Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713

Part of that down to the uae and kuwait deciding to cut production. Haslinda chinas factory gate prices fell while consumer inflation eased, pointing to weak domestic demand. Bloomberg markets coanchor Tom Mackenzie joins us from beijing. Take us through the key takeaways. Thatthe top line is Producer Prices fell more than expected. 3. 1 compared to a drop of 1. 5 in march. That does suggest weaker Commodity Prices. Going forward, Bloomberg Intelligence expects that deflationary picture to continue given that the economy will remain under pressure and we have pretty weak demand. That raises questions about the possibility of these corporates and their ability to pay down debt. Consumer prices rose 3. 3 . Poor crisis continue to rise at a slower pace. Pointing to a weaker demand picture. It is going to reinforce the case for a more certain policy support. Moderating,pi is the other question is whether this starts to spread internationally as well. They are saying there couldnt be a worse time. Lets move to the was overty of what last year coming back again. We are talking about trade officials in beijing considering avoiding the trade one trade deal. Is there any more flesh on that story as it work . Tom this is according to the global times, backed by the state, and they have reported that they are hearing from sources close to the trade talks who have suggested they will consider the possibility of axing this trade deal altogether. They are livid of these accusations. Is renegotiating the deal to make it more favorable to china. The idea is they would use the force Majeure Provisions baked into the trade deal to either rework it or pull out altogether. It could just be part of this rhetorical sparring between beijing and washington. We did have that phone call between the two sides last week and we saw communique suggesting they are going to try to meet the goals and commitments in phase one. The other part of the story is increasing tensions between beijing and australia. Embargo ontting an australian beef. 35 ofpresent about australias beef exports to china. It follows this push by the australian Prime Minister to call for an independent investigation into the origins of coronavirus. Calls forng the investigation were politically motivated and they worn there could be a boycott of australian products. Theres also concern about australian barley. That is Something Else to watch as the tensions between australia and china continues. Rishaad tom, good stuff. Tom mackenzie, Bloomberg News coanchor. Breaking news out of Hospitality Group hired, terminating some 1300 employees as of the first of june. This is down to cut costs with the impact of covid19, hitting the Hospitality Industry very hard. Talking of the coronavirus, we have 285 deaths globally from it. Lets get that story and the rest of the first word news with Karina Mitchell in new york. Global Health Services warn of a second wave of infections with new cases in south korea and a spike in the city where the outbreak was first reported. Wuhan saw its first new cases since the city ended its lockdown last month. Italy has reported its fewest new infections since march 4. Philippinesf the that remain under virus lockdown as president Rodrigo Duterte says the nation cant afford a second or third wave of infections. Areas with high rates will be kept in a stayathome order. The president didnt identify which places. Othernila region and areas have been in lockdown since midmarch. Indonesia is warning about the fallout from their iris amid a capital exodus. The finance minister says the domino effect may require extra steps. Japan is said to be ready to lift part of its state of emergency. They say the government may lift curbs in 34 of the countrys prefectures. The governor of the bank of japan is warning that the domestic and global economies are under increasing pressure from the virus. Kuroda told the parliament that the japanese economy will remain in a severe state and that Downside Risks are rising. He said the bank is watching the situation closely. Global news, 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Ahead. A plenty more a company partnered with eli lilly to develop antibody therapies for treatment of covid19. That and more coming right up. This is bloomberg. This is Bloomberg Markets. Looking at stocks in asia trading down, economic challenges from various virus easing measures. The state street Global Markets head of asiapacific microstrategy. Tell us, during this whole pandemic, what prism you are looking at, and where are we going . Picture. Lightly mixed we can talk about the pandemic and i dont think i or anybody else has something new to say about it. We are looking to see the fallout. The fallout is becoming clearer in terms of the macro data. That will unequivocally be very bad. We dont get brownie points for saying that. I think it moves to the next stage. The lockdowns are being eased. Is it too early . I dont think anyone has a very clear answer on that. Complicateding is by the resumption of trade talks. We are trying to understand maybe what investors are doing, that looks a very mixed picture. Equity markets have rebounded well. Some of the metrics we ,re seeing at state street there is not a great deal of love for this rally. We are cautious and skeptical. Cases, or ifve of we see much weaker numbers than maycted, a lot of the rally have been built on sand. The earnings have suggested that we are some way away from a recovery. We are trying to look at whether theres any legs behind this rally. We think there is in certain sectors, but we still take caution Going Forward. Asset allocation is slightly more on the cautious side. The thing is, with the trade conflict between the u. S. And china also rearing its head, and reports that President Trump is thinking about pulling federal money out of chinese equities, that could really up the ante and have titfortat with the chinese doing