tv Bloomberg Daybreak Asia Bloomberg October 11, 2021 7:00pm-9:00pm EDT
inflation and the slowing pandemic recovery. the global power crisis has industrial metals. in more evergrande bondholders say they did not get scheduled payments as other boulders scramble to avoid the fall. haidi: we are expecting asian stocks to slip. what do you think? sophie: ozzy stocks opening to change after closing lower monday after we saw minor gains for a third session. it is gaining ground while we see tech gains under pressure at cash trade. keeping a close eye after iron or above 130 in singapore adding to inflation as futures climbed to 50% in the past three weeks. ing expecting the aussie dollar to have protection from rising commodity prices. the currency is seen at 73 with a dovish rba. trading around a four week high.
on the broader session ahead of the opening tokyo. looking mix. among the best performers but we had benchmarks closing at a fresh record high. the bond buying program will be looking to see the data from india and the rate decision for more color on the inflation -- inflation outlook. coming up this morning in the early asia session we have had demand looking to underpin prices in the rally will continue in city saying they can see 90. haidi: we had u.s. crude closing above 80 bucks a barrel for the first time since 2014. holding above that key level. energy prices rising with these. the question i think as posed by the mliv blog is, do these commodity prices guarantee the
inflation? that is something investors are having in mind. shery: goldman sachs and jp morgan say that inflation is transitory and is telling stock investors to buy this. what's happening with bitcoin. we are seeing bitcoin being bought at $57,000 level. a little bit of pressure in the asian session but still above that level. despite the fact that jamie dimon is saying bitcoin is worthless. it seems a lot of people disagree on that one. haidi: lots of disagreement with the future of evergrande. continue to be on repayment. bondholders saying they did not receive payments on monday. we continue to monitor that calendar repayment when it comes to the bond coupon. the bigger question is to how beijing deals with this beyond
just evergrande. we are seeing this play out across multiple pockets of the market. the credit market has been pretty intact, but there were some questions as to what the long-term implications are for not just markets in china but the broader economy and the drag on growth. shery: especially when china is dealing with the power crunch. this start with the energy crisis tightening the market and pushing prices higher. we bring in bloomberg su keenan. asia and europe is impacting u.s. prices. >> the rally just continues to ratchet higher. let's go right into the five day turn. we are seeing west texas intermediate here in the u.s. hold above the $80 level in asian trading. but in the last session it closed above 80 for the first time since 2014 and got up as highest 82. the intensification that analysts say are now being driven as the direct result of the growing crisis in asia and europe.
in brent crude we see a similar ratcheting higher prices now clearly on track for $85 a barrel. natural gas prices are heading skyward, and that is the crux of the issue. we go into these year to date prices. you don't only see gains in bren and west texas intermediate, but look at natural gas, that bottom line shows that natural gas in europe is up almost 300%. there is a growing view that a lot of energy generators are going to switch from oil to natural gas, so oil just because natural gas is at the equivalent of almost $200 a barrel. not every generator can make the switch, but they have the intent to do that." prices in asia are at the highest ever seen in the area. you can just layer on the fact that the largest coal producing region which just hit by severe flooding, and that adds and compounds the threat to the
company already destroying power supply. let's take a look at aluminum. it is at a 13 year high in london trading. many of the industry insiders kind of joke about aluminum being solid electricity because it takes an anonymous amount of electricity to make one ton of aluminum. incidentally, it's probably no small supply -- surprise that china aimed its energy conservation measures at aluminum producing for that very reason. it is very big in terms of energy or electricity. haidi: what is the outlook when it comes to what prices will look from here? wax let's take a listen to danny with ihs, because he thinks it's going there. >> i think it could go to $90. what has happened is, in addition to everything else happening, people around the
world, particularly in europe and china are switching from some natural gas and switching to oil. suddenly you've had this upward pressure on oil demand that wasn't in the forecast one month ago. >> you can also think that president biden is likely to pressure opec to produce more oil to alleviate the situation. let's go into the bloomberg. the highest close since 2014, you can look at the drop in the chart at the peak of the pandemic where oil was below zero. the snapback has been intense. you can look at the big victors for west texas intermediate and brent. and it underscores why many believe that in incumbent president like president biden is going to be very focused on this issue. high oil prices now making gas prices at the pump at seven years high. there are concerns that perhaps this will take a bite out of holiday spending and just growing concerns that the iron
prices or the metal prices in the energy prices will combined to just pressure the inflation debate, if not the actual inflation itself. haidi: bloomberg su keenan. let's look at the property sector in china. evergrande's debt crisis is escalating. other developers are scrambling for ways to avoid defaulting on their debt obligations. let's bring in our executive editor. another bond payment being missed according to some bondholders who say they have not received a payment on the u.s. dollar bonds. this is incrementally progressing the story rather than really moving the needle in any dramatic way. >> i think that's an accurate description. evergrande is missing the coupon payment at the end of september. there is a 30 day grace time on the payments. we are looking forward to later this month in october before we could say there was a default on
any bond. there is always the risk that one default sugars cross defaults and that could ripple through the markets as a result. obviously mention the effects of other developers. we had modern land asking for a three-month delay on the payment of a bond due later this month. we had another company asking that it just pay 5% of the principal. the rest of the step two and 2023 with the stress of the system. shery: stress in the system and the property system how does that compare to the broader chinese economy? >> i think it's obviously that -- obvious the economy is slowing. we had the numbers from the seven-day national holiday that showed travel and spending was a bit weaker and april expected or hoped for. there has also been a slow in other parts of the economy. the logistic problems that have
been there have caused headaches for exporters. in the property sectors have been quite notable in terms of a big drop off in sales, in terms of new homes, tightening of regulation on lending to homeowners. we had a city in northern china introduced some steps to try to stabilize its market locally by allowing more lending for certain types of buyers to stabilize prices for homes. bloomberg executive editor for greater china with the latest on evergrande and the broader chinese economy. let's turn to vonnie quinn for the first word headlines. bloomberg has been told the u.s. will not seek to remove imf's managing director. the lenders borders preparing to decide on her future after allegations with improper actions during her time working at the world bank. the u.s. position likely backing from european nations, including france and the u.k..
