tv Bloomberg Markets Asia Bloomberg January 12, 2022 10:00pm-11:00pm EST
evergrande facing the vote to avoid default. and diving into india's big tech earnings. haslinda: cpi numbers playing out in line with expectations but inflation could be stickier, where will inflation go? perhaps even with rate rises expected by the fed, inflation will remain elevated. the msci asia-pacific index down slightly. a big drop after selling shares at a 15% discount, not helping investor sentiment.
hs tech also down after the 5% increase we saw yesterday. the question remains whether bitcoin is a hedge against high inflation. bitcoin edging lower from the level we saw. the commodities index down slightly, by .4%. new york crude was trading at the highest in about two months on the back of tightening supply. nickel at the highest level in about 10 years. expectations that indonesia may impose a tax on nickel exports. rishaad: let's move to that open over in bangkok and see what it's doing there. up just a fraction, a mixed bag
across this part of the world. nothing to write home about but we did sit strengthen for a fourth day. a bit of appreciation coming along after the dollar weakened wednesday. let's talk about inflation, this is something playing out in india. looking as though the nfte will be buoyed up by that news. a lot of focus on the likes of dcs, which did report earnings. the market will react to all of that. the indian market opens in a mere 43 minutes. haslinda: and the biggest gain in u.s. inflation nearly 40 years all but guaranteeing a
series of rate hikes by the fed. we all know inflation is surging , the big question is, how much and how quickly can it turn? >> that's a question the reserve is facing as 2022 gets underway, with an annual rate of increase, 7%. let's take a look at the bloomberg chart, the highest since 1982, nearly 40 years, back when ronald reagan and margaret thatcher held their respective offices. it was just up around 2.5% year-over-year and suddenly, 2021 is when it really started surging, up five point 5% year-over-year. let's look at another chart, why is it rising so much now? all those pink lines, that's the surge in inflation.
as we see all the supply chain things going on, all the things pushing up prices, that blue stuff that you could barely see until this year, that is goods prices, they were up 10% year-over-year in 2020 one. the orange series of bars, energy, that's another reason inflation is up so much. energy and go up and down a lot. supply chains are big factor, the energy market. lots of demand, and the omicron variant, that will create all kinds of dislocation and keep workers at home and wages rising, etc. these are the things the fed is trying to figure out, but they're obviously ready for it having to do something and do it fast. the question they will see playing out over the year is are they doing enough and are they
doing it fast enough? haslinda: autos up 20%, you talk about disruption of the supply chain caused by omicron, how much is the sector thinking of that? kathleen: it's definitely going to make them wonder. neel kashkari, president of the minneapolis fed, in november he wasn't even looking for rate hikes in 2022. and by the end of the year he penciled in two rate hikes. he said he's getting some calls about inflation coming down. let's listen to what neel kashkari said. >> you look at financial market indicators, where the initial markets thing inflation is going over the long-term. going back to stork levels of around 2%. i don't overweight that, that's
one thing we pay attention to. that at least gives us some confidence. kathleen: now let's listen to what one of the leaders of the hawkish federal reserve act said today talking, he said four rate hikes now look likely. he thinks the fed needs to get a couple of rate hikes under its belt early in the year. two days after jay powell did the same thing, she said inflation is too high and curbing it is a top task for the federal reserve. there's a lot of political forces pushing the fed to get inflation under control. the public doesn't like it, midterm elections are coming soon, and there's a lot of reasons for this to move and move quickly. haslinda: a lot of uncertainty. rishaad: let's stay on the
inflation theme and those numbers, and the anticipated federal reserve tightening. simon joins us now. inflation there at these elevated levels, that could be engendering further bond yield increases. the dollar did slump, and what are the reasons behind that? simon: it was really quite peculiar. i think the best explanation is the dollar had previously overshot, at the turn of the year the u.s. dollar was about 1.7% overvalued against the euro. that's taking into account relative interest rates. but after the recent slump, it's now undervalued versus the euro.
