tv Bloomberg Daybreak Asia Bloomberg November 25, 2021 6:00pm-8:00pm EST
plus, the bank of japan's newest board member sounds an optimistic note on inflation. paul: we have just opened for trade in australia. we have a staggered open, so it's hard to get a read on things. right now, it's looking flat. u.s. markets are closed, so there isn't much of a lead in. new zealand has been trading for a couple of hours currently weaker. we just heard from the reserve bank of new zealand and we will hear more about those remarks in a moment. nikkei futures in positive territory. we will have tokyo cpi numbers out a little later on. the middle east is looking
higher by 1/10 of 1%. u.s. markets are closed today. they will reopen on friday u.s. time. in terms of what's going on in the u.s., we have been closely watching the fed. it took a hawkish turn according to the minutes of its last meeting. now we have goldman economists raising their expectations around the taper. they see it speeding up. then rates start rising possibly as early as may. then a couple of hikes and september and december as well. yvonne: it is interesting this turn after what we saw this week. it signaled that more fed officials are on board when it comes to the faster taper. we heard from one earlier this
week, the san francisco fed president. how do you express this in the markets? we see the yields ticking up. look at what we are seeing on the bloomberg dollar index. we still trading around 16 month highs. we are on track for a fifth week of gains for the greenback. at this point in the near term, people say the dollar still has the strength to go. paul: the dollar gaining at the expense of the kiwi dollar which took a hit this week. inflation running hot in new zealand. it is at 4.9%. we are seeing new zealand leading the charge in global
stimulus withdrawal. they tell us they are going to be continuing on that path. this was an earlier conversation with kathleen hays. >> for us, it's really a story about where we think we need to be setting policy to achieve our policy mandates. the reality is that in new zealand, we hit a resilient economy. we have core inflation running near the top of our target range. the unpleasant market is through what we think is next month sustainable unemployment. we are getting clear signals that we need to start, to continue the process of removing stimulus and getting interest rates backup. >> how will you know if you're moving too quickly and jeopardizing jobs growth or moving too slowly and risking letting inflation become more persistent and get out of
control? >> it's a great question and it's a balancing act. it's something that all central banks have to go through in setting policy. at the moment, we see them finally balanced. on the upside, i think the risks are we have a strong economy, a big change in the starting point. inflation expectations lift and we can see that hearing -- happening in the near term. gone the other side, we have interest rates have moved a long way. in new zealand, mortgage rates are nearly 2% of from the lows in january. ahead of us, we will have to navigate having covid in the community which is a different strategy than we have experienced over the last 18 months. we see things evenly balanced
and that is what moved us towards taking considerable steps for now. >> what would tell you that you have to be more aggressive, that the balance has shifted and at the press conference with the governor and the rest of the team, it was preclear that there is a concern that could happen -- it was pretty clear that there is concerned concern that the balance could shift. >> we have the benefit that we meet again and can consider our decision again and see what we what to take the cash rate from here. i think it comes back to inflation and inflation pressures here domestically. we have a very tight labor market at the moment. we have core inflation getting up for the top end of the target range. inflation expectations are going to be absolutely key for us.
at the moment, it's doing what we would expect. inflation expectations are very well anchored. short-term inflation expectations have lifted in a way that we would anticipate. i think that's a key thing to watch for how that develops through time. yvonne: that was the rbnz assistant governor speaking with us earlier. the u.k. has added six african countries to a travel red list amid worries about a new dramatically different covid variant that was recently identified. how different is this latest mutation? >> what scientists know is that it has lots of different
mutations. it appears to be highly transmissible. the fear is perhaps more so than delta. in the worst case, it could evade the vaccine. it doesn't have an official name yet. the world health organization's meeting tomorrow and they might give it one. in some circles, many people are worried this is the variant that will possibly put a big dent in the vaccination effort. paul: this news doesn't come at a very opportune time particularly when the eu is grappling with an outbreak. how is that being brought under control? >> you see countries all over
europe working as hard as they can't crackdown -- as they can to crackdown. the eu approved vaccinations for children age five to 11. that can be a little late, but it is a vector of transmission. in the czech republic, and germany, belgium, denmark, portugal, all are putting in new restrictions. it is out of control and in some places, it's putting huge stresses on the health care system. in places like germany, we are seeing deaths go up. yvonne: thank you. we have seen some good news when it comes to new south wales and australia. they are easing restrictions when it comes to masks.
in hong kong, they are meeting a requirement to start the whole reopening process with the mainland talking about a health code as well. it will be interesting to watch the date when that happens. earnings will be front and center on it comes to china. tech, numbers come out later this afternoon. this one is going to be interesting. the net loss is expected to widen to 7 billion. that is the worst performance since 2018 when it went public. there weighing down by a host of issues whether it is covid outbreaks, they are also investing in new businesses. they are complying with new regulations like giving security and insurance to drivers as they comply with common prosperity. there's a lot to look for in this earnings call. look at the chart you can see on the screen.
three quarters in a row of losses. look at the orange bar, that is the cash pile. that's $11 billion u.s.. that looks healthy to the point of being a question. what they plan to do with all that money later on. we will hear for more later on. we have seen shares take a dive over the past five days down nearly 10%. off near than 40% -- near 40% year-to-date. yvonne: can they surprise the market again with a positive market -- positive revenue?
perhaps they are outperforming. when it comes to their annual active buyers, they overtook alibaba from the fourth quarter of toy 20 on. -- fourth quarter of 2020. paul: for now, let's check with the first word headlines. trying to edit the u.s. reportedly making plans for meeting between the top defense officials. the two sides are aiming to hold talks iphone or online by december for the fifth. if that happens, the secretary of defense will lead for the u.s. china will be represented by the chairman of the military commission. china has slammed a u.s. decision to sanction several firms.