potentially clears the way for them to stay in their job. jamie dimon is forecasting tighter regulation for cryptocurrencies. this ceo told the institution of finance that i'm glad to be around stable coins in the asset class more generally is growing in washington. it differentiated between personal stance and how jp morgan will deal with it. >> i think bitcoin is worthless. i don't care, it makes no difference to me. our clients are adults and they disagree. if they want to have access to buy or sell bitcoin, we can give them legitimate, as clean as possible access. merck has applied for emergency use -- vonnie: merck has applied for emergency use authorization.
risk of developing illness that may require hospital care. if approved, it could be the first oral antiviral treatment for covid-19. southwest airlines has apologized for canceling more than 3000 lights over four days. a shortage of workers overlapped with control interruption. the directors said pilots were protesting covid vaccination mandates. global news, 24 hours a day, on air and on bloomberg quicktake powered by more than 2700 journalists and analysts and more than 120 countries. this is bloomberg. haidi: why the investment group says traders should buckle up for a bumpy ride. rebecca felton joins us next. our interview with 2021 nobel prize for economic sciences who shares his views on the labor market. this is bloomberg. ♪
>> do we really think what we are seeing now will move through the aisle on medium-term inflation asset? i don't think that's obvious. >> i think we received wages and commodities and all the things like that, so there's probably an inflection point. >> to be able to get through them without having to depart very significantly from the clients that they have. >> as central banks taper, inflation goes up. >> there's a lot of debt out there and movements in interest rates will have a big impact. >> we all depend on getting them
right. shery: inflation concerns topping the agenda at the annual membership meeting as central bankers face rising price pressures. our next guest warns investors to buckle up as the ride could be bumpy. let's bring in the senior market strategist at river fund investment. rebecca, always great having you with us. thank you. as this gtv chart on the bloomberg shows, we are seeing bears are firmly in charge of the market with the aaii bears survey taking control right now. will the third quarter earnings season help or hurt this stance? >> thank you for having me. i think that's one of the reasons why you had this show me approach to investors over the last several days. as we had navigated towards this, we probably had 100
companies give forward guidance in just under half of those have given negative guidance. so everyone will be listening for the tone. we expect third quarter earnings to be strong. that's probably 27%. but it's the forward looking to q4 into 2022 that has everyone on edge. shery: where you position as we really have so much uncertainty, whether it's earnings seasons, commodity prices surging or what's happening in china as well? >> we remained risk on. as it relates to our sector positions, we are taking a barbell approach. you have seen this seesaw between growth and value as we navigated through the year. we are leading into tech industrials and financials because we think it's the best way to not be caught off guard. that shifts back and forth from growth to value. haidi: impact on growth is
worrying a lot of people. it's a concerning how consumers will see the economy of and how investors have that perception? >> it is concerning. we have seen a weakening, if you will, in some of the consumer sentiment data with retail sales coming out later this week. we are going to see how different what they are doing in terms of their pocketbooks is from how they feel. so we will be watching that, given how much retail consumption is of u.s. gdp. haidi: do you expect further deterioration of consumer spending, particularly with supply chain issues going into the holiday season, does that mean we should be looking out further downward revisions to earnings? >> i will speak with the tone --
stick with the tone of management. they have pricing power, so we know some of those have been passed along to consumers. but if you think back to 2020 when we came into the pandemic, consumers are spending at a healthy rate in the retail sales are back to this pre-pandemic level. we have not seen a demand issue, and has been a supply issue. we are not worried yet. in particular when we think about housing trends it's robust. >> do you play into the commodity surge because we have seen energy stocks lagging crude prices. are there any opportunities in that sector? >> we remain neutral to underweight depending on the strategies. we are reviewing that. we don't think energy prices will stay elevated.
we have seen stockpiles building because we have seen reductions from states impacted by hurricanes. that could be temporary, so we are watching and waiting just like everyone else. >> always great to have you with us. some of her views at riverfront investment group. you can get a roundup of the story in today's edition of daybreak. bloomberg subscribers can go to dayb on the terminal on the mobile and the bloomberg anywhere app. you can get the news on industry and assets that matter to you. this is bloomberg. ♪
seeking to remove managing director. it is accused of meddling in the world bank report to help china. our u.s. economic policy editor is now tracking this. this is an encouraging development for her. what do we know, and does it give more certainty as to what the outcome could be? >> we don't have a lot of details, but we do know that the u.s. has taken a position in these imf deliberations that it is not seeking to remove her from her job. and this is been something we have been waiting for for several weeks. the u.s. initially called the allegations very serious and did not offer support for her as she faced this scandal now in this final round of deliberations with the imf board over whether she should keep her job. the u.s. has apparently decided that the allegations were not
serious enough to warrant a position that she should be removed from her job. shery: we also heard that european governments were leaning towards backing her as well. what do we know? >> that's right. the french were in support of her, and we reported that the u.k. was also leaning toward support. if you have france, the u.k. in the u.s. altogether, that assures that she will be keeping -- the fed chief will be keeping her job. the french are particularly influential as a number of french nationals have previously helped position the managing director of the imf. so when you have european powers all ultimately on the same page here, it's just her staying ahead of the imf. >> even if she stays, what are
the implications for repercussions on the reputation on the imf, given the allegations in the scandal so far in the ongoing u.s.-china rivalry? >> that's a big question that she may have to address going forward. in other people associated with the imf may also need to address people and if you read op-ed pieces or anything over the past few weeks, it raised the questions that you have mentioned. so there may very well be an effort to restore the credibility of these reports and repair any reputations that have been damaged in this scandal. >> bloomberg u.s. economic policy editor there with the latest on imf. here is a quick check of the latest business headlines. the billionaire founders of kkr are stepping down to make way for their handpicked successors.
