex exercises will be staged in the future. 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 yvonne man. this is bloomberg. kathleen: president biden and global leaders across the pacific held a virtual meeting to discuss how the world can best emerge from the pandemic
even as nations grapple with a deadly resurgence of virus cases. one leader was notably absent. president xi jinping. joining us is our editor. xi sent a prerecorded message. tell us about it. tony: there was some expectation that there would be a face-off between biden and xi at this meeting. that did not happen, that it gave biden his chance to lay out the u.s. position. in terms that sound familiar to china, even though xi was not at the meeting. there has been so much on the table in fact that could have discussed, some sort of moving of relations between the countries, everything from human
rights to military conflict over taiwan and chinese fracking. this was not the significant occasion in might have been. haidi: the u.s.-china relationship and global coordination of the virus themes that loomed large. what do you think the president wanted to drive home as his main message? tony: biden's stance was very much the u.s. message that has been consistent on china, that's the indo pacific region must remain free, which has all kinds of connotations for china. also, to maintain a values-based global system, which again, is code for freedom, including free
trade. he also used it to make a pitch for his build back better global initiative, you were member that came up at the g7. it is kind of a counter to the chinese belt and wrote -- road. haidi: we will have a lot more from that eating, we will be speaking to the executive director for the apec secretary later on daybreak: asia. meantime, the white house giving inflationary pressures as temporary, and supply chances -- crunches limiting growth. >> at the longer-term inflation expectations, i think the near bump is when you expect given the price pops in recent reports. we have tried to stress how much
those increases have been driven by pandemic affected sectors of the .9% increase in the cpi. 7/10 of 1% of that pop would have been .2% when you take out the affected sectors. that does not mean it is not a challenge for people dealing with autos and airfares and restaurants, but those are the kind of supply chain bottlenecks we have been expecting a long time. that's also the view of every forecaster, the fed, the cbo, and the folks here. i think what is critical about the report this morning is longer-term expectations remain solidly anchored below 3%. >> that is true and it has come down, it is below the highs we have seen recently, the long-term expectations. however, there is nervousness. how do you argue, even the white house, the former treasury
secretary larry summers visited it this week, the idea that this is transitory, and that extra stimulus is important to get over the other hump to prevent inflation from taking hold? >> we have a lot of people who are going to be chatting about the stuff from the outside. down here, we are keeping our heads down and hang attention to the policies the president has set out to pursue, and the ongoing boom this president's actions, particularly in the rescue plan, have triggered. let's not lose a site that we have a 3 million jobs since this president took office, unappointed claims down by 55%. we have the levels down to pre-pandemic rates. we have a forecast for gdp this year north of 7%, the highest since the mid-1980's, so-called morning in america. we are focused on the economic boom. when it comes to inflation, we
are far from sitting on our hands. the near-term response is in agreement with the federal reserve, but we are trying to do a lot on the supply side when it comes to supports, housing, chips, longer-term infrastructure investments in the bipartisan plan and build back better plan to boost the supply on productivity and labor supply. that feeds directly into dampening pressures in the medium-term on inflation. housing, we have an elaborate set of housing policies designed to increase housing supply and experts have looked at them and said if we can legislate them, they will make a big difference in the medium and longer term. >> how do you respond to critics, especially given the debate regarding fiscal spending is front and center in washington? what do you say to the critics who say more fiscal spending will further inflate prices? >> i am going to try to put before them some very simple and
coherent and widely agreed-upon economic analysis. first, if you listen to the federal reserve, the congressional budget office, virtually every forecast i have seen, the inflation pressures we are seeing is related to an economy that is turning back on with a robust a covering, juiced in no small part by actions the president has taken to get shots in arms and checks and pockets, including child tax credit, for the first time going out as we speak. that is the near-term. these other policies are longer-term policies that make an investment is a consumption framework. we are not talking about stimulus checks or enhanced unemployment benefits. we are talking about investments that boost the economy's productive site and supply-side. whether it is ridges, roads, airports, water pipes, childcare and providing a frictionless path for caretakers to get into
the labor market. those put a dampening pressure on anything from the price aside. what is important is to help people understand that when you're talking about build back better and the ever structure framework, you are talking about measures that put downward pressure on crises by improving and expanding the economy and supply-side. kathleen: jared bernstein, a member of the white house counsel of economic advisors. be sure to turn into bloomberg radio to hear more from the days big newsmakers and get in-depth analysis from the daybreak team. now broadcasting live from our studio in hong kong. you can listen via the app, radio plus, or bloombergradio. com. plenty more ahead. stay with us. ♪
haidi: let's get you a check of the markets at the start of trading this monday. asian equities in a slump after u.s. stocks falling. the s&p 500 wavering for the first week after four weeks of gains. new zealand off about 1/10 of 1%. sydney futures looking at a downside just under 4/10 of 1%. also softness when it comes to hong kong and tokyo. in the next hour, we will look