12 chinese companies were added on wednesday to the u.s. commerce department entity list over national security and foreign policy concerns. china's commerce ministry says the decision hurts both economies and supply chain. china's foreign ministry has warned germany not to meddle in its internal affairs. it is calling on the germans to respect the one china policy with regards to taiwan. this comes after the new chancellor released a statement with strong language about china. 27 migrants died after their boat capsized trying to cross the english channel. the french interior minister says the u.k. clandestine workers act as an incentive to
i want to talk about this chart. the car is the flattest we have seen since march 2020 when the market turmoil began. the fed was forced to lower rates. what is it telling you at the moment? it seems that at this point, people are saying the fed is heading into a policy error. would you subscribe to that? >> it depends on what you think is a policy error. the markets are starting to price that in. it is all suggesting now that we're going to have a fed that is going to be much more aggressive when it comes to tapering as well as lifting interest rates next year and that will come at an expense of future growth. we are still seeing real yield quite low. they have come off the lows from last week. that suggests that despite the
particular moves by the fed, there will be -- will be a struggle to bring in inflation. the bond markets are pricing in that the fed is going to have to be much more aggressive going forward and that will come at the expense of economic activity and the future. yvonne: what does this mean for how to express that? most people are saying you by a dollar and you sell tech. >> i disagree because i think one thing economists will tell you is that a removal of tapering should see a rise in yield. the thing market participants are digesting is what happens when the q. week is removed from the markets? history suggest the removal of
the stimulus, the channels that are works through, it might lead to a lower long-term rate for lower inflation expectations into the long-term. it seems to benefit companies that do well and environments where growth is stagnant like we saw in 2010s. as a result, companies like big tech growth nims -- growth names . i think a good place for growth stocks especially in a higher inflation environment because what investors will do is say the growth is weakening that will flatten the yield curve. we will still see inflation above the 2% target and consistent concerns about low
real yield will push companies that have strong market share and pricing power. maybe this is the time for growth shift rather than a value shift. paul: with all this talk of rising inflation, wire we sing the traditional inflation hedges catching a bid at the moment? >> we are saying an element of that. it begs the question of where are investors going to park their money if we are in a higher inflation regime? is going to be interesting that at least the relationships we have seen over the last 18 months, a simple growth versus value dichotomy.
that's where we will see investors moving into companies and assets that are exposed to real assets and i think commodities in particular we will see commodity prices rise on the basis that if inflation pushes higher, that is driving inflation higher into 2022. on the flipside, we will see investors targeting companies that have market dominance, a pricing power, and art attached to the economy so they can pass on the higher cost. part of it goes back to the plate into quality names. that those names should see their profits rise.
paul: you mentioned the consumer. i want to get your take on the health of the consumer. black, we are expecting underwhelming numbers. what are your expectations? >> at the moment, i am interesting to see how we play out in terms of the data through the month of december. strong consumption we have seen over the last two months is twofold. number one is people bringing forward their buying for christmas. they're worried about supply chain disruptions. one thing we haven't spoken a lot about his the increasing positive -- that emerges when inflation expectations start to pick up. that would square the circle a little bit when it comes to the computer -- consumer sentiment readings.
also strong retail sales numbers. people are worried about the value of their money being eroded. to me, sales this week as well as the consumer activity going into christmas will be telling as to whether the u.s. consumer is in a strong state. paul: thank you so much for joining us. we have plenty more to come. this is bloomberg. ♪
considering a joint bid for telecom italia. in a letter, telecom italia ceo urged the board to take action on the bid. a fox come logistics arm is considering money from investors. it is in the early stages of investigating a listing in hong kong. it will use the proceeds for expansion. blackstone has become -- gun discussions over a bid. packer has yet to make any public commentary about the $6 billion offer. crown has not responded to the
bid which is blackstone's third. yvonne: we are watching these moves in south africa on the back of the new variant that is emerged in many countries on the african continent. it has been a volatile week overall. the turkish lira and the mexican peso are saying that. the mexican peso is moving on the back of the chief pick when it comes to the central bank talking about the questions of independence. we have plenty more to come on
daybreak: asia. this is bloomberg. ♪ this is elodia. she's a recording artist. 1 of 10 million people that comcast has connected to affordable internet in the last 10 years. and this is emmanuel, a future recording artist, and one of the millions of students we're connecting throughout the next 10. through projectup, comcast is committing $1 billion so millions more students, past... and present, can continue to get the tools they need to build a future of unlimited possibilities.
were going to see some inflationary pressures in japan largely due to oil prices and expected to pick up further in december as our and -- economists say. go to the japanese yen, a little bit of strength today with the dollar rally pausing a bit. paul: strength comparatively speaking. the japanese yen is still hovering around four year lows. nikkei futures, let's look at how they are tracking. in australia, we are also week. all major sectors are lower. financials are flat. u.s. markets were closed, so not a lot of catalyst for markets in the asia-pacific.