henry kravis and george have handed over the reins to newco chief executive officers. they become executive cochairmen along with the leadership changes. they say it will move to a one share/one-vote structure within five years, giving all shares equal status. credit suisse is delaying publishing a report into the collapse of a $10 billion group of investment funds that it ran with green sale capital. the bank hope to present key findings with its word quarter results. sources say executives want to spend more time looking at how they can recover money for investors. a major management revamp has been announced as the dutch bank pushes ahead with plans to access investment banking and refocus on corporate lending in europe. the research -- the restructuring will see them acts 2800 jobs in its planning to cut one third of its business with corporate clients, drop company
clients outside of europe and exit training commodity financing altogether. haidi: let's check in on currencies today. we do have the bank of korea's decision on tap as well. just the risk aversion we are seeing play out, but dollar-yen does pretty -- kellyanne is steady at 113. the korean won is ahead of the central bank decision. we do see broad dollar upside holding broadly higher in the session. the surging energy prices in the crackdown by authorities weighing across the sentiment. we did see the dollar index up by three tens of 1%. the aussie dollar giving back some of those gains with commodity prices. we have seen the energy producers doing well in the equity session. still shy of that 74 sent level. the kiwi dollar under $.70. not much of a mover. we see the lockdown being extended by another nine weeks.
in the divergence compared to the aussie is playing out with a dynamic. we have another big interview coming up ahead with the rising of capital asia. it's part of the third-largest bank in the eu that manages more than $1 billion of assets. their ceo joins us next. coming up next, signs of the crisis surrounding evergrande is deepening. we spoke to the director. this halloween, xfinity rewards is offering up some spooky-good perks. like the chance to win a universal parks & resorts trip to hollywood or orlando to attend halloween horror nights. or xfinity rewards members, get the inside scoop on halloween kills. just say "watch with" into your voice remote for an exclusive live stream with jamie lee curtis. a q&a with me! join for free on the xfinity app. our thanks your rewards.
lift in three to four years. and we will also be watching for preferred -- producer price data in 20 minutes. economists see upward pressure with cpi expected to rise 5.8% on the year in september. it was up 5.5% in august. in south korea, lgl electronics do to release earning guidance for the third quarter. there is also samsung electronics vice chair accused of using illegally. preliminary export data do around the top of the hour. plus, we are expecting a policy decision from the be ok front and center. the bank of korea decision expected to keep policy on hold after stepping out in front of most other central banks in august to raise its key interest rate. kathleen hays is here with the preview. what matters most today? kathleen: clearly, it's what the bank of korea says what they signaled to us about a future
rate hike. at this point, they are not expected to do anything but to rest after their rate hike. astana's -- it's not a complete surprise, but they went ahead with the 25 basis hike. let's take a look at the chart. the bond market. you look along the top, that orange line along the bottom is there key rate at 0.75%. look with the three year bond yield is doing. steadily climbing, suggesting that investors are saying, we know you will raise rates again. maybe not in october, but you will do it by november. and a couple of reasons. household debt continues to search. people want to buy homes. inflation is above the 2% target that has been set. something like 2.8% year-over-year. another reason they are doing well is exports. let's take a look at that.
export numbers have come down. up over 40% year-over-year back to 23% year-over-year. so we get the monthly numbers for the month of september just coming up in the next several days. that's expected to show a slowdown. those are a lot of green bars. a lot of demands of exports. one of the questions is what about china's power shortage. what if they don't need as many inputs from korea. what if we see more slowdown or uncertainty around the asian region are around buyers of korea's exports that slow things down. that's another reason why people are looking for the be ok to hold steady now, but signal they are ready to hike rates soon. the economy is doing better, gdp is doing better in vaccination rates. korea expect to have 80% of its
population vaccinated by october. this is something that will allow the bank of korea to be confident that this growth and reopening continues and keeps them on a track towards one more rate hike. we will watch that press conference after their policy decision in the next hour and a half or next and see what they say. haidi: our global economics and policy editor. academics have been awarded the nobel prize for their pioneering use of natural experiments to understand key questions and labor policies. we spoke with tom keene following the announcement in stockholm. >> at the moment i think it's all very much in flux after the pandemic that has had great effects on inequality and has set -- and has had equal impacts on different parts of the labor
market. so i think that their work is so extremely relevant, and i think the current administration is probably taking it very seriously. >> obviously you are more focused on natural experiments in the actual study of empirical data. as we talk about monetary policy and a federal reserve that wants to operate on realize data versus expectations, is that something that can only be done with hindsight bias? >> i think a lot of these are very relevant for informing future policies. and a lot of the experiment literature has made inroads in macro and interesting work going on there. early on there. it's very interesting work that come around and are doing
interesting work china to have causality in macroeconomic. in having micro data that we have typically looked at. >> what is so important here, and i think we will do one final question as you go to your massive media day in celebration of this award. the final question is, we have a certitude about data. it's in our economics and wall street. it's in everything to do with the financial media. you grew up in what i will call the real doubt over 90 in servitude. are we too confident about our data that we are trying to guess the future on? >> i think that something that is occupied of my thinking.
i think we have aired on the side of putting too much faith in this. they have been trying to make these more robust, but the ongoing challenges in doing so. shery: 2021 nobel economics winner speaking with bloomberg. we are half an hour into trading in australia. let's turn to sophie for what she's watching. sophie: we are seeing little change with a mixed situation when it comes to sector performance. we are seeing miners in the green. we have shares rising to an april 2019 hi. this is for metals like aluminum that had a 13 year high in london in the face of the power crunch. we are seeing downside pressure for the energy sector. we have oil surge shares falling around a 52-week high. pulling up this element now to
focus on the aussie dollar is 73 trading at a four week high. it may v.a. drag. they know that they can hit the aussie dollar harder than other procyclical currencies. and on that team pulling up the next element. increasing caution will have the cost against default. that has risen. haidi: some evergrande bondholders say they have not received coupons that we do on monday. this comes as the chinese developer missed other offshore bonds. this is the longest adjustment and china's property market. joining us now is the director of china markets research. great to have you with us. of course this real estate boom cycle and china is something building way before justice year and we got a hold of the risk.