the same thing, cutting investment ties could be a huge move to the downside for markets. And that is the gist of the conversation i am having with people. There, sitting investment manager, you had a very cautious stance. Realize there is a cost to not having joined this rally. Deception that they are being forced to go back into the markets. It,if i dont believe in and i do believe there is potential for a flareup in sino u. S. Relations, do i really want to be joining a rally here . This is a major question mark now. You cant miss out. Rally,you believe in the what do you do . This is what investors are generally doing. Desire to puteat on conventional trades right now. Know thatkground, we trump has one objective, to get reelected. He will do anything to get reelected. People are very concerned with that about trump. Haslinda just a line here out of south korea. It says the nightclub linked virus cases have risen to 101. South korea seeing 101 cases linked to nightclubs in the city. You talked about how caution is the word and you should get back into risk assets. In terms of risk assets, what is looking attractive . Where are they sitting . You mentioned south korea. The markets that we have been haveng at, we do overweight on the emerging markets. Think there are positioning opportunities. Be seen inhould absolute terms but also in relative terms. Emerging markets and equities do look better here. Is reason behind that support from the pboc and expectations that come from the end of the month. That will cascade down to the rest of the region. We think it will cascade down to countries like korea and taiwan. The pickup in cases in south korea doesnt necessarily change that picture, but it does raise slight questions against our expectations that north asia was first in an first out of this whole pandemic. Creates additional issues. We do favor emerging markets. Some traditional risk assets dont see the valuation potential. It is a very tactical sort of foret where you look positioning opportunities, valuation opportunities, a combination of both, or you try and project where you think the initial macro recovery story will cascade down. Feelmerging markets, we like u. S. Equities as well. Equities, looking at we do think that u. S. Equities are in a much better position than european equities, british equities, or equities elsewhere. Haslinda the market is pretty divided in terms of whether usd is headed. It was pricing in negative rates. Fed officials are pushing back on that. What does it mean Going Forward . What assumptions are you making . This is an important one. Emerging markets cannot perform well in isolation. One of the supporting factors they need is a stronger dollar. This is obviously a major interest. Concerns that the fed boxing itself into a corner where it is being forced to not do negative rates. The market is going to think it might be forced to do so. The dollar isnk going to be under pressure from talk around negative rates. We would expect to see the dollar, under pressure. Safe haventhat buying has included the u. S. Dollar. We are looking. Dollar, for now, pretty resilient. Wyfor evans, thank you for your insight. Toyota and honda brace for a market impact. We will preview the numbers next. This is bloomberg. Ofhaad some news coming out carolines weekly news conference. Time nowg that it is for hong kong to look into easing entry restrictions. You will remember it was difficult to get in. How hong kong can expand the job security program. Will be given to employers for the benefit of employees. That could be given out as early as late june. That is carrie lam, hong kongs chief executive. More on that on your bloomberg terminal. Just go to live go. Haslinda and in japan, we have kuroda saying he can promise cant promise the boj wont pause hyperinflation. Theres really no where he of that now. Japanese carmakers toyota and honda out with fifth Quarter Results today that should reflect a dropoff in Global Demand and significant disruptions. Northget to our chief asia correspondent, stephen engle. Steve, what is expected . This is a global story. Retailand honda, with sales in japan and the United States and china falling, those are three of the biggest markets , and the results coming out for toyota and honda, it is all about virus impact on demand. Bloomberg intelligence for yeara expects the full fiscal fourthquarter operating and nonoperating profit to have aen dragged lower on top of booking of unrealized losses. 18. 5 pix plunging about in the fiscal fourthquarter. The First Quarter for the japanese fiscal year. Japanese retail sales fell. Vehicle sales in japan plummeting in april. And then you had all those suspensions of factory , northion lines in japan america, as well as china. We are starting to see some of those factories come back online, but the outlook, that is what we are looking for. Virusidance on how this impact is going to be protracted. Rishaad similar picture for honda, i suppose it is smaller than toyota, but it is also exposed heavily to the u. S. As well as Chinese Markets. Is a smaller company. In japan, it has 13 of the market, where toyota has 55 of the market, but it is a big player in the United States as well as having factories in the china market. Similar picture for honda. It suspended production at many of its plants from late march. Like toyota, we are hearing that its north american plants in the United States and canada started back up operations since being suspended in march. That was just overnight. We are going to look for the outlook. Sales and profit declines expected to accelerate according to Bloomberg Intelligence. Just so much uncertainty. Bloomberg intelligence expects sales in the u. S. For all japanese automakers may bottom this month with the easing of lockdowns and generous incentives and growing popularity of online sales. But if you dont have a job and you are staying home, are you going to rush out and buy a new car . Those incentives better be pretty good. Stephen engle with that report. Now lets look at where we are in terms of the markets. We have asia pretty much red across the board. Looking at investors. The fed pushing back on negative rates. Investors also waiting for chinas response. We have the csi 300 pretty much flat. It opened in positive territory. China reporting credit growth early today. Data showing weak domestic demand. Cpi rising less than expected, 3. 