so we've turned the correction from overvalued. rishaad: how does it actually affect what you copper? simon: -- do you cover? simon: first of all, you have stronger emerging-market currencies. secondly you have reduced price pressure and a lower dollar means you have lower debt repayments. the question, will it continue, one of the main things is that the market still needs return
rates and that will be dollar positive. rishaad: the peak of the fed rate cycle can still be priced a little bit higher. is that correct? simon: exactly. just take fed fund futures to the end of 2025, they are pricing in less than 2% on the fed's rates. that's kind of odd given inflation expectations. plus you've got to build in a buffer. the terminal rates should be priced a lot higher than they are today. you've got zero yielding debt, it's still pretty strange and i think there will be further repricing. rishaad: simon flint there,
emerging market strategist. let's get over to vonnie quinn in new york for the first word news. >> u.s. house leaders are said to be nearing a deal on a china competition bill. it would authorize billions of dollars in funding and provide aid to the local semiconductor industry. sources tell a senate majority leader chuck schumer and the white house see the legislation as a top priority. an agreement must be reached before midterm election campaigns. china has postponed to political meetings in the city that borders beijing over it sudden covid outbreak. it is raising concern about whether the olympics can go ahead smoothly. a reported 137 you cases on wednesday. the city is located just 30 minutes from beijing via train. and suggesting and in for covid
is insight. saying the country is on the cusp of transitioning out of the pandemic. earlier this week, spain's prime minister said the virus could be treated like the flu. u.k. prime minister boris johnson is fighting on after apologizing for attending a downing street garden party during lockdown. he told the house of commons he still needed to take responsibility. his survival as premier is now in question. >> with hindsight, i should have sent everyone back inside. i should have found some other way to thank them, and i should've recognized that even if it could be said technically to fall within the guidance, there will be millions and millions of people who simply
would not see it that way. >> global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haslinda: still ahead this hour, speak exclusively to the cofounder of india's latest unicorn and whether the ad tech sector will see more regulation. we talk about the policy risk raised by the fed as it contains pressures. this is bloomberg. ♪
expectations. >> we will see elevated inflation readings for the next few months. >> inflation is likely to be significantly above what is discounted. >> the message we have been getting from the fed. >> i don't think there was enough to stop them from pursuing this more hawkish path. >> i don't really think anything stops them from going in march except one of these kind of outliers, and i think they are ready. rishaad: some of our guests earlier and prices elevated at levels not seen in 39 years. haslinda: let's get more
perspective from our guest, good to have you with us. we talk about how inflation came in in line with expectations, but there is still some concern, if you look at wages, that's why the market is pretty nervous. >> exactly right, simply because it wasn't as hot as expected. cpi inflation running at 7% on an annual basis, going back six months ago, no one was calling that. so we are entering a very different macro paradigm this year. 2021 was classified as a reflation paradigm, accelerating growth, accelerating inflation, 2022 is going to be ushering in a time of much slower growth and our best case in the moment is
on easing inflation. of course the risk to that view is that inflation remains secure. logistical bottlenecks remain with us for a lot longer than anticipated and therefore inflation stays at an uncomfortable level for much longer than most expect, including our central bankers. which is a long way of saying that stagflation is coming, and that's a more challenging backdrop for risk assets. haslinda: 2021 was about no alternative to stocks, and then 2022. sue: given the more challenging macro regime facing the market, we would indicate more of a barbell strategy. such as consumer staples, big tech, health care. a value profile where were more
focused on cash flow being stable, where dividends are safer. some utilities fall into that category. in the asia region, it's more of a mixed bag. we like taiwan and we like japan as well. rishaad: you mentioned stagflation, certainly that's not on the table now. sue: when you're confronted every single morning, someone sending photos of supermarket shelves being completely bare. the on the ground reports from those in logistics suggest that we do need to worry about the potential for this sticking
around well into the second half of this year. we are aware of the risk skew on that best case at the moment, especially if you look at covid, while we are seeing great news in the fact that there seems to be a lot less severe symptoms, fatality -- rates a lot lower than in previous waves, economists are starting from a much lower basis. we have much less policy headroom, not to mention the supply chain disruptions over the last 18 months to two years. what has that taught government? it has taught them to move away from just-in-time supply chain to just in case supply chain. rishaad: and of course your call
on the dollar will be vital here. what about the way that it affects some of these emerging arc it currencies, especially those that have a lot of offshore debt? sue: a great point. i will give you two sides of the coin, a more negative case the reaction to cpi overnight out of the u.s. as a negative reaction to the u.s. dollar. that comes as inflation wasn't as bad as feared. the market has got a lot priced into the federal reserve. were talking about four hikes when it was two or three, not that long ago. it's a very aggressive profile for the federal serve monetary policy for the next year. we doubt they will be able to follow through with that. it does seem a lot has been priced into u.s. dollar strength.