what is the long-term drag on the chinese economy. if it's not a systemic immediate risk, what do we see in the next 2, 5, 10 years in the sector? >> nice to be with you. that is sort of the issue with ever ground at this point. our concern is that beijing is, at some point, potentially running out of time in order to respond to the immediate consequence of evergrande's financial woes. that's creating evidence of contagion in the markets. no use what's happening in the offshore bond market. nearly a quarter trading at yields over 50%. that situation has deteriorated rapidly. the concern is that the longer beijing weights, the higher the cost of the eventual adjustments when they finally step in in
order to respond to some of the market turmoil. and the other thing we would be worried about is the fact that they have been silent throughout the entire holiday. many expected there to be some indication over the holidays that there would be a workout plan. there is another response to the broader property sector downturn. you can wait a little bit for the central economic to have the broader sense. people are waiting for what's going to happen to evergrande over the holiday itself. in the longer you stay silent, the more erases stakes for when you finally start to communicate with the market more openly about what the next plans will be. haidi: is that a game of chicken here between beijing and provincial levels? we spoke with him yesterday and
he thinks this is the capital forcing this. say -- they are forcing it to a provincial level. what are the implications if that's true for local government ? in a broader inefficiency of capital and assets going forward. >> it's a fair concern. markets really want to follow the money to see where the actual support for evergrande's investors on the property sector investors will be provided and where money is going to come from in order to actually build the apartments that are promised to homebuyers. it's one thing to say that local governments can step in and provide and pick up some of the baton in terms of continuing construction. but many are financially strained themselves. we have seen preliminary data on land sales in september that suggests we are down over 40% in terms of land purchases.
that's quite a significant part of local government revenues. if you start to get into the potential for local government financing faults, which is a significant part of the chinese domestic onshore bond market, then that would potentially be another wave of contagion that would make it far more difficult for local governments to carry out their basic functions in terms of infrastructure investment, in terms of managing local financial conditions and that could exacerbate the downturn in the economy as a whole. shery: how does the crisis of evergrande factor into president xi jinping's drive. you mentioned we could see homebuyers taking a hit. >> i think the question is, does the political association with, prosperity change the
policymaking function at this point. it would be expecting a policy response in the face of this market turmoil. but it's clear that this effort to reduce the property sector's impact on the economy is part of the broader political effort to reshape china's growth model. so as a result, you haven't seen the same countercyclical response. markets had to recalibrate in terms of where those expectations might be. so there is an assumption that there is contributing to contagion. beijing, because of the crackdown against tech companies and education and tutoring companies, they have changed the calculus for potentially unsecured investors as well. shery: give us your outlook on those. we continue to see the markets
tilted by any headlines of what could be to come. >> i think the property sector is really -- we advise our clients at the greater concern was towards the property sector itself rather than a new focus or broadening of the regulatory crackdown to different sectors. because the property sector has been a thorn in beijing's side for some time. supply is running far ahead of the fundamental demand. so it doesn't seem like the three red lines of these harsh restrictions on the property sector will be sustainable policy. the reason they were initiated to begin with was because there was already this tenure battle against speculate seven investment in the property sector, and then finally you had blunter measures in order to control this pattern of investment in general. shery: great to have your
vonnie: come vonnie quinn with the first word headlines. global sachsen -- goldman sachs said global growth means it will take it's time to raise interest rates. u.s. growth forecast is downgraded, citing sluggish consumer spending. the process of the fed tapering will take months in interest rates won't rise until 2023. >> tapering is likely to be announced at the next meeting. that will take until the middle of 2022, and then i think the question is, where is growth, where is the labor market, where is inflation? under our forecast, growth is much more moderate and inflation is on its way back down to something like 2%. in that environment, i don't think they are going to move directly to rate hikes. shery: jamie dimon is
forecasting tighter regulations were cryptocurrencies. they told the institute of international finance that anxiety around stable coins more generally is growing in washington. mark and his partner have applied for emergency use authorization in the u.s. for their covid pill. the company says the drug is aimed at treating mild to moderate cases in adults at risk of developing a severe illness that may require hospital care. the pill could be the first oral antiviral treatment for covid-19. global news, 24 hours a day on air and on bloomberg quick day, powered by more than 2700 journalists and analysts in more than 100 20 countries. this is bloomberg. shery: the global trade finance gap rose to 1.7 trillion dollars last year as covid-19 sent shock waves through trade. let's bring in our chief asia economic correspondent.
tell us a little bit more about this gap and the drivers behind it. >> trade finances obviously the grease of the wheels of the global trade story. and what they have identified from their survey of both companies and banks is that up to a third of companies are still concerned about getting access to trade finance next year. and of the 40% of trade finance applications that were turned down in their survey, over 2020, 40 percent came from sme's. 70% of those smes were led by women. this is a real area of concern. it's clearly an area that will drag on the global economic recovery at a time when momentum is slowing down. and the reason that banks are reluctant into to lend is -- to these companies is that there are concerns over economic recovery. they know the your customer requirements and money
laundering requirements. we have this trade finance gap, it is widening, and it's widening at a could go time for global economic recovery. haidi: are there immediate solutions, because they seem to be longer-term ones? >> very much so. it's about standardization, requiring legislation to put together a global digital standard for the trading ecosystem. on a microlevel that can be something as simple as making sure that shippers and warehouses are joined into systems and the technology systems they are using. on a macro level, if you have this digitalization process, that will generate more data, that would boost transparency. in the thinking is, if he did push through the sweeping digital playstation -- digitalization, then you will boost access and trade finance. that is a longer-term gain that
would require legislation. one area that's pointed to is an area where you could make progress on this. haidi: all of this coming amid the supply chain crunch as we head into the holiday season. our chief asia economic correspondent with the latest. though supply chain concerns adding to the ongoing power crisis. although, u.s. gas prices are starting to see relief today as the research says that asia's biggest markets are relatively ready, but europe is not. they expect prices to continue to climb. let's bring in the head of global research. do we see any stabilizing factors for the market, or will it be second -- segmented? >> geographically segmented. it has been reacting to news last week, and this is from the comments about additional
supplies into europe. but as you said, a lot is the asian economy. in terms of their energy stocks, they are well suited for a normal winter. so with regards to the markets getting jittery, they are reacting to headlines. anything that will signal a supply disruption is going to impact prices. the reason we are talking about supply is because demand and all of these markets that are big gas consumers have already entered their peak winter. so the stabilization factors, we are looking for forecast that indicates any kind of warmer than normal weather, which might be a safer situation and some of the markets. the next thing we are looking out for his flows, physical flows of gas. prices react to the news, but we need to see the gas flowing into
europe specifically. i say europe because asian prices today are only reacting to the hike in european prices. we need to see russian flows coming in at any of the three pipeline coins, and production increasing in the u.k. shery: what can we expect for lng? >> chinese lng wilco -- grow. the thing about gas demand is that a majority is met by domestic gas production. what's different this year is there will be more russian pipeline gas coming into the country, but lng will come into help stabilize it and come in to fill in the gap anywhere. it might create a spike in lng demand for china because it's cold. that means the northern parts of china will need to have more lng on a short-term basis --
short-term basis. this is more about industrial activity. i will say one last thing about china's l&d spot demand, china has been particularly more reliant on lng cargoes. versus the likes of japan and korea. now with lng spot prices so high, it's probably going to push chinese buyers into signing more secure longer-term contracts with lng supplies. we saw that in the last few days. we saw u.s. lng suppliers. shery: we do have to go. thank you. we have tons of breaking data. out of south korea we are getting the daily average numbers for the first 10 days of this month. coming in at 33.8 percent year on year. the headline number is the growth of -- chip growth of 22%. the headline numbers is 53.5%.