3 . The taiex down by 0. 8 . That taiwanesting average salary in march dropped for the first time in 39 years. Movers weme of the were tracking today, korean air, head of the Board Meeting tomorrow and its new plan to keep afloat. Softbank down about 1. 3 . Q4 operating profit falling short of estimates. Also projecting a smaller profit for the rest of the year. As in australia down as much 11 today. More to come. This is bloomberg. These days staying connected is more important than ever. So were working 24 7 to maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. It is 10 29 a. M. In hong kong and shanghai. Has banned the import inbeef from resources australia. The Australian Broadcasting Corporation Says three of the plants are in greenland and one in newfound wells. Tensions have been rising after australia question the origin of the coronavirus and called for an inquiry. Chinese authorities may consider ending the phase one trade deal with the u. S. There are rising tensions over the handling of the coronavirus outbreak. Sources say there is a growing call to renegotiate the deal and tilt the agreement more to the chinese side. The global times say this could be forced by force majeure. They say they want to reopen the trade talks to make it better for them. China has been taking advantage of the United States for many years, for decades. Thisse we had people at position right here where i am standing, sitting right in the oval office, that allowed that to happen. I am not interested in that. Lets see if they live up to the deal they signed. Is lifting its nationwide lockdown even as daily new cases of the virus surge past most european countries. President putin is ending the stayathome order while putting responsibility on regional leaders. Russias economy has contracted by one third since the lockdown began, while oils collapse added more pressure. Infections have topped 10,000 per day for the last eight days. Saudi arabia has announced a surprise cut in oil output to its lowest in 18 years as it tries to counter the crisis gripping the economy. Hours after announcing else terry measures, the king austerity measures, the king said they would cut in addition to what was agreed with opecplus. It was followed by cuts from kuwait and the uae. 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. This is bloomberg. Lets take a look at the markets right now. Mostly lower as investors mull the path ahead. What will it be as economies reopen . Goldman saying stock is set to drop 18 after the rally driven by more volatility, and it keeps falling, now about 20 seven. The csi 300 swinging. A few moments ago it was in positive territory. Cpi rising less than expected. Cpi at the lowest in four years. Nikkei to 20 town 225 also down. At the moment Holding Steady. Down by about 1 . Investors keeping watch on the recent outbreak linked to gay clubs in seoul. Lets flip the page and look at where we are in terms of other markets in southeast asia. The gci looking like this, indonesia increasingly concerned about the stability of the Financial Systems as it seems more capital outflows. We heard from president duterte in the philippines, some areas will remain under lockdown. The government said it is finalizing its economic package. Lower as well. Indian bonds and focus. They tumbled of the most in more than three years after modi boosted borrowing to cover lost revenue. Looking at other asset classes, the dollar inching ever higher, gaining as officials downplay the possibility of negative rates. The blumberg dollar index up half a percent since mid april. We have crude coming in at 24. 46, inching higher as saudi arabia says is cutting output even more. Down three tens of 1 . It tumbled over the weekend, a crash of 13 . As the global race for a treatment for covid19 continues, bio scientist partners are working toward a cure. Interview exclusive with a cofounder and senior vp. Good to have you with us. First of all, how significant is lilly . E up with eli thank you very much. This is tremendous. It is a big recognition by a Global Pharmaceutical Company pew company. It allows us to accelerate our covid19 program. With their operational capacity, the agreement has the potential to reach a wider range of countries and regions. Haslinda in terms of the antibody you are working on, how much progress has been made, and are you set for Clinical Trials, for instance . Ofng since the beginning the covid19 outbreak, in january, we have launched the research and Development Program for the antibody against covid19. For about three months, we have study,ed the preclinic the process developments, and manufacturing of clinical materials. Aimther with eli lilly, we for the Second Quarter of this year for testing. Treatment will be available for some patients. How does neutralizing an antibody work . It is very different from a vaccine. Sheng yes. Collaborate m basically we collaborated in late january. Antibodyal occurring from a patient who recovered from covid19. Those antibodies are fully human and correlate with the therapeutic effect in those patients. Just look at where you are with all of this. How far are you away from the nicole Clinical Trials . Constant are you with this treatment . We are now able to enable Clinical Study and manufacturing as the clinical material. Trials. P is we plan to do it with both u. S. And china. Launch the Clinical Trial. [crosstalk] sorry. Rishaad just very quickly when you look at the coronavirus, how does it differ hit the sars virus that hong kong and china very hard at