futures for wilma get going again we are currently looking at a weaker open. as inflation continues to halt global investors and policymakers, the rbnz says that has the tool to keep inflation under control. >> you really have to look at the different elements of inflation. typically the supply side disruptions, the supply chain disruptions that are causing the shifts in price levels. these are proving more prolonged than we had originally anticipated, but we do see those anticipating through time so the
forecast domestically is for inflation to lift from a little under 5% at the moment to a little under 6% then come back down through the course of the second half of next year. that is partly some of these transitory factors working their way up. a similar story what the global central banks were talking about. we also see domestic inflation pressures building. we are seeing that in our nontradable's inflation locally. it's really those persistent domestic inflation pressures that we feel we need to lean against. we are in a different position from the rest of the world because we started covid at a different starting point. we had a stronger economy going into covid and we are moving out of covid into this endemic world with a strong economy. yvonne: looking at the global forces, the federal reserve has made it clear they are starting
their taper. the signals are that they may be in favor of speeding it up. on that realization, we have seen the dollar strengthened. possibly one of the reasons why the kiwi has weakened recently. as that continues, a more hawkish fed, maybe they speed up their rate hikes, could that impact your exchange rate? bond yields? could it inflate -- influence the policy steps you do or don't take? >> absolutely and that is the environment we need to navigate every time we get together to make our decision about interest rates. we are a small open economy. the global economy affects us through a number of channels.
whatever the fed does will influence global yields, global interest rates, the liquidity of global markets. you could possibly see our monetary conditions tightening through this channels. equally, there will be impact on the exchange rate. we will need to feed those through each time we get together and do what is right for the new zealand economy with a focus on what our mandate is and what we are seeking to achieve. yvonne: that was the rbnz assistant governor. turning to japan, a new board member sees inflation creeping up in the country. let's bring in our managing editor in tokyo. good news for japan, we are finally seeing some inflation. >> yes, but the cause of
inflation is similar to what we are seeing elsewhere. it is largely led by fuel prices and possibly the impact of the weaker yen. these are not the healthy type of inflation that the bank of japan wants to see in order for them to change their fundamental view toward the economy. it is interesting how they mentioned that these factors were possibly going to impact japanese economy. whether that would be enough to change any sort of policy outlook is still quite unclear. paul: we are also seeing the yen week at the moment by the standards we have become accustomed to. he would be good news. she is lukewarm on that as well, isn't she? >> there are two things that play.
one, she doesn't want to say anything that would sway or influence the market. a weaker yen is positive for the exporters. with energy prices already hi, a weakening yen would only exasperate that pressure. i think she is mindful that the weaker yen is a double-edged sword. paul: let's get a check of the first word headlines. goldman sachs economist say they expect the fed to tighten policy faster than expected next year. they forecast the central bank will double the pace that it is withdrawing its asset purchase program. goldman also expects the fed to start raising rates from near zero in june next year with more hikes in september and december. the u.k. is adding six southern african countries to its list
citing a new coronavirus variant. south african scientists say the recently identified variant carries an unusually large number of mutations. the eu is said to propose a nine month time limit for the validity of covid vaccinations for travel into and within a block. it recommends all countries reopen as of january 10 giving priority to vaccinated travelers. australia is sending trips to the solomon islands to curb violent protests. the prime minister says about 75 members of the defense force and federal police will be deployed immediately. local reports say a curfew has been imposed to stop riots centered around the city's
gap has risen to the lowest. let's bring in one of the women responsible for that. thank you so much for joining us. the pay gap in public sector narrows to 8.6% from 9.6%. how long is it going to be before you managed to close the gap completely and what are the obstacles? >> we are pretty excited that we managed to get the pay gap down. the biggest drop we have had. the reason for that was because we put a plan in place. with a at measuring. no gender pay gap is acceptable.
a modest pay gap, that's what our plans will focus on going forward. paul: you are the government, we are talking about the public sector. why not just legislate this and be done with it? >> part of what we did in the previous plan was that we focused on equal pay. flexible work. gender balance and leadership. removing bile us -- bias and discrimination. we put in pay equity legislation to change that. we now have to see the results of that coming forward. we can't just rest on waiting to
see the results coming forward. we now need to look at new actions around looking at continuing on the focus of gender pay gap but also when ethnicity comes into play. yvonne: you mentioned about the ethnic pay gap. why has it been so difficult to close that one in particular? >> there hasn't been a focus on it. we started focusing on the gender pay gap in the early 2000. now we are starting this part of the plan that we put in place looking at the focus and saying it's not good enough.
now we are focusing on how we can bring it together. if you put your plans around it, if you're open and upfront, until we acknowledge it we can't do something about it. yvonne: how big of an asset is it to have an investor who is a woman, also a person of your position to help supercharge these efforts? >> it's a huge part. i now belong to a caucus that has over 50% women. that makes a big difference. what we have done in the public service over the past three years is we have gone from -- 253.5% of our senior leadership positions are women.
we have also changed up the governance on our boards. we went from 35% of the governance and the public sector boards are women, we now have over 50%. you can't be what you can't see. it's important that we see those women. paul: obviously some encouraging developments. what efforts are being made to encourage the private sector to follow suit? >> those conversations are ongoing as well. i have started conversations, we have a great group of businesses coming on board and wanting to continue those conversations with us. we had some large companies that sit on our exchange saying we need to change things up, we
need to make sure we are open about our gender pay gap. i have an advisory group that is taken this on board. they are a group of women and men who come from all parts of the public and private sector who have made it part of their key area they are working on. they're giving great advice in this space and also making certain we are keeping the conversations going. what we do know what the public sector is that if we focus on this, we can change it. it we are hoping the private sector -- helping the private sector to understand it so they can be open about bridging the pay gap. yvonne: hopefully, this can be replicated across the globe. turning to japan, the financial regulator is taking steps to improve gender parity in policymaking.
