tv Bloomberg Markets Asia Bloomberg August 4, 2021 10:00pm-11:00pm EDT
aim with a possible clue to further crackdown on targets. >> looking for a clue as to what xi jinping's thinking is. yvonne: it's hard to comb through all his speeches to find out what the next regulatory crackdown is going to be. but it shows what links traders are going through to see what is next in his regime. rishaad: the u.s. with the move toward growth, the nasdaq, let's have a look at the markets. let's look at some of the price action as well. the hang seng up, a bit of relief given the week we've had thus far. it has been a roller coaster ride to put it mildly.
looking at the yeah and -- theyen, the lowest we've seen since may and the thai baht pretty much unchanged as we had that rate decision change and looking toward what goes on with the bank of england later. the fed firmly in focus as we move toward the nonfarm payrolls on friday. yvonne: when it comes to u.s. assets and what we've been tracking, we didn't see a lot of movement in the bond market because you could argue that it's in line with what the dot plots were showing. u.s. futures are looking up about .20%. here is more from the vice chair
himself. >> if the outlook for inflation and outlook for employment i summarized earlier turn out to be the actual outcomes for inflation and unemployment, realized over the forecast to rise and, then i do believe that these three necessary conditions for raising the target range for the funds rate will have been met by year end 2022. rishaad: that report did spook a lot of people on the u.s. economy. looking forward to that nonfarm payrolls report as well. it's a signal sometimes, otherwise is not really a good guide for what's going to happen with nonfarm payroll.
were looking at 950,000 jobs being created by the u.s. economy. yvonne: and the brazil central bank this morning signaling potentially there could be more. it just goes to show the rising inflationary pressures we are seeing globally right now forcing a lot of central banks to act. then you have the whole delta variant which is that question mark of whether it will stop the fed from hiking in 2023. bullard had a different view when it comes to inflation. here is what he had to say. >> i would expect between 2.5 and 3% in 2022. it is going to come down but not as fast as many people have in mind. yvonne: as we mentioned it's really about state media we are watching out of china here today. it's a major reaction every time
we see a headline about some form of society. and e-cigarettes, you cannot sell to minors. and then it's about growth hormone injections. i did not know people cared so much that they had to do this. of course it's a concern to beijing and how they say it has dangerous side effects. we will talk more about that. regulatory risk still very much front and center the on just the fed. rishaad: rejoined by aaron brown , pimco has something like $2 trillion in assets for global management. what is the mood like as?
>> optimistic. we are coming out of the pandemic but we are still early to mid cycle in terms of coming out of the recession that preceded us in 2020. i think the growth outlook going forward still looks robust. for risk assets we still think risk assets will do well over the next 6-12 months but we do think risk assets in developed markets will continue to outperform, at least for the foreseeable future as vaccine still remain a challenge across emerging markets. yvonne: people watch closely these vaccination rates. that means when it comes to the whole debate that potentially dm is a safer place to be? >> i think right now it is. i think you will continue to see rose numbers look quite robust. they both have monetary support, which is fading, but still out
there, as well as fiscal support across developed markets. emerging markets continue to suffer from the challenges of slow distribution of the vaccine. you're now starting to see in response to higher inflation -- inflation particularly from food and energy prices, central bank starting to tighten rates which continues to pose an additional challenge as liquidity conditions tighten at a time when growth is challenged across emerging markets. rishaad: what we have is an employment report out friday that is perhaps a bit of a miss. is the fed more concern about employment right now, rather than inflation, which some say is a bit of a red herring? erin: i think that employment getting back to full capacity
will be an important marker for the fed to start to taper. i don't think the fed feels like we are at that level yet. we will reach full employment as we get closer to december, and at that point i think the fed will start to taper or at least announce the tapering of rates which will begin in january. inflation obviously is a risk out there, but i think the fed right now, at the base case thinks it is a manageable -- manageable risk and we will likely see inflation peak in the coming quarter and then start to subside as we move through late 2021 and into 2022. certainly that is a risk out there that could cause the fed to tighten a little bit sooner. yvonne: if we get a decent u.s. jobs report on friday, is that a potential inflection point for where yields are going to go? the whole low yield trend, is that likely to reverse? erin: we think that at current
levels, yields are probably too low. i wouldn't read too much into one payroll trend. chair powell's dated we are still a ways away from full employment. so we would take more than one good payrolls report in order -- in order to really move the fed. that said, i do think that as we start to see stronger data come out over the next couple of months and the data remains strong, i do think yields at these levels seem to rich and will likely see a little bit of a selloff from here closer to the 1.5% which is still about 30 basis points higher from current yield levels. rishaad: there has been a robust recovery and has perhaps been reflected in good news and bad news in some regards. we look at the scale market lies and what's going to go on the physical side with this
infrastructure bill wraps coming to fruition at some point, how much does it change the game in terms of asset selection? erin: i think it does change the game in terms of asset selection. we have been under invested in the u.s. for over a decade. this has been one of the challenges, which has been government led infrastructure. we know that the government led infrastructure can soon get private sector investment as well in our roadways, in our waterways. so i think you will likely see a mini infrastructure boom as we come into 2022 and beyond. remember this is money spent over a long stretch of time. so it is not going to hit all at once. i wouldn't expect to see a big pickup in infrastructure stocks starting to outperform meaningfully, but i do think it provides a boost as we head into 2022 and beyond.