the beginning of the century . And what are the challenges that make it perhaps more difficult to deal with . Virus has a very long latency, which brings a tremendous challenge to treat. We know sometimes it will hide in peoples bodies up to 14 days without symptoms. They are the spreader of the virus. This makes it a challenge to identify the virus early. Need multiple do approaches including a vaccine and antibodies to treat the virus. Haslinda can you give us an update on your plans . Have plans [indiscernible] one or july, and depending the authorities. I think we are very close. Probably a month or two. To have aenable us pretty secure Financial Support to further extend our programs, including the covid19 treatment. Notinda why star board and other exchanges, and what are you planning to do with the capital rate . We have offices in hong kong. To extend ourw us timeline. As you are probably aware, we approved lateics in 2018, and we had a clinical program. The Clinical Trial activity and also our pipeline products. Rishaad tell us about your pipeline and a little more detail. Sheng definitely. [indiscernible] molecule and Antibody Development spewed development. Products, noneve of them and clinical stage. We have one commercial product approved in china for melanoma. We have one submitted for approval last year. Coverage in oncology and now Infectious Diseases as well. Rishaad are you worried at all about being shut down if the trade war again reappears between beijing and washington, very quickly . Think of course, i given theworries, pharmaceutical completes are doing global trials. Pharmaceutical companies are doing local trials. Have Effective Therapeutics at a reasonable price on a global scale. A roadblock for that. Hopefully we will do our part and it will be resolved by both countries. Much, ourhank you so exclusive interview with a bio scientist cofounder and senior vice president. Coming up, the latest on the coronavirus as cases top 4. 2 million. 295 deaths. An update coming your way. This is bloomberg. Coronavirus was first reported in the city of wuhan. Now it has seen its first new infection since it instituted its 76 day lockdown. It is reminder of the risks countries face as they reopened their companies their economies. Lets get to yvonne man. The fear of a second wave in china, its not the only place where the virus has reappeared. Yvonne we are seeing new clusters in china. We are only talking about six cases so far in wuhan, and it seems to be under control, but these are people already under quarantine. They were asymptomatic before testing positive. Fears of a research is a new as another earlier, city was locked down after 11 new infections were found. It is a cautionary tale to other countries who came out of the pandemic. South korea is another example, they did not have a full lockdown and was able to flatten the curve. You mentioned the latest numbers from that outbreak linked to gay clubs and central seoul, where people have tested positive. 30s are trying to track down more than 5500 people across the seouly from soul and elsewhere. Many people are free to come forward because of the stigma against homosexuality. Personaleering information may not work this time. Haslinda concerns about a second and possibly third wave. Japan is closer to lifting it state of emergency. What do we know . Yvonne in many regions of the country, daily cases have dropped to zero, which is surprising. Downs a fairly loose walk in the country, hairdressers were still open. We heard from the economy minister and hes considering lifting the state of emergency for most prefectures before may 31, when the current declaration is set to expire. The local media reporting it could be as many as 34 out of 47 prefectures could have restrictions lifted. Tokyo, osaka, maybe excluded. Those areas are seeing multiple cases every day. A similar picture in the philippines. We heard from the president earlier this morning saying some areas in the country will remain under lockdown, but stayathome orders are expected to end on friday. He did not specify what areas, but he said the country at this point cannot afford to have a second or third wave of infection. Our Bloomberg Markets coanchor in hong kong. Endome countries begin to their lockdowns, medical experts say the effectiveness of reopenings depend on governments companies and the publics go about it. I think the ability to open retail space pens on more than masks. Masks are a stopgap measure. Thing is thertant ability to stay away from each other physically and have barriers between people. Ike at cash registers it would prevents writing better than a mess good. I think it is possible to do that. As infections are coming down and more Public Health measures are in place and hospitals are doing better, it has to be done carefully. Its not just wear a mask and gloves. How does Contact Tracing work . Is it the most effective tool we have right now . It is a really critical tool. The idea is to stop the virus from spreading from persontoperson without telling everyone to just go home and stayathome. What you do is find someone who , maybe theynavirus had a test and they are positive, you call them right away and find out who they have been in contact with during their infection period. Of days beforee they started symptoms. And then you quickly call them and tell them they may have been exposed and they should quarantine themselves so that when they are infected, theres nobody to give it to. That is the basic idea. It requires a lot of people to do, and new york is trying to hire Something Like 10,000 people. If you can do it, even if it is not perfect, you can really slow the spread of the virus. Was the vice dean of Johns Hopkins Bloomberg School of Public Health. The school is supported by michael bloomberg, founder of bloomberg philanthropies and the Parent Company of this network. Itsting inflation, but will last . We look at april cpi data. That is next. This is bloomberg. Panic