they are hiring more college graduates next year. how significant is this news? >> it is something of a milestone for japan. the financial industry is not known for its gender balance. the overall picture we can take from this is that while change in japan tends to be slow at times, it doesn't mean that change isn't happening. if we are bringing in bureaucrats at the bottom level, and 20 years time we can expect to see more women in management positions. it is definitely a step forward. we can say that services agency is a small and new agency. it is potentially easier to make changes there than in the actual finance ministry which is a more traditional organization.
paul: what sort of challenges exist to bring greater diversity to those parts of the government? >> if you look at parliament, in the last election we saw the proportion of women fall for the first time in about a decade. that was because the ruling liberal democratic party did pretty well. they always have trouble recruiting women as candidates because of the way their candidacy system is set up. overall, japan remains backward in terms of gender diversity. the gender gap index is number
120 in the world which is not great for a developed country like japan. we haven't seen him made any pronouncements on gender diversity nor have we seen him appoint high-profile women, so i am not hopeful that things will change at this point. yvonne: thank you. we are counting down to the start of trading in japan. the government saying covid is becoming less of a drag on the economy. seeing that the severe situation economically is gradually starting to fade. good news also when it comes to the bank of japan, talk about the newest board member seeing inflation creeping up. upward trends that she is forecasting as well. she is saying that consumer
paul: we are tracking the fallout of the global supply chain crunch. dutch agency reported that the volume of trading fell. that is a reversal from a pickup we saw in august. the bloomberg trade tracker showing lower volumes and october the world's busiest ports. signaling continued snags for global trade. foxconn logistics arm is said to be considering offers from investors. it will use the money for expansion. yvonne: u.s. retailers had a tough week. the gap and nordstrom said they can't capitalize on heightened demand this season as supply
chain disruptions led to empty shelves. you can read more about those stories and our newsletter. paul: a ceo says inflation is a fact and he thinks it's going to remain for the coming year. he discussed inflation, supply chains, and the company's outlook with us. >> inflation is a fact. we see it happening on all dry goods. it has been increasing there as well. demand is potentially stronger than we offer so we have seen price increases. now i think it's going to last for the coming year for short. we see a strong inflection
currently. we secured a lot of our contracts for the whole year. it is going to impact us next year for sure. it will have an impact, but at the same time we believe it is manageable because when you are on the high-end, people are less sensitive to prices so there are things we can do. >> we saw the margins increased to 33%. does that tell us you are passing the cost on to the consumer? can you preserve your margins? >> we don't necessarily work are pricing directly linked to the inflation. it is more about the attractiveness of our brands. of course the price increases we have planned this year which are
driven by the desirability of our brands -- it is driven by many more factors than purely inflation. now the growth of the market that is coming in from the growth of the sales and control of overheads and costs. we have been spending more on communication. it is a good control of our costs in the context of a strong increase of turnover. >> what about supply chains? are you seeing any evidence they are starting to ease? how long do you think the supply chain constraints will be with you? >> easing in a sense that it is easier than last summer when the channels were empty. now it is not easing from a
macro perspective. we see it lasting until 2023. it has a huge impact on the costs of logistics but that is not so big at the scale of our gross margin so it is not so impactful even though absolute value it is a sharp increase. it's going to remain high, but for us from the time it takes to ship the goods so we see our sales related to the shipments and i would say that this is probably the more critical today . we don't want to see the shelves empty. yvonne: checking on markets as we count down to the japan open, we are seeing a quiet session because it is thanksgiving in the u.s.. new zealand, we are seeing lower. australia is also down. when it comes to emfx, the rain
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removing domestic price pressures and hong kong plans to open its border to mainland china just as a new worrying variant of the virus is detected in the city. yvonne: we are seeing a bit of a risk obsession here when it comes to south korea as well. they are considering strengthening from these quarantine measures as well as we continue to deal with these flareups in covid, also when it comes to market moves, we are still dealing with a little bit up risk assets and a bit of trouble today. the nikkei lower. the japanese yen, that reversal a little bit when it comes to that yen weakness, but we are still hovering around one 15.09. new boj board members saying inflation is creeping up finally in japan. take a look at when it comes to
the open. we are focused a little bit more on what is going on with this rotation, the likes of socgen saying we might be seeing more rotation out of china. they are saying mst china outperform most gauges in 2022. the crsp flat. we've been talking about dollar moves a lot in the last couple of days. paul: that's right. dollar strength definitely a theme at the moment, weighing pretty heavily on the ossian kiwi right now. the kiwi dollar one of the worst performing currencies right now. the aussie weakening as well. weakness seems to be a theme across the region at the moment. we've got the sx grinding lower, off 2/3 of 1%. pretty much every sector is
weaker at the moment with the exception of information technology. the new zealand exchange also heading down, off 2/3 of 1% right now. in terms of currencies, we've been talking about the south african rand. that has dropped to more than 16 against the u.s. dollar. south africa one of the countries put on a red list by the european union with concerns emerging about a new variant of the coronavirus, which has multiple mutations on the delta variant, highly transmissible. so concerns about that virus mutation weighing heavily on the south african rand at the moment. let's bring in the investor director for multi-asset solutions at aberdeen. in terms of recovery and performance around the region, you see multiple speeds of growth across various asian economies. this does sound complicated.