material costs. it is decision day for the bank of korea, expecting a policyholder after an august hike, and evergrande said they do not get payments as other builders are scrambling. trade underway. let's get you straight to the market in seoul and tokyo. soph? soph: downside pressure of the nikkei 225, the yen trading your a three-year low on the side of the risk-off sentiment. we are seeing data from japan, turning to south korea, largely expecting the bok will stand pat. the korean won trading above 1197, and the kospi down after the long weekend. we are seeing samson under pressure, even as we got the latest trade data showing that chip export futures are continuing with growth, rising
22% for the sector for the first 10 days of the month. we have an eye on a bank, morgan stanley initiating coverage with a stock with an equal weight rating. we will keep an eye on the lng player considering a dividend next year to a rally that saw prices coming off recent highs, as russia has pledged to boost exports. checking on the mood in australia, the cash trade there, we are seeing stocks now higher by 4/10 of 1%, as we are seeing materials stocks gaining grounds, with the likes of alu -- of alumina prices rising to a high in london. a little bit of a mixed bag with wti. a little pressure but holding above $80 a barrel, and we have brent coming online, shery. shery: soph, let's stick with
that topic and the surge in energy metal prices, giving investors a fresh reminder of how commodities can fuel inflation fears and threaten economic recovery. bloomberg's su keenan joins us with the latest. su, we are now seeing follow-up. su: higher electricity prices, forcing the army of smelters to cut back on a lot of their metal production. just take a look at the latest prices in terms of the surge we have seen. you notice that we have got coal up almost 10%, and quickly, to year to date changes, what we see is dwarfed by what we are seeing with natural gas, particularly one up almost 300%, and that combined with china's energy prices putting a lot of pressure on u.s. oil prices. let's look at a 5-5 and a chart of west texas, -- let's look at
a five-day chart, west texas, holding above 80, $82 intraday. looking at brent crude also holding higher, and many say it is on target to hit $85 imminently. but the real issue here is whether the crunch will force many natural gas and other generators to switch over to oil . that is adding demand that was not even anticipated a short time ago. let's jump into the bloomberg and look at coal. that underscores the never before seen prices we are seeing. we also have rain with flooding in a key area of china, and that is just adding to the energy shortage and the energy concerns. lastly, look at the aluminum price, which sophie mentioned, and you can see how that is continue to skyrocket, further
adding to inflation concerns and just wrapping up how commodities are the big driver here. haidi: some banks and analysts, where do they think it will go from here? su: higher and higher, $90 being the next up, citigroup raising price outlooks from $85 to $90 for west texas intermediate. a big jump from the height of the pandemic. one year ago, we were a little below -- brent crude, their price target raised to $90, which they expect brent to hit several times in the winter, which is just around the corner. what we are also hearing is a vice president, daniel, an oil veteran, an historian that he says it is very likely oil goes to 90 and that also this will be a catalyst for president biden
to urge opec to put more oil on the market. as we know, opec recently decided, opec+, to yield to the increment monthly output increases, and that has added to the last couple of weeks of intensity that we have seen, and also, in terms of the contract prices going out, the contracts are showing highly bullish by a lot of the u.s. oil traders. we had gas prices at seven year highs here in the u.s., and that is adding to inflation concerns. looking at bloomberg and the energy stocks, lagging a bit behind the actual commodity, the stocks not enjoying the same rise that we are seeing in the underlying metals. back to you. haidi: su keenan there. next guest says inflationary pressures could be accelerated if opec is willing to do more to increase output further.
let's bring in a cheap asia strategist at j.p. morgan. tai hui, from the bloc, really asking, does -- from the blog, really asking, does this guarantee stagflation? not just natural gas hitting these new highs. it is coal, iron ore, food prices at a decade high. the high risk of stagflation, does that change your strategy? tai: i think in the near term, what you could see is an acceleration of inflation on the back of these energy prices, commodity prices. meanwhile, there is a slowdown due to covid in the economy. you could see the diversions of growth. there is a fact we are still in the recovery phase. i expect them to join in in 20. while inflation is a concern, i
do not think we are running into the stagnant growth. i am not that pessimistic about further stagflation in the long term. haidi: we are hearing from morgan stanley that they are worried about the increasing gap. there was a peak in july, and how investors seem to be receiving delta and the economic recovery, when does that start playing into earnings expectations if the consumer side and tin used to lag? tai: first of all, if you look at the covid situation, of course, we are running into winter months, and that could change. secondly, you look at the job numbers, the jobless numbers, wage growth, so i think from that perspective, the covid news
may not be particularly cheerful for consumers. at least on the wage front, things are looking robust. i think that will keep consumer spending going even though there is consolidation. shery: we have seen the dollar continuing to rally. we are talking about the most bullish bets by hedge funds in about two or so, if this gdp chart -- at this gdp chart on the bloomberg shows. how would a stronger dollar factor in? tai: yes, i think in the near term, a stronger dollar boosted by high yields, maybe a little bit of concerns about growth for a more bullish dollar in the next six months, but nonetheless, if we do get a rebound in the asian economies, when the facts are ration -- when the vaccination rate goes up, that could be good news for asian earnings, and, yes,
typically, the strong dollar -- in fact, if you look back to the past months, we have seen inflows into parts of asia. for example, india, indonesia. there is a much stronger dollar. it is even better for asian assets, with people with a more bullish take. in the near term. shery: also, not only inflows but outflows, from the likes of south korea and so forth and we are getting the be ok rate decision and seeing more central banks starting their -- getting the bok rate decision and see more central banks making moves. tai: you look at other central banks around the region, for example, very slowly looking to normalize policy, and china,
because of the difficulties right now, i would expect them to be more accommodative. otherwise, very much staying put where we see things rebound. hopefully, next year. i think overall, the environment in asia and globally is likely to stay very competitive, with the exception of central banks. shery: tai hui, always great having you on the show, from j.p. morgan asset management. let's get to vonnie quinn with the first word headlines. vonnie: thank you. lower u.s. growth will mean your that the federal reserve will take time to raise interest rates. sluggish consumer spending. bluebird television was told the process -- bloomberg television was told it will take months. >> it is very likely to be
announced at the next meeting. that will take until the middle of 2022, and then, i think, the question is where is the labor market. where is inflation? growth is much more moderate, and inflation is on its way back down to something like 2%. in that environment, i do not think we are going to move directly to rate hikes. vonnie: tighter regulations for cryptocurrencies. anxiety around stable coins and the asset class, more generally, is growing in washington. dimon repeated long-held views on bitcoin but not about how j.p. morgan will deal with it. >> i do not want to be a spokesman. i do not care. it makes no difference to me. they are adults.