i would balance out against the fact that we are seeing a major withdrawal of global liquidity. the biggest losers in that environment are the emerging-market currencies. but again, we would really stress that a much more differentiated approach to emerging markets is the right way to go as well as watching the asset class. rishaad: always a pleasure, never a chore. let's have a look at this company making headlines, giving the game away, this is after two of its hospitals have been suspended because of treatment delays amid the latest covid outbreak taking place.
the company sought share price fall to the lowest since september about a week ago and that was about 6.5%. it seems a bit counterintuitive that you don't usually suspend hospitals for treatment delay, taking them out of the equation to treat people. haslinda: there you go, putting in perspective, among the cities in china grappling with the outbreak of omicron. and the hospitalization rate is really important, is one of the things we look at to decide on the level of restrictions. icu beds, 50% are currently occupied and the government is working on measures to put a lid on new cases. there is plenty more ahead. keep it here with us. this is bloomberg. ♪
haslinda: let's do a quick check of the latest business flash headlines. china's biggest producer has priced -- a supplier to tesla already listed in shanghai. it's all more than $124 million in shares. it is set to begin trading on the hang seng on friday. and the investment firm buying 51job is cutting 28%. it includes the ceo of 51job and says it is now offering $57 25
per share in cash. set to close 9% higher. qatar consulting trailed estimates after it boosted hiring to retain workers. sales climbed to $6.8 billion. rishaad: two chinese markets as we go toward the lunch break, just looking at this company, saying it will have problems here to pay its financial obligations. evergrande there almost -- also very much in the frame.
the share price south as much as 20%. evergrande had sales rebate dollar debt trying to avoid on short default. and there you have it. woah. wireless on the most reliable network nationwide. wow. big deal. we get unlimited for just 30 bucks. sweet, but mine has 5g included. relax people. my wireless is crushing it. that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one-upping itself. take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes it easy to switch and save hundreds.
doing better compared to last year. take a look at traffic at the airport, about 13% compared to 3% previously, up far away from pre-pandemic -- off far away from pre-pandemic, but making improvements nonetheless. rishaad: of course, one of the worst hit industry groups. no carrier immune to that. others faring worse, those that don't have domestic markets. let's take a look at how these elevated price levels are playing out on the political front. let's get to new york. vonnie: the highest in nearly 40 years. president biden saying his administration is making progress, even as headline inflation hits the highest and a must for decades.
the president says the u.s. cpi report shows a meaningful reduction over last month with gas and food prices falling. this top economic advisor notes the fed's role in easing price pressures. >> they are continuing to predict we will see in easing -- and easing over the course of 2022. the fed is operating independently and the president has underscored the importance of operating independently to take actions consistent with making sure these price increases do not become entrenched. vonnie: the u.s. says russia must abide after a second round of talks concluded without a clear path forward. washington says moscow gave no commitment to de-escalation during wednesday's meeting. little progress was made in monday's denise -- geneva talks. on thursday, discussions continue, this time with the 57
nations. the international agency says global oil demand has proven resilient. the executive director says strong crew demand is mainly due to milder omicron expectations. he says russia is to blame for europe's energy crunch. saudi arabia's sovereign wealth fund is planning to invest about $10 billion more into stocks this year. sources say the goal is to more than double assets by 2025. we are told the fund is looking to buy global stocks based on a thematic strategy that focuses on areas like e-commerce and renewables. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg.