which region do you see powering ahead, and which economies do you see lagging in asia? >> we expect ossian to accelerate -- we expect asean to accelerate and offset what is happening in 2021. regions we expect to maintain existing pace of growth would be japan, india. regions we think will moderate will be pockets of north asia. in terms of moderation, we don't think it is going to be the start of a down cycle. we are still seeing moderation, but still lots of factors like improvements in the medical backdrop, reopening's in terms of consumption to keep growth fairly upbeat, so moderation but still quite strong. paul: china one of those
countries where you see lagging a little, but it seems wildly developed world is acting, perhaps the pboc might be easing pretty soon. does that improve the case for opportunities when it comes to equities in china for you? quits within china, we look at -- >> within china, we look at shares, -- we look at a shares because it is still fairly sheltered from the regulatory pressures we see affecting china internet. two, the other part which we see that will be beneficial is earnings. we do not expect a huge modification of earnings within asia. last but not least in terms of benefits, asean markets have
higher percentage to consumption , and we think that is in line with what the chinese government is trying to push for, which is common prosperity which we expect during this pandemic. yvonne: we are seeing quite a bit of pressure on the south african you on -- yuan amid concerns of this new variant that has been detected. how closely are you watching the variants now? >> definitely it is one of the top three risks. one would be the development and mutation, and what is key is to try to identify if existing vaccine treatments can deal with it. the second is to also take a look at the upcoming treatment in the pipeline.
particularly the pill. if it does show efficacy, i do not think we have much to worry about. if not, we probably have more to worry about. we will probably look at what happened in 2020. yvonne: taking a look at multi-assets, i'm wondering when it comes to what has outperformed this year, it has only been three things -- stocks, commodities, as well as crypto. is that likely to be the case next year? >> for next year, our preferences are for currencies we think will continue. i don't think we can buy stocks anymore. it will be a bit more challenging. i expect the dollar to do fairly well. we think inflation will be ok at least for the first quarter of next year before we start to see
moderation. that will keep rates fairly elevated. you couple that with the fed indicating a pickup in its pace of tapering. in terms of pockets of equities, we think there will be a huge opportunity in terms of acceleration of growth coming out of a huge delay in this reopening. in addition, if you look at the higher interest rate environment, high-yield environment, there are huge exposure to banks, and central banks over there are also watching the decision and have a slight hawkish bias. we are expecting the digitalization of asean. we are starting to see more and more internet growth of
companies in the region. yvonne: thanks so much. we did have u.s. markets closed, but treasuries have reopened in japan. you are seeing when it comes to u.s. on yields, they are taking lower amid this risk aversion we are seeing across markets here today. for basis points lower for u.s. 10-year at 1.5876. australian 10-year yields down close to five basis points, so we are seeing a little bit of repricing, so to speak, after what we have been hearing from the fomc about faster tapering, the be ok hiking, rbnz hiking as well. commodities as well. perhaps it is a dollar strength story that really is reigning. you see crude also heading down.
how is the opec-plus going to respond to this coordinated release of strategic reserves? gold futures also slightly higher here by about .5%. to first word headlines now, the u.k. is adding six southern african countries to is travel red list as it investigates a new coronavirus variant. the press association cites the health minister as saying flights will be suspended from midday friday from countries including south africa, namibia, and botswana. african scientists say they have recently identified a variant that carries an unusually large number of mutations. china and the u.s. reportedly making plans for a meeting between top defense officials. the two sides are aiming to hold talks by phone or online by december 5. china will be represented by the minister of defense and the senior vice chairman of the central military commission. china has slammed a u.s.
decision to sanction several firms, saying the decision violates an agreement between president she and president biden last week -- president she -- president xi and president biden last week. china's foreign ministry has warned germany's incoming commission not to meddle in its incoming affairs and calls on germany to expect its policy with regard to taiwan. the warning came after the chancellor and waiting unveiled an agenda that includes surprisingly strong language of china over human rights, its claim on taiwan, and its risk to hong kong. paul: still to come, we will be joined by israeli global advisors. the latest china tech firms get set to report results. up next, the rbnz says inflation
yvonne: let's take a look at currencies now. i'm taking a look at the rand, the lira, the mexican peso, all seeing quite a bit of pressure here this morning. walk us through the price action so far. >> basically stemming heavily from pressures from the variant we are seeing in africa. the african ran weakening to a one-year low.
the dollar benefiting and the yen benefiting even more. the turkish lira is trying to stabilize a bit more. if cpi data comes out strong, martin's -- markets will certainly question erdogan's strategy. paul: the reserve bank of new zealand raised rates on wednesday, signaling there will be more to come, but the currency has weakened since then. what is going on there? >> the problem there was rate hikes were already priced into the market. the market was actually expecting something slightly higher, so it is more in line with the market now. because it was already factored in, there was no real surprise to the market. the dollar obviously rising on
expectations of increased qe taper and maybe more rate hikes next year. the markets are pricing in two and certainly beginning to look at three rate hikes. kiwi basically has already factored it in. paul: rates and fx reporter david finnerty there. sticking with new zealand, as david mentioned, it is leading the charge in global stimulus withdrawal. the central bank told us they would be continuing on that path. christian hawkesby spoke with economics editor kathleen hays. >> for us, it is about policy mandate, and the reality is new zealand are looking at a very resilient economy. we have core inflation running
near the top of about our 1% to 3% target range and we have an unemployment market at what we think is a sustainable rate, so we think we need to continue this process of continuing stimulus and getting interest rates back up toward neutral. kathleen: how will you know if you are moving too quickly and jeopardizing job growth or moving too slowly and risking letting inflation become more persistent and get out of control? >> it is a great question, and it is a balancing act that we will have to go through in setting policy. we really look at the balance of risks to the outlook, and at the moment, we see them pretty finally balanced. on the upside, the risks are that we have had a pretty strong economy.