they disagree. that is what makes markets. if they want to have markets, we can give them legitimate access. vonnie: bloomberg has told they will not seek to remove the im f chief, deciding her future after accusations of improper action at the world bank. nations in europe including france and the u.k. clearing the way for georgieva to stay in her job. global news 24 hours a day, on , air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi? haidi: after the august high, and economist will be joining us, but coming up next, investors left in limbo amid reports of a crackdown with
haidi: -- shery: we are seeing signs of a debt crisis while other developers grappled to avoid defaults. let's bring in john. evergrande still not paying bond investors? >> the latest coupon, as far as we know, the holders have not received that payment. evergrande, the first they missed was in the back of september. there is a 30-day risk, so we are looking at october before potentially the company could default on these payments. the risk is obviously the default on one coupon payment could trigger across to other
bonds, and that could have a ripple effect in the market. haidi: and, john, a lot of soul-searching for policymakers? are we hearing of potentially a broader crackdown? john: there has been some. there was a report in "the wall street journal" about greater scrutiny of financial institutions. obviously, we know china announced in september that they are beginning some regular checks that they do for anticorruption purposes, and they were going to be doing that with financial institutions. obviously, the policymakers are going to have to balance that with concerns about the property market, in general. we have seen from other developers, one real estate company earlier this week saying they wanted to delay payment on some of their bonds coming due later this month, and also, the dropping sales of homes, in general, those are all points of
concern. policymakers will have to take that into account. shery: what are the implications for the broader chinese economy, given that we saw spending was a bit sluggish? john: the property market and sort of the related -- related industries, for example, that is in excess of 20% of gdp. that was according to an estimate from goldman sachs. you can see as that sector as a whole has trouble, that will have tremendous implications for the broader economy, which is, as you mentioned there, not doing as robustly as people thought it would be at this point in the year. we had expected consumer spending, obviously over the holiday -- a lot of people had concerns about covid chose not to go out, chose not to spend may as freely as they might have otherwise, so there are plenty of headwinds. haidi: our bloomberg executive editor, john liu.
to the bloomberg -- to the winter olympics, we know some big events like the olympics, winter olympics, and the summer olympics, they are huge lucrative opportunities for the biggest brands in the world, but when it comes to the chinese government and some investigation going into human rights abuses, and that is not even mentioning the geopolitical tensions, these issues that we talk about on this show, it really is going to be a sensitive topic for some of these big names, procter & gamble, coca-cola, intel, the most recognizable brands in the world really having to balance what they need to do to not upset further constituencies, if you want. shery: toyota, more than $30 billion. this as we continue to really hear from human rights advocates
, who are saying that supporting the beijing olympics would be helping china youth sports in order to distract from bigger issues, especially human rights issues, for example. they are calling this washing. this will be an issue that we will continue to watch as we head towards the games. haidi: coming up next, inflation is a topic of concern for both investors and central bankers alike. hear our conversation with a central bank governor on how he is tackling these pressures. this is bloomberg. ♪
component, and just to see the wages and economies and things like that, probably an inflection point. >> those that are transitory and that central banks will be able to get to them without having to depart very significant leaf from their plans. >> it is not terrible as long as inflation is not out of control. >> there is a lot of debt out there, and interest rates will have a big impact. >> we all depend on them getting it right. shery: inflation concerns topping the agenda at the annual membership meeting as central bankers face rising price pressures. now, colombia's central bank has hiked rates for the first to five years. policymakers say they will monitor the impact before its next move. governor leonardo villar told me
the process of normalizing the policy could take about 12 months. leonardo: for people to say how much we will increase the rate, but we have told everybody after the last meeting that we have started a process of normalization of the monetary policy. it will take a long time. it will take a while. we will cover a more normal level of activity. we have already increased 20, and we may increase it several times. >> when one of those increases include half of a percentage point? we know that three of the board members voted for a larger increase? leonardo: well, we do not know. some want to start with a bigger
increase, but than others that we will increase by 25 or 15 basis points, but what we know is that we will look at the numbers, and each time, we have to decide on the rates. >> so what could lead to a half of a percentage point increase? leonardo: we will go through a process that may take a year or so, taking the interest rate to a more normal level, and we will look at expectations about inflation and how inflation behaves, how the economic activity recovers, how unemployment goes, and the outlook for the broader economy will determine how we move. >> suffering from inflationary
pressures, and you see the benefit of exports, right, so when it comes to the economic recovery of colombia, how does the surge of commodity prices factor in? leonardo: well, traditionally, commodity prices -- we have seen this with oil, but we are also importers of many commodities that are increasing their prices. imports, many other commodities that we import are being affected by the process that we are seeing in the country, so we have -- haidi: that was the central bank
governor of columbia, leonardo villar. we will hear from the philippine central bank governor, as well. let's get a check of the latest business flash headlines. we will get it update -- get an update on an ipo this week. a company hit a roadblock, pending an update to earnings information. bloomberg is joining about 50 other companies with ipo applications, and evergrande says it has a commitment it may just weeks after citing cash flow difficulties. looking for funding of approvals to make sure the company can achieve mass production goals. and reporting one playing order, airbus, since the pandemic began last month, working towards a
goal of 600 hand over his by year end. coming up next, why goldman sachs chief economist expects the fed to hike rates by the end of the next fed meeting. this is bloomberg. ♪ it's moving day. and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours? ...delegating? oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today.