engineering and construction stocks, semiconductor stocks, stocks leverage to infrastructure will continue to do well and most importantly, it will extend the cycle further. yvonne: aaron brown, asset manager at pimco, thanks for joining us. vonnie quinn is in new york. >> the director general of the world health station once a moratorium on shots to let other countries catch up. the who wants to achieve its goal of vaccinating 10% of the population in all countries. elizabeth warren -- criticized chairman jay powell, the
democrat is a member of the banking committee and a key voice ahead of president biden's decision on who should lead the fed when powell's term ends in february. >> my concern is that over and over, he has weakened regulations here, he has led the fed to ease up there, he's led the fed to help protect the biggest financial institutions. i'm very concerned about that. >> loggers for the huawei cfo are trying to convince a canadian judge that the u.s. extradition request is deeply flawed and she should be released. the vancouver hearing is the final stage of the battle against extradition more than 2.5 years after her arrest. it underscored washington's efforts to contain huawei, which
it deemed a national security threat. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. rishaad: more to come on bloomberg markets. robinhood bulls are making out like bandits. a while to date stocks surge. we'll look at what's behind the massive turnaround. yvonne: up next we look ahead to smic earnings for china's ship bellwether. this is bloomber♪
e-cigarettes and growth hormone injection companies today on the back of the headlines. it goes to show you have to look deep into our times to see what comes next, what clues you can find. today it's really about children's health. rishaad: it's about the education side of things. my lots of sports equipment, hints a run-up in the terms -- in terms of the run-up on sports gear. what about positive trends? they want to have a sovereign kind of semiconductor industry. yvonne: we've seen investors look into that whether it's local chipmakers.
let's talk through what we are expecting right now. charles is our analyst. this has been of play for many investors out there that have been immune from that. charles: they want to achieve the highest self-sufficiency in the chip supply. i think it will be a key role to play in the future. rishaad: it may not be that prevalent but there are other issues surrounding this company. what have you found out? charles: i can think of two
things. first is the talent shortage. there is increased competition in the industry. that means they would like to recruit more engineers but the supplies limited. rishaad: how do they stack up? [indiscernible] charles: you need the right people. smic needs the people. others are also hiring. outside china, taiwan and umc
are also hiring. the second is, china wants to move to advanced technology. you have to prove you are making high-quality. yvonne: let's talk about earnings. you are still thinking this could be a beat from the consensus. why? charles: the first quarter, look at earnings. [indiscernible] it will either be 20% or 40%. looking at the gross margin, it's lagging behind its peers.
34% if i remember correctly. smic is guiding at about a 27% gross margin for this quarter. i think they are quite conservative on this number. they still have potential to raise their pricing because of the chip shortage. and they can move some chips to higher, more advanced stocks with the higher price. rishaad: coming up, reiki 10 -- reiki 10 rakuten. yvonne: this is bloomberg. ♪
rishaad: rakuten has agreed to export to the german wireless carrier. yvonne: we spoke to the german president and ceo. >> we have been developing this platform and recently acquired a company. in terms of software development it will be very limited. we just made a clear policy that we don't have any secrets. with a slight margin on top of it, the key is, no more secrets.