inflation expectation risks are at bay. on the other side, we've got interest rates having actually moved a long way here in new zealand. mortgage rates are only 2% up from their lows in january. we are going to have to be navigating having covid, which is a very different strategy than we have experienced over the last 18 months or so, so we think it is pretty evenly balanced, and that is what has led us toward taking these steps for now. kathleen: what would boot -- what would tell you that you have to be more aggressive, that the balance of risk has shifted, and at the press conference with the governor, you, and the rest of the team, it would seem clear that there was a concern that that could happen, that the balancing risk could shift. >> that's right. we have the effect that we can
consider our decision again. in terms of the upside risks, i think it really does come back to inflation and inflation pressures here domestically. we have a very tight labor market at the moment. we have core inflation getting up to of the top end of our target range, so inflation expectations will be absolutely key for us. at the moment, they are doing what we would expect. five to 10-year inflation expectations maintained. short-term inflation expectations have loosened, but lifted in a way that we would anticipate, so i think that is a really key thing, you know, to watch for and how that develops through time. yvonne: that was the rbnz
paul: china's property-let economic slowdown may be set to continue. bloomberg's aggregate index of eight indicators shows sales slowing again. bloomberg's china economy editor joins us from beijing. james: as you said, home sales have continue to drop in november. you also see car sales falling, which is not a good sign for a
rebound in consumption. i stockpile of iron rebar is what you need for constructing buildings. it is partly because of falling pressure, but also because companies just are not using that. there is no demand for that. it looks like the slowdown we have seen in construction is continuing in november and there's no sign the cover -- the government is stepping in to change that direction right now, so that might continue for the rest of the year. yvonne: these easing measures we are seeing, is not likely something we could see in other cities then? james: there have been limited measures like this. a few places have announced limited easing measures from their housing market, but it really has not changed the picture across the whole economy and across the whole country for the market.
these are sort of localized measures that may make a bit of a difference, but they will not change the picture that housing sales and housing prices and also housing construction investment -- these are all falling. even though china is a huge city with a population bigger than australia, it will not make a huge difference to the overall market. yvonne: our bloomberg chinese economy editor joining us in beijing. the debt sector meanwhile threatening to defund developers that have borrowed millions. we see how these green debt markets in china have surging. how has the whole property market crisis impacted things? >> they were sold about $10 million worth of green bonds so far this year. that's about half of all the bonds as far as green debt, so really picking up steam this year, but really not a place
where the defaults and the problems we have been talking about for month now and kind of focus now, but about a month ago , it was a green bond, and modern line was the first company five years ago to issue green debt on the hong kong stock exchange, so you have kind of a first mover five years later starting to run into issues with its green debt and you wonder where is this going to happen with all this new debt that has come on this year. paul: how has green property debt been faring in light of this plunge we are seeing? >> they are down almost $.40 on the dollar to about $.70, so it is actually a bigger drop than we have seen for china junk bonds and others, dollar bonds in general where we saw yields jumped to about 25%. we have seen kind of a bigger move in the green bonds and we have seen for regular china property bonds.
yvonne: how does this play out for the market, then, for international investors looking for china to meet these long-term carbon neutrality goals? >> we got $100 trillion earmarked in recent years for green climate goals. china wants to be carbon neutral by 2060, so there is a lot that they have to do. obviously, they are looking to have peaked carbon emissions by the end of this decade, so this got to be a lot of movement as far as going into more renewables to reduce their coal output. they cannot rely on themselves to fund that. they need international money to be able to do this. if they are concerned that they need to ask for higher yields at the beginning of the issuance, that may be something to look at going forward. yvonne: let's do a quick check of the latest headlines, meanwhile. dime >> -- daimler saying
chinese demand will be strong next year. premium luxury car demand remains high in china amid strength in models including mercedes. i foxconn logistics arm is considering raising funds from private investors before going public as early as next year. sources say the supply chain management platform is seeking up to $4 million in pre-ipo rounds. we are told the company has a valuation of as much as $4 billion and will use the proceeds for expansion. rbc considering a joint bid for rb antalya. they could team up with cdc to share the burden of what would be europe's biggest ever leveraged buyout. telecom italia's ceo urged the
board to take action on the bed and offered to resign to help get it across the line. plenty more to come on "daybreak asia. this is bloomberg. ♪ ♪ - [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color
paul: got some breaking news out of australia. a big pop for australian retail sales in the month of october, rising 4.9%, more than double market expectations. this covers a period when half of the country were beginning to emerge from coronavirus lockdowns, so big jump for retail sales, up 4.9%. the a sx right now not performing particularly strongly, weaker by about 15%. if we look at the aussie dollar,
it is also pretty weak today, 71 point 68 versus the greenback. one of the weaker of the g10 currencies. we are seeing a fair bit of weakness across the board in the face of u.s. strength. the yen, though, gaining a little, off of its four-year lows. we did see a slightly stronger than read for tokyo a little earlier on, but take a look at the aussie, i mentioned that. the kiwi dollar, 68.30 dime -- 68.39 versus the dollar, as a result of them not tightening quite as aggressively as the market expected. the euro little change, but very much a story of dollar strength. even more dramatic when we look at the e.m. complex. yvonne: absolutely. take a look at the rand out of
south africa. they did detect this new variant which does not even have a name yet, but it is concerning. you did see that move in the currency. this is the first time in a year we have reached these levels. you could say the same when it comes to the mexican peso, so it is i dollar story but also a virus story about mexico, the central bank governor, and a you on story. they talked about how they could be looking at stricter quarantine measures, saying perhaps these kind of virus concerns are emerging once again when it comes to e.m. space, and you see the turkish lira dropping against the dollar. taking a look at broad markets as well, you see bonds seeing a bit of a bid this morning. equities selling off. nikkei futures down 450 points, despite what was the theme here. people saying there was that catch-up trade in japan. that dollar move against the yen certainly is weighing on those
exports today. you are seeing a lot of pressure on new zealand as well as australia as we wrap up the trading week as well. u.s. 10-year yields down close to five basis points at 1.585 nine after resuming trade. this is pretty interesting. liquidity has been thin given it is thanksgiving in the u.s.. certainly seeing some pretty big moves when it comes to emfx here today. tech firms also set to report today. bloomberg intelligence is seeing one company occurring its biggest quarterly loss since going public. joining us for more is the head of research at really global advisors. it seems like there's a lot of different fronts these companies are dealing with, not just with the regulatory crackdown in china, but how bad is it going to look?