ahead of indias lockdown may have been enough to lift Consumer Prices and april, but the downward trend remains intact. Joining us with more is our guest in mumbai. Is headline inflation so sticky . As you rightly said, inflation is likely to stay sticky, baby because of the lockdown and the surge and maybe because of the lockdown and the surge of demand for food. It started in march and continued through april. Food prices have gone up across the board. Oil havemilk, sugar, all shown to increase. Vegetables are the exception, but onions have also risen. The reserve bank of india is likely to see through this rise in headline inflation and likely focus more on the coinflation side, which will likely ease below the 4 mark because demand has been easing, demand for services has been easing. That could provide headroom for the central bank in coming months. How will the reserve Bank Actually deal with this number when it meets next month . Important thing is if headline inflation does not cross the limit of 6 , that is likely to provide headroom. The monitory authorities have been doing a lot of the heavy lifting in india. There is stimulus and rate cuts. The pressure will remain on them to do more because the fiscal stimulus has been lacking, and the Prime Minister has been ustereably on stair a about the economy. Economists are telling us that the npc, which meets next month, is going to see a rise in headline inflation and probably focus on the growth story, which is likely to see a recession in the apriljune quarter. A sharp contraction in the apriljune quarter, perhaps as sharp as 25 yuan year. 25 yearat they on year. That is likely what they will focus on. Rishaad thank you so much. About india debt to gdp ratio coming in at 77 of 2021, saying they expect indias physical response to be relatively restrained. Thats essentially what we just had from fitch. Its get to the business flash headlines. Indigo considering a bid for virgin australia. Looking to capitalize on the First Airline casualty from the coronavirus. This is one of at least 20 potential buyers and they are seeking bids by friday. Version collapsed last month. Collapseds version last month. Indigo says it is not involved. Virgin is looking to save its Space Business on earth. Travel and leisure businesses have been hit by the pandemic. Last october, Virgin Galactic became the first Space Tourism company to go public. A risk off day in asia. Thestors volleying over uncertainty ahead, as economies reopen. The csi index and negative territory on the back of the cpi numbers, rising less than expected, three point 3 versus 3. 7 . The kospi currently down. Investors keeping a watch on the recent outbreak linked to the clubs in seoul. It will be interesting to see how india opens p rishaad opens. Rishaad yes. Letting more to come, including a look at digital wallets and bitcoin as well, as volatility for the cryptocurrency continues. This is bloomberg. Haslinda it is almost on. Welcome to Bloomberg Markets asia. Rishaad lots of trading in hong kong for the morning. This is a look at our top stories. Trade tensions making headlines again. China may terminate the phase one deal or at least demand new terms. President donald trump saying he is not interested. The coronavirus continues to spread with new infections in will hand, where it was forced reported. South koreas strategy in question as covid19 strikes again. Rishaad new data shows chinas recovery remains under pressure factory slowing cpi pointing to week domestic demand. Haslinda asia looking pretty red across the board and it is risk off. Investors looking for new catalysts for the rally to persist, but today it is pretty much a down debuted the csi 300 pretty flat at 39. 57. Rising and ppi lowest in several years. Down, retailading stacks stocks leading the pack lower. The yen Holding Steady after falling for most of march. The kospi down 1 10 of 1 . 8 10 of 1 . Hitralian shares getting above its 50 Day Moving Average yesterday. On fourposed a ban australian beef companies. Looking at where we are in terms of the Southeast Asian markets, they are under pressure today as well. Being dragged down by banks. Increasing concern about the stability of the Financial System as we see capital outflows even more than the financial crisis. Morningt saying this some areas of the philippines will remain under lockdown. The government also finalizing its economic programs. Inigher budget deficit march. Rishaad lets have a look at what we have with u. S. Futures. A positive day for the nasdaq. Mixed bag for the s p and dow industrial. The s p with a lower start. The dollar index moving to the upside and yields moving a little higher. To speakers two fed speakers pushing against negative interest rates. Crude oil moving to the upside after saudi arabia, uae and kuwait said they will cut production further. Going to the prospects of the indian session, 43 minutes away. Nifty futures pointing to the downside and the rupee a little weaker. We will discuss the indian bond market of the later on, the yield is 20 basis points, to the upside six point 17 . Suspending four beef providers from australia, an important trade relationship youd relationship. This after china said it might pull out of the phase one trade deal with the use that with the u. S. Know about the situation with australia . It Something Like 25 of all beef that leaves australia. Tom it is significant. What we are hearing in beijing is they have a concern and an import ban has been imposed on beef from those four australian abattoirs. As you said, it represent about 35 of australias beef exports to china. Trade that was expected to reach about 3. 