it is limited and the deal is very exciting. yvonne: we are seeing your structuring your business around providing the technology. give us a sense of the demand out there. who are your targeting -- who are you targeting? >> because of the tension between china and the u.s., the demand for a new solution for 5g mobile network is significant. the existing approach is too expensive for most of the carriers. obviously for -- given the large
global companies looking for global solutions, i think we have a couple of years of a head start advantage. the rest of the market will be near 150 billion dollars in two or three years. >> you talk about the global chip shortage and how that pushback the rollout of the rakuten network. i believe you said it would be around three months. that sounds optimistic to me. is it because you have -- you have acquired the chip supplies or do you believe the shortage will be relieved? >> we are not talking about
millions, we are talking about tens of thousands. it is a challenging environment but our partners are very cooperative and they are our partners. we consider what we are building and what we are doing as the future. so they are very cooperative. >> you have been exploring opportunities in the chinese market. but we continue to see a series of crackdowns in different sectors of that economy. are the opportunities they are still worth the risk? >> we do not have significant business in china anymore. i think our exposure to chinese business or china is down at
this point. >> we know there is an investment from tencent that's being scrutinized by the japanese and u.s. government. give us an update on that. >> it is a minor investment. they gave up voting shares, and we have a cap on the amount of investment they can make. so in a since it is a peer financial investment from venture capital. rishaad: the rakuten chairman there. people aren't going to the office, so they are not using printers. so the demand has fallen. sony beat estimates, moving up
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>> it is just about 10:29 a.m. in hong kong. we are up by about 0.2%. that is the benchmark at the moment. let's have a look at what is going to happen in southeast asia today. >> we are watching the philippine central bank. a rrr cut is on the table. indonesia reporting second-quarter gdp numbers. singapore reported 92 new covid
cases, parking at second day -- second wave of infections -- marking its second day of infections staying below 100. >> looking at vietnam. jakarta ahead of the gdp numbers. malaysia is an interesting one. we have a bit of a political stalemate with a lot of pressure on the prime minister to resign. standing firm for the time being. pretty much unchanged for the time being. >> let's focus on indonesia now. covid related deaths have topped 100,000. it is the second asian country to breach that threshold and it is shifting away from its goal of reaching herd immunity. our senior medical reporter is here. tell us what is going wrong in the situation in indonesia right now. >> this is what we have been seeing across all of asia and southeast asia. they have done such a good job up until this point of keeping
the virus under control that once that delta variant has gotten behind the defenses, it is just a vulnerable population. only 8% are vaccinated and once that infection gets into one person, they start spreading it to between six and eight people for each person. >> what does giving up herd immunity mean? >> herd immunity is the idea of what we see with measles. everybody gets vaccinated and the virus basically goes away. as opposed to what we see with influenza, where it comes back every year and you need to get a shot. we had been hoping we would get to herd immunity when it comes to covid-19. indonesia is saying we are not going to get there. if we were going to get there, we would have to vaccinate more than 100 cent of our population. with the breakthrough infections we are seeing with delta, even that would not get the virus to go away. rishaad: [indiscernible]
that is asking along a piece of string is, essentially. in a country like israel, people have been told now to stay at home because of this variant. >> that is the situation we are dealing with. when is the virus going to go away entirely in indonesia? that is when it goes away entirely in the world. no one knows the answer to that. as far as this catastrophic outbreak they are seeing, there is a rhyme and reason to this. we see this exponential growth, then it will fall off exponentially, as well. it is generally lasting about a month in each of these cases. they are probably in it for a few more weeks. >> let's sticks to southeast asia and talk about singapore's banks increasing dividend payouts driven by lower provisions. all posted profits that beat analyst estimates. rishaad: [indiscernible]
the big story, i suppose, is the dividend is back and the dividend is stronger. >> yes, absolutely. [indiscernible] everybody delivered on it. [indiscernible] all the banks delivered in line slightly better than expectations. >> is it too early to celebrate, harsh? singapore continues to see a rise in covid cases. what is the outlook for the next 12 months?
>> [indiscernible] i fully understand the worries on the rising cases. if we look at all the banks, in singapore, indonesia, thailand, there are issues of a lot of loans to be restructured -- [indiscernible] they seem to be pretty decent and good enough to manage despite a recent spike in the cases. i agree that it is too early to pop the champagne, but it is not a dire situation. what will happen in the next six months, and we are starting to see that in many markets, is an accelerated plan and as that happens, the what seems like a pretty nasty rash of infections,
we should see a bit of growth coming back. [indiscernible] i think there is hope. i would want to be more optimistic. rishaad: looking at return on equity, looking at capital one tier ratios, and ultimately bad loan provisions and the like, which of these three is the strongest? >> at this point in time, i think loan growth is the most important thing to look for. even the provision numbers are very decent across the board. we have seen that and commentary in singapore. i would say loan growth, these are things that would be good at this point in time.