haidi: all right. australian business conditions outcome confidence rising, from the report. is this conditions for september falling -- business conditions for september falling. we continue to really see fluctuations in both sentiment and confidence and conditions of businesses, given the unevenness
of this recovery, although we have sydney emerging from the strict this phase just this week, so we expect to see that recovery continue in the coming months. let's take a look at what we are seeing when it comes to trading in sydney. soph? sohie: bond yields continuing to rise, the highest since may, and the aussie bond yields, as you see, this is just the start for australian yields, and check out what is going on with treasuries. cash trading, the 10-year above 161. energy prices keeping it up, and central data reinforcing the data coming in at highs, pushing the yield towards an equal high, and the 10 year bond futures, we are seeing them going lower ahead of the report. there could be a rise in the
korean bond report. now, a check on price action when it comes to equity markets, being led lower. the korean won slipping to a july 2021 low, and the index boosting. we do have the asx 200 up, now looking little changed. there is some divergence, and energy names are mixed with some pressure on oil. shery? shery: let's not get to vonnie quinn with the first word headlines. vonnie: one company has applied for emergency use authorization in the u.s., with treating mild to moderate cases for the risk of developing severe disease and that may need hospital care. the first oral antiviral treatment for covid-19. southwest airlines has apologized for canceling more
than 3000 flights over four days. storms and an air traffic control disruption. they denied that pilots were staging it. and some academics winning the nobel prize for economics. david card, joshua angrist, and guido imbens, demonstrating that many of society's big questions can be answered. >> putting too much faith in it. they have been developing and trying to get away from it, trying to make it more robust. vonnie: global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts
in more than 120 countries. i am karina mitchell. i vonnie quinn. amshery: the federal reserve may start tapering at the next meeting, but our guest spoke to tom keene and jonathan ferro. >> in 2022, just under 2% by the fourth quarter of next year. in the near term, i think there is still some reason to expect stronger growth. the trend is down, but i do not think it is going to be a straight line. a boost from the receding delta wave, and i think the inventory cycle is also going to boost growth, but this is all and the relative short-term, and going forward, we think there will be a significant result. tom: whatever the flavor of
inflation here, what does it do for the inflation-adjusted wage? jan: i think it depends on whether you look at the top end of the wage distribution or the bottom end. i think at the bottom end, we have seen a short acceleration in wage growth. we think about 6% with all of the changes in composition, and that is obviously the strongest we have had in many years. i do think that the expanded unemployment benefits are a big driver of that. i think we will see a deceleration there. but in the middle and upper end of the distribution, will probably see continued gradual acceleration as the market tightens, and i still think it is tightening, so overall, roughly sideways in the 3.5% to 4% range. that is all current.
then, the real wage will depend on what happens to inflation. in the short-term, there is no real rage growth. real rage is probably declining slightly. higher than that longer-term as you go into 2022, i think we will have real wage gains. jonathan: jan, help me understand. 4%, but in the back half of the year, are you saying what gdp growth? jan: that is in part being driven by the strength in the later part of 2021. that is a carryover into the year, but as we go through the year and especially into the back half, we have it at 3% and then 3.75 in q4. that is definitely a trend.
some of these petering out as you go to the year. jonathan: jan, how do you think the federal reserve will respond to that? do you think it will still be decent in the labor market, or do you think growth will fall below 2%? jan: chambering is very likely to be announced at the next meeting. that will take until the middle of 2022, and then, i think the question is, where is growth? where is the labor market? where is inflation? growth is much more moderate, and inflation is on its way back down to something like 2%. in that environment, i do not think they are going to move directly to rate hike, and we have this not happening until 20, but it will depend on how it compares -- until 2023 it will depend.
shery: jan speaking there. inflation surging, given the commodities, and we are now seeing investors dumping emerging-market bonds, the most since march 2020, so it is really about the hunt for a yield taking a backseat given these concerns, so when it comes to e.m. bond selloff on the currency index, the highest since july 2020, so investors now demanding the highest premium in 11 months to to own -- to own these over u.s. treasuries. haidi: p growth but not yet peak inflation, and that is playing
out -- peak growth. the energy crisis or the energy shortage, we will be talking about a lot of these emerging-market currencies, net energy exporters, like russia, for example, really seeing these bullish bets on their currency happening as a result of these oil prices just continuing to surge. shery: yes, and as we continue to watch global expectations around the world, we will get more insight on the bok's insight with a moody's economist , coming up. this is bloomberg. ♪
haidi: -- shery: the billionaire founders of kkr to make way for their handpicked successors, handing over the reins to the new coexecutive officers. they become executive cochairmen along with leadership changes. kkr says it will move to a one share-one vote structure within years, giving all shares equal status. one company delaying publishing
a report into the collapse of a group of investment funds that it ran with retail capital, the bank hoping to present key findings along with its third-quarter results, but sources say executives want to spend more time looking at how they can cover money for investors. am a dutch bank -- a dutch bank pushes ahead, and we focus on europe. risk factoring about cutting 2800 jobs and planning on cutting about one third of its business. commodity financing. haidi: all right, let's take a look at samsung, one of the movers to the downside. a broad-based selling on the kospi ahead of the bank of korea, samsung dropping as much
as 3.1%, the lowest since december 3, and we are off session lows, but when it comes to 2021 profit expectations, we are expecting samsung to be able to meet consensus profit expectations, but getting caught up in the korean kospi selloff, being dragged down by the foreign funds selling, and waiting for the bok. shery: yes, that monetary policy decision coming at any time. our next guest talks about them keeping rates on hold, and let's talk more about it with an economist at moody's analytics, katrina ell. if we are expecting a hold, what will be important for investors to watch in today's decision? katrina: the bank of korea will hold, it will be good to see commentary around the economic recovery really progressing. we know that domestic demand, particularly household consumption, has come under
quite a lot of pressure from the covid situation there, but we know that exports, as well, have been an ongoing strength, which goes to the broader economy. another thing we are looking at is around their commentary, around their hefty household debt, that south korean households are carrying, because that was a really key input into their decision in august 2 actually hike rates, and so, it will be interesting to see whether their commentary has changed there. shery: yes, the gdp chart on the bloomberg shows the build up when it comes to household debt. why is the sector of the bok, and what will it mean if we continue to see these rate hikes later in the year, given that the expectation is that they are off the rate hike cycle? katrina: we are expecting another rate hike in november, so they will pause this month