rishaad: hong kong silver services something email saying they will be allowing some government staff to work from home, these special work arrangements will be until february. that is a look at that. the hong kong civil service will be allowed to work from home. haslinda: let's get a check on the markets as japan comes back from lunch. asia under pressure, cpi in the u.s. coming in in line with expectations that expectations will remain elevated at about 7% the next couple of months, but tapering to 3%, though some say even with rate rises, inflation will remain elevated. the nikkei 225 down about one percent. we are keeping an eye on tech
stocks in hong kong. chinese tech down 1.5% after surging 5% yesterday. flip the page. the chinese property plays. sue next selling its shares, not great for sentiment, the benchmark for chinese developers down about 2%. sunac slumping 16% right now. rishaad: just talking about these developers you're alluding to, evergrande, the company facing a key vote. onshore bondholders deciding whether to allow deferred payments on one of his notes. meanwhile, sunac selling shares at a steep this trump -- discount. let's start off with sunac. if you sell that many shares at a discount, you will send the share price suddenly. reporter: it does look like the
share placement has failed to assuage concerns among creditors and bondholders, even though part of the use of proceeds is to repay some near-term loans. we have seen a resurgence of concern about sunac long-term stability and health, concerns that started to emerge a few months ago in september when there were concerns whether or not it could pay its debt obligations. that reflects this broader selloff we have seen among china high-yield and property bonds across the whole of this week, it has been a rough week so far. haslinda: rebecca, we're back to where we started with evergrande, looking to avoid an onshore bond default. a key vote today. rebecca: absolute. we are waiting for results from that boat and should come before 3:00 p.m..
more broadly, the key point here, evergrande has already committed to a restructure, it seems unavoidable there will be haircuts on the notes, even if there is an extension on the onshore bond. the key question now, who owns this bond? as evergrande defaults or even manages to call that offer a couple of months, who is on the hook? we saw questions about financial health after lending billions to china evergrande, lots of concerns. that bodes -- we are expecting to see that it's all about who is able to withstand the losses after high exposure to many different developers. haslinda: our china credit editor. let's do a pivot.
if i chairman the u.s. must develop a long-term strategy for rare earth minerals production to catch up with china. he spoke at the minerals forum in saudi arabia. >> as far as the united states is concerned and policy uncritical minerals, you take the first look, you would have to say critical minerals is an important piece to the energy transition that we are all underway with. if you're thinking about policy and a consensus, i am not sure i would even go as far as to say that in the u.s. right now there is consensus across the political spectrum as far as the need for the energy transition. it's here, many of us embrace it, there are large parts of the population that can understand why we need to move from fossil fuels.
be that as it may, i mentioned that because i think it gets in the way of a consensus on policy as far as the energy transition is concerned, as far as a policy uncritical minerals. -- on critical minerals. i think you have to go back to 10 years ago when there was a wake-up call in washington and u.s. where we saw china take steps to limit the export of critical minerals, rare earth in particular, and before that, there was not a lot of recognition on the part of policymakers. that was a wake-up call. i think what occurred thereafter is when the wto stepped in to resolve the dispute between many countries and china, the dispute was resolved in our favor, but
it was and did serve as a wake-up call, and i think we have seen the u.s. take action since. when president trump was in office, he declared almost a national emergency in the mining industry. he crawled for the creation of a critical minerals list. his secretary of state mike pompeo went about forming a coalition of nations and start of this energy resource to begin to share best practices with one another so the u.s. could come in and research critical minerals. i think we are beginning to see some critical progress. many of you know there are active projects underway, not only in critical minerals, but rare-earth, and even to that
hard technological peace on processing. we have a long way to go. >> you mentioned the relationship between the china and u.s. which is probably one of the key developments on the political stage. -- the geopolitical stage. how much will this impact the security of supply for critical minerals, and may be relations with other countries, emerging markets and others, to make sure both economies have access? eric: i think this is much about the u.s.-china relationship. i mentioned the critical minerals injection into that relationship, certainly during the trump administration, there was increasing awareness about rare-earth amidst the trade war between our two countries. i think it is reflective of the larger context of the
relationship right now. rishaad: eric cantor speaking at the future minerals forum. one feature we would like to bring you attention to is our interactive television format, tv , you can watch live, see some previous interviews, dive into any securities or bloomberg functions. you can become part of the chat during our shows. this is bloomberg. stay with us. ♪
let's take it out from china to india. haslinda: trading starts in about two minutes, looking ahead to keep stories investors are watching. the government is set to hold post-brexit trade talks with a free-trade agreement that london says will double bilateral trade by 2030. we will be watching for results from a software developer, and iron producer, it is earnings season. rishaad: looking at those i.t. stocks, having a look at how they are faring as we get close to that open. 30 seconds away. we have tcs moving to the upside. the i.t. boom has led to perhaps
more competition for talent, and it missed because essentially the stock costs have risen. look at that, 1.5% up free market, it did beat estimates. the misses more pronounced, and as a consequence we are seeing -- there is the open. nifty is up. a divergence appearing with banks a tad weaker. more will go room for the reserve bank -- wiggle room for the reserve bank, inflation not quite as heightened as had been feared by the economists we had talked to. haslinda: speaking of earnings,
let's get more from debbie wu. good numbers expected, no? debbie: investors are reporting record high profits. there are a couple of things analyst will want to find out. tsmc management said in the last earnings quarter the capacity will remain high for 2022. that sets up probably -- we will see what management says today. a record 100 billion u.s.