margin is something where we should have some degree of weakness. rishaad: looking at what is going on with citi as it retreats from consumer banking in many parts, which of these would be the best fit for some of those assets here, harsh? >> it is it pretty broad question. a lot of assets are available in the market at this point in time from local players and international players. [indiscernible] i would say every bank is looking at basically saying, we have income capability. how do i add to some type of physical presence to make it better? on the other hand -- [indiscernible]
how do i broaden out? i could make a case for multiple banks here, at the regional banks or domestic champions. as for some of the challengers drying to figure out how to fit that asset. it is not a one on one mapping. it is a many to many kind of mapping. ultimately, it is going to be a matter of who pays the best price. there are going to be a lot of actions in the next six months. >> we just heard from the vice chair of the federal reserve, richard clarida, talking about their potential he could do a 2021 announcement on tapering, a 2023 left off. how will that affect some of the banks in your region? >> that is probably the most important bit of angst in the
next 12 months. not only taper, but also the lift off. if i think one layer behind that, why will any of those rate decisions be taken? it is because growth is good. would we do start seeing in the case of better growth, higher rates, in most parts of the world, growth comes back in a more meaningful manner. [indiscernible] probably the other more important one is the quality. growth washes away all the -- [indiscernible] i would say that is pretty positive. [indiscernible] we are very confident that singapore banks become one of the -- [indiscernible]
rishaad: very quickly, who is best in the digital space? who is making the most of the fintech revolution? >> every country, every market has one or two lead players. i would say very comfortably -- we go market by market. on the flipside, we would have what i would call a tech leader in every country. on the other side of the divide, you have some large challengers that have gained skill to a level. they will become -- [indiscernible] my sense is that in the next three to four years, we will have a decade of buying and fintech dominating the banking space. rishaad: harsh, thank you.
[indiscernible] the rest of the first word news from new york. >> here is the reason, the biden administration has approved its first arm sailed to taiwan. the proposed deal must go through a congressional review process and then full negotiations between taiwan and the contractor before a contract is signed. the proposal is sure to be denounced by china, which sees taiwan as part of its territory, and is likely to inflame tensions between washington and beijing. here is the thing. sources tell bloomberg a boeing 737 max jet has left seattle and decided to china on a test flight for regulators. that moves it a step closer toward ending the aircraft's two-year grounding there.
175 nations have cleared the jet to resume after going redesigned -- above wing read is -- boeing redesigned. the fate of the max is seen as a gauge of broader u.s.-china relations. bloomberg has learned the white house will soon announce new limits on car emissions and new electric vehicle sales targets. the mandate marks president joe biden's first major attempts to regulate emissions. the standards were drafted by the epa. a compromise was reached two years ago between california regulators and automakers. the u.k., anyone 16 and older will not be able to be vaccinated for covid-19 -- will now be able to be vaccinated for covid-19. the panel says 16 and 17-year-olds should get the pfizer shot. officials are not recommending vaccinating anyone under 16,
unless they have underlying health conditions. new york governor andrew cuomo is facing mounting pressure to resign over allegations of sexual misconduct, including from within his own party. county prosecutors indicate they may pursue criminal charges. a poll conducted among registered new york voters shows 63% want him to step down, 59% want him to be impeached if he does not. the governor says he has done nothing wrong. global news 24 hours per day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. >> coming up, robinhood jumps for a second session is the retail frenzy continues. details just ahead. this is bloomberg. ♪
the retail arm, the latest meme stock or may be the last stand. >> it is a head scratcher for some analysts as to what is driving this, but at one point in the latest session, the stock was up some 82%. it managed to close with a 50% gain, way above where was trading on its debut last week. it closed above $70 a share. a wave of retail investors clearly driving this, following on the heels of big institutional players. after hours, we did see the stock pull back a bit and that has a lot to do in part with the options trading driving a lot of the volume we saw. it appears from the data that we have that the bulk of the options are bearish. there is a bet the stock goes lower from here. the big difference from the debut, last week we had the
founders and their families ring the opening bell, smiles all around in what was anticipated to be a big pop at the open that did not happen. an unusual strategy was pursued in which robinhood had allocated 35% of their ipo shares for the retail investors. investors did not appear to show up, at least until now. volume surged tenfold on the tuesday session as opposed to monday. in the latest session, the wednesday u.s. session, we saw as many as 100 million shares change hand in the first couple of hours. the pop was delayed by at least a week. yvonne: pretty delayed. what are the analysts saying about the stock longer-term now? su: longer-term, they do believe the stock likely goes lower. there are questions about what they call the platform shaky fundamentals. a big part of the revenue for