5 billion in value. This move comes after the prospects of a deterioration in relations between australia and china. Ofhad the Prime Minister australia calling for an independent investigation into the origins of the novel coronavirus. Chinese officials quickly responded to that saying the investigation, the calls for investigation were politically motivated, and they warned there could be a consumer boycott of australian products. China has yet to say why it has imposed this temporary ban on these beef products. It may not respond and it may not tell us that this is part of a retaliatory move. But it seems likely, when you look at chinas playbook over the years, that this is a form of retaliation. Theres also news that china could consider tariffs of up to 80 on australian barley as well. It seems like, and we are waiting for confirmation, but it seems like this is china responding to the pressure coming from the australian Prime Minister over an investigation into the coronavirus. We will see how this develops Going Forward. Haslinda tensions definitely escalating. Chinese trade officials reportedly considering the option of voiding the phase one trade deal with the u. S. What are you hearing . Tom this comes from a report in the global times, which is a tabloid backed by the state could the state. They say certain advisors linked to the trade talks are now looking at the possibility of pulling out of this trade deal. Apparently these officials are very angry about the u. S. Accusations about the way the virus has been handled, and this could be one way they respond. Another option they are apparently looking at is whether they could renegotiate the deal to make it more favorable to china. The idea is there is a force theure provision baked into phase one deals that could allow them to rework it or pull out altogether. That is according to the global times. This could just be part of the sparring between beijing and washington. It is worth putting out there was a phone call between the two sides, the trade teams last week. You have a positive communique saying both sides were committed to implement in the commitments around the phase one deal. But it seems there is no uncertainty on the prospects, considering President Trump has hinted he could use walking away from phase one is a form of retaliation as well. Haslinda just this morning we had cpi, ppi out of china, both falling short of expectations. How challenging is a deflation story in china . Tom it is certainly not good news. Producer prices falling more than expected, they contracted 3. 1 compared to a drop of 1. 5 in march. There were weaker Commodity Prices feeding that. This is a demand story, and it calls into question the profitability of some corporate and it will weigh on them. Looking ahead, Bloomberg Intelligence expects the inflation will continue because the economy is so weak at the moment. That will be a further hit to corporate profits. In terms of Consumer Prices, they rose 3. 3 , but that was a smaller increase in forecast. Pork prices continued to rise but at a slower rate. Core inflation is relatively tempered. That gives the pboc room it needs to take further action to support the economy. More policy measures is the expectation from economist Going Forward. Another question is whether the deflation from china is exported as it was in 2015, another blow to the Global Economy. Haslinda especially emerging markets in this part of the world. Tom mackenzie in beijing. Lets get the first word headlines with Karina Mitchell. Global Health Services are warning of a second wave of Coronavirus Infections with new cases in south karina korea and a spike in the city where it was first reported. Hashe other hand, italy reported its fewest new infection since march 4, while france, spain and greece continue to these restrictions. Parts of the philippines are to remain under virus lockdown as president deter day says the nation cannot afford a second or third wave of infection. They will maintain a stay at home order. The president did not identify which areas. The manila region has been lockdown since midmarch. Meanwhile, indonesias warning about fallout from the coronavirus amid a capital exodus. Says thece minister domino effect may require extra steps. Japan is said to be ready to lift part of its eight of emergency as the rate of infection falls. May liftovernment restrictions in 30 prefectures. Saudi arabia has announced a surprise cut in oil our pit output as it moves to counter the energy crisis. Hours after releasing the new austerity measures, they said they would cut an extra 30 Million Barrels per day. This was followed by cuts from kuwait and the uae. 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. Im Karina Mitchell. This is bloomberg. Thank you. Still to come, bitcoin running out of steam ahead of the key milestone that is being watched closely by cryptocurrency investors. We get the view from one of asias leading firms. Next, j. P. Morgan Asset Management tells us where it sees opportunity in asia. This is bloomberg. Haslinda welcome back. Asian stocks drifting lower as there are challenges and economies in removing strictures to contain the virus pandemic. Lets bring in an executive director for j. P. Morgan Asset Management. Good to have you with us. You said before we needed to cp virus to see the trough of the macro cycle. Have we seen the peak and the trough . We have seen the trough of the equity market. I think we are undergoing the trough and recession today. I think currently where we are in the markets in terms of where we are in the cycle, economies are now reopening. In terms of fundamentals, it is still challenging. The problem now with reopening and the economies, supplyside and demandside, when economies reopen, expect demand to be week. Not just because Consumer Confidence has fallen, but a change in behavior. That, howhaving said much conviction is there in the rally in asia . We see asian stocks up more than 20 since midmarch. Possiblewell, it is that we could see a correction in the next couple of months, given how much has run out. In general i think we still remain constructive on markets because, just because we think that now that we are going through the recession, we think the Business Cycle will reset and we will enter into the