dollars over a three-year period to serve the growing global demand. we are already expecting them to raise that spending number again, and we will see what they say this afternoon. rishaad: people will be looking at the supply constraints, how they are coping, but what about other things? what about pricing power that they must have in this environment, items such as that, i suppose we are looking at guidance, you have already alluded to that. debbie: in the last earnings call, that is something analysts wanted to know about. the management said that there price strategy is changing.
that means they are not seeking to raise prices just for the sake of raising price, they say they are also working with suppliers to make these calls to enhance their overall profitability. haslinda: debbie wu in taipei, thank you so much for that. let's do a check on hong kong. a record 56% down at this point in time, that is off the back of the company saying it is perhaps unable to meet its financial obligations. we will have more on the story just ahead. keep it here with us. this is bloomberg. ♪
rishaad: let's have a look at shares in hong kong, down the most in a single day, biggest loss on record, the cruise operator resumed trade following a four day suspension, they say there is no guarantee they can repay a loan provided by germany. give us the nuts and bolts, andrew. andrew: it sunk to that record.
it's worth keeping in mind that it is a penny stock and tends to be volatile, but what has changed more recently, sentiment has soured after it warmed of more defaults due to its german shipbuilding unit going into insolvency. a dispute with some loans related to that shipbuilding unit are in the german courts at the moment, the next potential flashpoint to watch will be on monday when a ruling could come. haslinda: how big a number are we looking at? andrew: genting hong kong, the cruise to nowhere, pandemic related child the restrictions
had a record loss of someone $.7 billion last may. it has already been in default since 2020 on about $2.8 billion. what we are talking about here with the loan are smaller amounts of about $88 million for one particular facility, but the key thing is what it said earlier in its filing, the most recent issues could potentially lead to cross defaults on other obligations and that is when the number could go up even more. rishaad: they have not actually received notice demanding payment, or indeed demanding action as well. andrew: that is an important
point for the moment. they did say they have not gotten those accelerations where creditors could call those defaults they were warning could be coming. it is significant that they put it out there, that it is a possibility, that is never a good thing. it is the main thing people will be watching from now on. in terms of the shares themselves, i expect they would be rather volatile ahead and the creditors will be looking for where they stand in the ranking as this works its way through the courts. haslinda: thank you. let's do a quick check of the business-class headlines. the farm says it's offering --
crown has said if that new amount is made, the board intends to recommend shareholders accept the proposal. blackstone owns 10%. he will be jumping into the race . he stepped down from the world's largest headphone earlier. morgan stanley is reporting willie going to raise bonuses by more than 20%. rishaad: let's get to markets as we had to this hong kong lunch break.
moving to the upside, 10% above the game line. biggest winner would seem to be the philippine market. the nikkei 225 feeling it as further restrictions are likely to be imposed because of the omicron variant outbreak in tokyo. we are seeing that direction for the 3090 your high for the inflation rate, that is affecting sentiment. some stories we have, developers at the center of things, sumac raising billions of dollars, evergrande in talks with onshore bondholders about repayment. 56% down.
>> from the heart of where innovation, money, and power combine in a silicon valley and beyond, this is "bloomberg technology" with emily chang. ♪ emily: i'm emily chang in san francisco, and this is "bloomberg technology." coming up, remote first for robinhood. the company says it will allow most employees to work from home permanently. we discussed the continuing trend away from the office. plus, hbo max has its biggest digital premier ever with "euphoria."