robinhood comes not from the fees, it is free trading, but from the order flow payments, which are under scrutiny by the regulators, the crypto trading bumps. some analysts point out it is unlikely to repeat in the third. a lot of questions about how the price is sustained. also pointing out that certain rebound, much like the surgeon meme stocks, which were a big focus earlier this year, if you look at the chat rooms, they were a fire with mentions of robinhood, some cheering it in, others showing aggravation. robinhood restricted trading so many could not sell their shares and gamestop started to fall earlier this year. one analyst said we have seen this movie, the pump and dump, and it does not end well. retail buyers coming late to the party in terms of buying robinhood shares. a lot of the ipo's are earlier in the year that grabbed a lot of attention, like dd, like
coinbase, really had huge volume and robinhood has really paled in comparison, but for the volume surge we saw in this latest session, as far as what is behind it, that is a question that is probably going to play out in the days and weeks to follow. a lot of attention now on this new, hot stuff. yvonne: is it herd mentality? are people trading on emotions? let's do a quick check of the latest headlines. singapore's biggest bank is increasing its intra-dividend after reporting second quarter profits that beat estimates. net income rose 37%. the rivals have also lifted payments to shareholders following better-than-expected results. hitachi is an exclusive --
[indiscernible] as it seeks to expand in europe. they say it would add 9000 staff in key digital technologies, as well as access to key markets. the sale is expected to allow the french firm to focus on aerospace, defense, and security. unilever is said to have already started looking for potential suitors for a large part of its tea business. first-round bids are expected in september. tea units in india and indonesia are excluded. last month, and ipo was considered or a partnership with its tea business. hsbc is boosting pay for junior bankers in the u.s., becoming the latest lender to increase compensation to retain staff. first-year analysts will receive $100,000 a year, up from $85,000 they are currently paid. you comes after hsbc raised
salaries for analyst in may. cooper reported a wider than expected loss in the second quarter after spending heavily to ease driver shortages. they saw an adjusted loss, but say they will see narrow losses in the third quarter. and an adjusted profit in the fourth. hoover's investors -- uber -- [indiscernible] rishaad: if you are a bloomberg subscriber, catch up with all our interviews by using the interactive function on tv . join the conversation. the interview we had just a short while ago. if you want to watch it again, tv is your destination. this is bloomberg. ♪
rishaad: back with bloomberg markets. having a look at what is coming up in the next hour of the program. an exclusive interview with one of india's oldest companies. it is a large, fast-moving manufacturer. asking about the prospects of recovery. india had a terrible time of it during the second virus wave.
talk to him about business expansion plans. inorganic, organic. being at the helm of that company. key economic data, as well. second-quarter gdp numbers for indonesia. horrible time of it there. 6.7% growth. july, get a read on the consumer price index. thailand saw the bank of thailand have a dovish hold on interest rates. that is one thing to watch out for. no doubt, they will be looking at the cpi level, as well. it is a bid in europe, as well. we have new forecasts. probably going to be adopting negative rates, perhaps as an official tool. looking later with andrew bailey
we have been seeing sterling. sterling a little bit ahead of this meeting taking place. [indiscernible] that two day meeting. reporting later on on what they are going to be doing. nothing specked it in terms of changes. also with regards to all of this, we have the u.k. government bond yields steady. looking at all of that. what have we got with trade? yvonne: you start to see the central bank diversions you are talking about. you have the hawks and the doves. the tightening cycle seems to be coming through to an end. what the traders are pricing and right now is that they are expecting the taper announcement could be coming pretty soon and rate hikes could be coming as early as may of 2022.
they are pricing in at 15 basis points hike here. we have been talking about bloomberg economics. they are still going to talk about inflation is transitory. you still have delta to worry about. there are still some hawks in the policy committee, but we could be leaning toward a pretty accommodative policy. rishaad: a hawkish revolt seems fairly -- [indiscernible] we got a headline coming through about iron ore you tears -- futures. they have dropped as much is 5.2% here. that is what we have at the moment. perhaps this story could be behind it is china possibly relaxing and mining project and looking at project approval. reducing the supply and demand dynamic. it is about markets, as ever. yvonne: they said, look, they don't see this rally continuing. you have delta and inflation.
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