early expansion phase. The behavior of the stock markets currently is irrational and not an accurate meter of the broader economy. Is the u. S. Clear economy, where the u. S. Market rally has been very narrow, led by quality Growth Stocks. Health care. It makes sense because investors are increasingly willing to pay a premium for Growth Stocks with longer duration cash flows amid low growth and lower interest rates. Because these Growth Stocks or tech stocks makeup a disproportionate proportion of , the s p 500ket performance doesnt represent the broader economy. The same for asia but not as pronounced. We continue to see the Investment Case for Growth Stocks. Aslinda you talk about possible reacceleration of growth in the second half of the year. How do you position for that and hedge against the risks of the full recession that could possibly be quite deep . Jasslyn like i mentioned, i think equity markets, the performance is quite different and not quite reflecting the broader economy or the real economy. Again, we see the Investment Case for Growth Stocks. Return of equity on profitability of the s p 500 or msci worldwide, and even in asia, and there is still a significant premium to value stocks, which in a way justifies the higher valuation of Growth Stocks. For example, if you look at the later earnings season, you can see there is superior profitability and certain stocks. Related iis think related to the economy are value stocks in the valuation phase. There could be a comeback in the second half of the year. Valuation is at extreme levels and value is extremely cheap. Back whencould come you see the Business Cycle resetting and we enter back into the early expansion phase. And sometimeession in the second half of the year or 2021, and equity markets will likely be moving before that. Wer financial materials, could see that coming back. We stress it is more technical in nature. Rishaad its interesting how value stocks have been left behind of late. What does that mean for a passive or active investor . The other part of my question, action inen much buying from the king of value, warren buffett. Jasslyn i just want to point out in terms of activity, passive, i think that makes the point for active investment in a way. You want to be active in terms of picking the stocks if you want to outperform the benchmark in the index. Of index is less refractive the Global Economy, so again, we want to focus on stocks that have highyield profitability, highquality on the balance sheet. You have higher cash flows, less leverage. Werek thats what focused on at j. P. Morgan Asset Management, we have a focus on Higher Quality Growth Stocks, especially in asia where we see the opportunities. The other thing is, weve got murmurs of a new trade conflict here also, and the murmurs are getting louder, between not just the u. S. And china but also now reports of australia and china as well. How does that move the needle if it gets worse and what is this threat by donald trump about taking government Retirement Funds and pulling the money out of chinese equity mean to you . Jasslyn i think both u. S. And china, they have more immediate pressing domestic issues to deal with man to start an outright trade war with one another. Could lead to a double chaos situation which will hopefully not be the case. China is running behind. The phase one is another point of contention. Targets, i trade think the risk impact of covid19 has caused stress to both economies. The focus i think will still be on domestic issues, and its likely we will see china and the u. S. Negotiate some compromise and are likely to ramp up negotiations in the near term. I think there are more pressing issues to deal with. Haslinda thank you so much for your insight today. A couple of headlines to tell you about. Tim hortons china says they received an investment from tencent as it seeks to expand in the chinese market. Tim hortons said in a statement it will use the funds to upgrade Digital Infrastructure and open more stores in china. Expandpany says it will from 50 stores in china to 1500. A big extension for tim hortons in china, getting that investment from tencent. Tencent currently trading down by 1. 2 . Plenty more to come. After being held up as a model for the rest of the world, south koreas fibrous strategy being called into question following a new cluster of infections. Details just ahead. This is bloomberg. Rishaad you are back with Bloomberg Markets. The coronavirus was first reported in the city of wuhan. They are now seeing their first new infections since it lifted its semisixday lockdown last month. It is a reminder 76day lockdown last month. It is a reminder of the risks of easing lockdowns. In other parts of china as well. Yvonne yes, there are clusters and other regions. There are only about six cases in wuhan, and it is under control, these people were under quarantine and asymptomatic before testing positive. A surge in new cases begin this week when we learned that a northwestern city that borders north korea was partially lockdown after 11 new infections were found there. It is a cautionary tale to other countries who came out of the pandemic first. South korea is another example, they were able to flatten the curve. Linkedhe latest outbreak to gay clubs in central seoul, they have people testing positive. 