>> made tuan's negative earnings has continued from q4 2020 -- meituan has continued from q4 2020 and likely will continue in coming quarters. that is primarily driven not by the regulatory crackdown but instead by large investments in their group-buying program. this is spurring long-term growth. we are likely to see active users push above 100 million this quarter, and their investments in ride-hailing have also cut into short-term profits, but we expect both of these approaches to improve long-term work, and we expect to see them return to profitability
by 2023. yvonne: isn't that interesting? the markets saw a bit of a tech rally, and many analysts are saying the worst may be over, we are seeing the tail end of this crackdown, and then you see the earnings and the impact it has had on some of these tech giants . do you see the view here as well that perhaps we have seen the worst of it, or how much is that reflected? >> the price impact of the regulations, the worst of that is certainly over. the impact on earnings and the growth trajectory of earnings will be felt over the coming quarters and years. this regulatory shift is a permanent thing. it is likely the case that we will continue to see loss and crackdowns on anticompetitive behaviors. we are likely to see a
championing of workers and ensuring that they receive insurance and other benefits. these are things that will weigh on the growth of these firms, but at the end of the day, these long-term growth prospects of these firms is still strong. the chinese retail growth will still continue. it is just that these regulations will alter the growth trajectory slightly. paul: we are not expecting great things from results today. alibaba got beaten up badly by investors this week, but all three stocks still rated by. do investors just have to lower expectations in terms of returns? >> the pain has largely already been dealt.
the growth trajectories will still be strong, right? -- the pain has largely already been felt. i think that is important to realize, we will still see double digit growth in these sectors for years to come on the top line revenue side. what we are seeing is that the market understands that continuing regulation will have an impact on the steepness of that curve. paul: thanks so much for joining us. let's get a check of the first word headlines. goldman sachs economists say they expect the fed to tighten policy faster than expected next year. goldman forecasts the central bank will double the pace of withdrawing its asset purchase
program. goldman also expects the fed to start raising rates from near zero in june next year with more hikes in september and december. china's foreign ministry has warned germany's incoming ministry not to dabble in global affairs. the warning came after new chancellor schulz unveiled strong views about china and human rights. at least 27 migrants died after their boat capsized in the english channel. prime minister boris johnson accused france of not doing enough to stop migrants from trying to get to the u.k. from northern france. in reply, the french interior minister said the british use of clandestine workers acts as an incentive.
paul: as inflation continues to haunt global investors and policymakers, the rbnz says it has the tools to keep price pressures under control. the assistant governor told us domestic pressures are growing as the country moves out of the pandemic with a relatively strong economy. >> there are a lot of one-off effects happening at the moment. we know that there are the supply-side disruptions, supply chain disruptions that are causing these shifts in price levels, and these are proving more sort of prolonged than we had originally anticipated, but we do see those anticipating
third time, so our forecast domestically is for inflation to live from a little under 5% at the moment to a little under 6% and then come back down through the second half of next year, and that is rightly due to some of these transitory factors working their way up and similar stories to what global central banks are talking about, but also see new inflation pressures building as well. it is really those persistent domestic inflation pressures that we feel we need to lean against, and we are in a different position from the rest of the world because we started covid at a different starting point. we had a stronger economy going into covid, and we are moving out of covid with a strong economy as well. >> looking again at some of the global forces here, the federal
reserve has made it clear they are starting their taper. now the signals are they may be in favor of picking up the taper. as that realization has kind of sump in two investors, we have seen the dollar strengthened, probably one of the reasons why the kiwi has weakened recently. u.s. bond yields are rising. as that continues, a more hawkish fed, maybe they speed up rate hikes. could that impact your exchange rate? could it impact bond yields? could it impact the policy steps you take? >> absolutely. that is the environment we need to navigate each time we make decisions about interest rates. absolutely we are a smaller economy. the global economy takes us through a number of channels, if it is the trade channel for all the uncertainty, confidence
channel. whatever the fed does will influence global yields, global interest rates, the liquidity of global markets, and so, you know, you could possibly see how -- our monetary conditions tightening through those channels. equally, there will be impact on the exchange rate as well, so we will just need to feed those through each time we get together and just do what is right for the new zealand economy with a laser focus on what our mandate is. yvonne: that was the rbnz assistant editor speaking with us earlier. scientists in south africa are studying a recently identified new covid variant of concern. hong kong has already confirmed two cases of it. let's find out what that means with our senior medical reporter. how worried should i be right now? michelle: it is still early, so
you don't need to worry significantly at this point. one thing that cannot be denied when it comes to south africa is they have actually done a pretty good job controlling coronavirus at this point. they are on a low level of the coronavirus curve. they are seeing these increasing cases. there's 100 of them there now, just up from 10 overnight. we are seeing this exponential growth of the variant. the thing is when the virus changes, it can change for good or bad, and we do not know exactly if this variant is going to make it worse or potentially could make it at her. paul: how long would it take before we know if existing vaccines are still effective against this new variant? michelle: we are not actually seeing people who have vaccinated infected with this variant. just with the other variants that have been spreading with
delta and alpha and other versions of the virus. just the fact that you have infected people who have been vaccinated in and of itself. again, what we need to concentrate on is how severe these cases are. the concern with this variant is that it is significantly different from the variants that have gone before, so if it starts spreading again, if it is able to evade the vaccines, we could see another wave across the world. the question, of course, is if we will see the severe cases, the hospitalizations, the icu's, and the deaths, or if it will be a much wilder, influenza-type, cold virus. we have two pieces. we are worried about how transmissible it is and how dangerous it is once it gets into you. paul: variable how governments are going to react to this. can we anticipate borders getting sealed up again?