but go again in november, and the expectation should be that the growth of household debt will start to cool off, and household leverage will start to come down. if the bank of korea was not raising rates, then household leverage would continue to rise, and that would really create problems about sustainability down the road, and, you know, the household sector is a huge part of the south korean economy. we have the high credit risk in that sector, then it is really concerning from a sustainability point of view. haidi: when it comes to this, sustained demand for housing, electronics, chips, pretty much every corner that you can look at, we are seeing these price pressures -- interest rates are a pretty blunt instrument to address that. katrina: certainly, they are a very blunt instrument, but we did see in korea, for example,
that they tried to rein in that elevated household debt. getting a transmission mechanism right is quite tricky for the bank of korea. ultimately, able to get that transition, the blunt instrument of interest rate hikes. i mean, if we are looking more broadly at asia, apart from south korea, it is really kind of the only economy in the range that has moved with that one instrument of an interest rate hike. i mean, elsewhere in the region, inflation pressures are quite elevated, and central banks are tending to look through that and really focus on domestic demand, keeping accommodative settings in place to really support economic recovery until they are less fragile. haidi: consumer sentiment being
a worry in the u.s. ever since we saw it come off the highs in july, and we saw the diversions with what the consumers feel and what the stock market investors feel. is this problematic, particular going into when we are already expecting issues to create havoc for the built-up demand going into the holidays? katrina: yes, that is a really good question and is a concern. one thing we have noticed is that businesses are holding up reasonably well in comparison. i think as long as business sentiment is holding up, that is one thing in the consumers' favo r. if they start losing faith, then they will start losing faith in their investment decisions, employment decisions, and that is when it will really start to impact on jobs growth, so that is something to really keep in mind, as well, the strength that we are generally seeing with these conditions.
haidi: when it comes to the systemic risks in the chinese economy, and, of course, here, i talk about evergrande, beyond a company's specific issues, are you concerned about long-term growth, that the productivity of some of these if the property boom does turn into a bus? katrina: yes, certainly. if you are looking at china's property market contributions to the economy, it is huge. it accounts for about 25% to 30% of gdp, with, for example, the real estate sector. shery: katrina, we are seeing they are leaving the rate unchanged, and economists were
expecting no change in the rate, and, as expected, the bok has left it at .75%. katrina, i know you were expecting no change here. give us your perspective and what we should be watching out for next as we head to the rest of the year in korea? katrina: certainly, this is certainly no surprise that we are seeing the bank of korea holding steady following their august rate hike, and what it really does show to us is that they are taking a measured approach when it comes to the tightening. gradually assessing the evolution of economic conditions, certainly the covid situation, before they make further moves, and based on the assumption, does remain that they will introduce a further rate hike in november, but we will assess, and that is really depending on how the situation is tracking in korea before they actually pull the trigger on
another rate hike. haidi: katrina, always great to have you with us. katrina ell at moody's analytics, and we are seeing the bank of korea leaving that rate unchanged as expected, 20 one out of 22 economists having forecasted no change -- 21 out of 22 economists that bloomberg surveyed having forecasted no change. we will also have more on the outlook for the global economy with guests tomorrow, when we are joined by bank guests, including the philippine central bank governor. this is bloomberg. ♪
>> it is a sea of red across asia. let's turn to sophie. sophie: an industry expects regulation, and we are keeping an eye on travel and tourism related plays after the government eased rules for vaccinated travelers from 10 low risk countries, and the daily case rate is lower, the lowest level since mid july. the country is pushing ahead with a covid strategy to attract holiday travelers going into
year-end. haidi? haidi: speaking of year-end, amazon facing a showdown in india, more important than ever this year as the two look at the in the hour retail focus. joining us is our editor. why is this particularly significant for diwali? >> i think there are couple of things. amazon and walmart, as we know, have been slugging it out, but this is the first diwali season since covid pete in may, we are looking at the consumption recovery in india, so this diwa li shopping season should give us an indicator. i think it is getting to the point where it is starting to move the needle for that business. we are talking something close to $10 billion of this diwali
season, and that is getting closer to something like cyber monday, for instance, so, yes, it will be interesting. haidi: how are amazon and walmart performing in the indian market right now? edwin: everything is on an uptick, but there is the idea that a rising tide lifts all boats. there is significant local competition, but looking further afield, sort of playing the long game, i think there is an argument to be made that india is one of the final remaining major growth markets for tech on the planet, and that is certainly applicable to e-commerce. that is why you see amazon and walmart investing billions in an effort to grab a bigger slice of this market. it is already $1 trillion, and as e-commerce expands and becomes a bigger part of overall consumption spending, i think there are billions to be made in
this market. haidi: what is the significance longer-term, and is there a risk of regulatory headwinds, as well? edwin: i think so. one of the things about operating in india is regulatory uncertainty, but one of the emerging markets you cannot afford to have a major slice of. china is closed off. other markets in the region, for instance, indonesia, are only on the cusp of an e-commerce expansion. it is already on its way, that is why the stakes are so high, and that is why we are looking at what is going to happen this diwali season. >> the latest on the india shopping season. thank you. we had the rate decision out of south korea, with the bok standing steady. 21 of 22 economists surveyed by bloomberg had them holding
steady, and they did not go ahead and pull the trigger for another rate hike, this after doing so in august. haidi: yes, a difficult balancing act for the central bank. interest rates are really a blunt instrument when you're trying to address things like household debt, rising property prices, and against this backdrop, just energy or food or agricultural commodities, so it will be very interesting to see what goes on in the central bank landscape. we will get a lot more on this. we will be hearing more commentary from the central bank to try to explain their decisions. shery: yes, and not to mention we have not had some positive data, included export numbers, today coming in pretty strong, -- we have had some positive data. south korea, perhaps some of the concerns over fiscal balance, the bok might move in the future, so we will be watching