michelle: that is a great question and on the top of everybody's mind. in hong kong, everybody is talking about opening the border with china. there's openings happening everywhere, and of course, governments and authorities want to be careful. we are already starting to see that. the u.k. has already started closing its borders to people coming in from south africa because they don't want to see cases of some kind of variant that is able to evade vaccinations. meanwhile, in the middle of a terrible outbreak, they are already overwhelmed. we are not exactly sure why that is happening in europe, but absolutely, we will start seeing restrictions come in as authorities watch this. they will want to be careful. i would not be surprised if we saw more things popping up over the next couple of days, but also, we are still very early when it comes to knowing about this variant. yvonne: very early, but we
already have two cases reported here in hong kong. i wonder if that impact in any way these talks of reopening with greater china now. michelle: right. exactly to the point we were just discussing, yes, we will be seeing it. that is why the u.k. has shut down travel coming from southern africa. already in hong kong, we have two of these cases. one came from south africa. the other is believed to have gotten transmission within the quarantine system, which is a whole other story, but the point is when we talk about what is happening with china, it does show that hong kong's processes are actually very strong. we are not seeing additional spread, and that is what chinese officials who were in hong kong this past week were looking to see, if the system in place is strong enough.
i would personally argue that this shows that they are catching those cases. will we see additional curbs come in? it is entirely likely, but hopefully, it does not derail this reopening we expect to start happening here in the next couple of weeks. yvonne coley you made me feel a little bit more comforted. paul: that is senior medical reporter michelle cortez. still to come, germany's bundesbank warning that a remarkably low number of business failures during the pandemic should not be seen as a guide to future risk. this is bloomberg. ♪
paul: we are watching a number of key events, including the fed chair's testimony before the senate alongside janet yellen. it will be an opportunity for powell to defend his renomination. they will reevaluate plans for oil supplies on a number of countries as the u.s. and china and japan tapped oil reserves. yvonne: when it comes to data, it will be a pretty big week next week when it comes to china pmi. further indications what things will look like, given what we have in seeing, if it's the
property picture dragging things down, the consumption story as well. u.s. jobs also front and center, given what bond market volatility has looked like. and are we starting to see some normalization in the labor market as well? also, paytm, those earnings coming out in the next couple of days or so. i think it is over the weekend, after that disappointing debut we saw in india. let's move on. germany's bundesbank has warned the low rate of this is failures during the -- business failures during the pandemic should not be seen as a guide for future risk. >> we have made it clear in all our forecasts that there's a strong temporary component. nobody knows how long that will be and what is the long-term. certainly there's higher upside risks, and that is something
that monetary policy has to take care of, but what we are saying is that monetary policy needs to act, but also, we have to make sure different sectors can deal with future contingencies, and one of those things with an increase in inflation is higher interest rates, and i think that is something the financial sector can deal with if they increased interest rates more abruptly, then we have some weaknesses in several parts of the financial sector. there is a potential abrupt increase in interest rates that certainly can also be a market increase, so risk premia can change. this is something we are making sure that the financial sector, everybody manages interest rates. >> i imagine that is so hard at this point because there is a huge debate as to if this is
one-off or permanent. not getting too much into the politics of inflation, but from a policy perspective, how are you able to handle those proposed scenarios? it does seem the debate is not settled. >> like i said, it is hard for everyone to affect probability, so what does that mean. you have a situation where you have a lot of uncertainty. what are the measures to take if there is a lot of uncertainty? you need to absorb potential losses, and this is why they are saying they need time out to take precautionary measures to increase the buffer that can fluctuate over the cycle, and that is the measure we have to take now in order to protect the financial system against whatever the contingencies will be. >> we are here at the german central bank. the president of the german
central bank is going to leave. there's so much speculation about who could be the new head of the german central bank. your name has even been floated. even if names change, can you guarantee the solid nature of the institution, not so much about the institution perhaps, but what the institution stands for? >> you can understand i do not comment on those decisions. we have a very stability-oriented culture. in one sense, i think it plays an extremely important role in making sure prices are stable, and we also have a very important mandate when it comes to financial stability, and we need it. financial stability is really kind of the backbone for price stability and all the other policies to work as intended. >> this is always the image the central bank of germany relates,
the number one focus is maintaining price stability. >> take the example of climate policy. for the climate policies to work, we need stable prices because in the end, prices might try to steer the economy toward greener production of goods and services, and for that to happen, we need stable prices. >> so whoever gets it, that is still very much the message of the central bank, that price stability should be front and center. >> absolutely, yes. paul: that is the bundesbank vice president speaking with bloomberg's maria tadeo. coming up, three major technologies will enable disruption in the decade ahead.