30s are trying to tack down more than 5500 people authorities are trying to track down more than 5500 people. There is concern that more than half will remain out of reach because many are afraid to come forward. The country holds a stigma toward homosexuality. The strategy that south korea has led to success in terms of flattening the curve, relying on people to get tested themselves, volunteer personal information, that might not work this time. Japan haslinda in japan, they are closer to lifting their state of emergency. What do we know . Yvonne in many regions of japan, daily cases are dropping to zero, which is surprising. Lockdown,airly loose bars and hairdressers remained open. There were not any restriction on movement. The economy minister says he is considering lifting the state of emergency for most of the prefectures before the end of the month, when the current declaration is set to expire. Asis reported that as many 34 of the prefectures could have restrictions lifted. The remaining 13 could include areas like tokyo, osaka, al qaeda tokyo and osaka, which is still seeing cases every day. In the philippines, the president is saying areas will remain under lockdown despite the orders expiring on friday. He did not specify which areas, but he said that the country cannot afford a second or third wave of infections right now. Rishaad thank you, a vindman. We have some news breaking out of thank you, of on man. Breaking news out of australia, the trade minister responding to the chinese ban of australian beef exporters. He says these minor technical breaches can be fixed. Talking to reporters, essentially just responding, the First Response with the beef export man with the four abattoirs in australia. More on that. This is bloomberg. Haslinda you are looking at live pictures of singapore. Almost 11 30 a. M. , and we are in the middle of the trading day. Ms ei a down day, down about 1 msci with a down day, down about 1 . Down from a year earlier, we are talking about march. Not surprising given the lockdown has kept people at home. Forced tors have been take on alternative jobs. A rental waiver has been extended for cabdrivers for another month. The msci down about 1 right now. Lets get the first word headlines with Karina Mitchell. Karina china has banned the import of beef from four australian avatars that provide about 25 of its exports to china. The astral your Broadcasting Corporation says three are in queensland and one is in new south wales. Rising afterbeen australia questioned the origin of the coronavirus and called for an inquiry. Reports from china say the leadership may consider ending the phase one trade deal with the u. S. Level times a says there is rising anger in beijing at washingtons accusations about the handling of the virus outbreak. Sources say there is a growing called to renegotiate the deal to tilt the agreement more to the chinese side. The global times says the move could be justified by force majeure. We signed a deal. I heard that, that they want to reopen the trade talks and make a better deal for them. China has been taking advantage of the United States many years, for decades, because we had people at this position where i am standing, sitting right in that office, the oval office, the oval office, that allowed that to happen. I am not interested in that. Lets see if they live up to the deal they signed. Karina japan may limit Foreign Investment in listed companies that it says are vital to national security. The government has a list of firms to be protected, saying for investors will be asked to say when they plan to buy more than a 1 stake. That is down from the current 10 holding. This applies to more than half of japans listed, nice, although exemptions are applied to investors. A missile strike has killed at least 19 people and killed 15 more as the arabian navy carried out drills in the gulf of oman. Just east of the strait of hormuz. This comes just months after the revolutionary guard mistakenly shut down shot down an iranian airliner. People working for juan guaido have resigned after a botched invasion. One said he had been in contact with former a former u. S. Green beret that led the rate from venezuela into columbia. Eight people were killed when the mission was interception intercepted, with 40 arrested. That included two u. S. Soldiers. 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. Im Karina Mitchell. This is bloomberg. Thank you. Lets look at bitcoin, at the moment training up 4 10 of 1 on 8,670. It is appearing to run out of a bit of steam. It touched 10,000 last week, tumbling after going through technical adjustment. The manna known as Bitcoin Jesus remains up eat remains up eat. Up beat. Cryptocurrency, there are these hard limits where you dont have a Central Monetary Authority creating more out of thin air. Thats why it is important to make cryptocurrency usable as currency so people have the ability to opt out of other systems and using cryptocurrency to pay employees or receive a paycheck or go shopping on amazon. Rishaad lets bring in dave from a Hong Kongbased crypto firm. Thank you for joining us. Us what has happened with bitcoin. Bitcoins number of entering circulation every 10 minutes was reduced by half this morning. It is a milestone that happens every four years and it has happened twice before. Bitcoin is a finite supply, and it is reducing the amount entering the market over time, a deflationary currency, very different from a debt based money. That is what we are witnessing. Rishaad what does it mean for prices looking ahead . Dave bitcoin definitely is volatile. Ithas been volatile since first came into mainstream adoption. A lot ofeality is people consider bitcoin to be a social experiment. Given how battle scarred bitcoin is, having passed every test thrown at it, im not sure you can call it as such. We are seeing a lot of interest from credit investors, a lot of interest from traditional finance. One or two of the many reasons why we havent seen adoption with traditional finance is twofold. One is the lack of regulatory clarity, but we are now seeing innovative regulation coming into effect globally. Notwithstanding hong kong and singapore. And secondly, a lack of quality. I will be the first to admit that this sector doesnt have the best reputation when it comes to managing client funds. However, what we are seeing now is a number of participants maturing in the space such as ourselves, who provide Custodian Services and a level of security and confidence that traditional custodians do. Haslinda lets pick up on prices. We see bitcoin close to 9000, but still about 50 off alltime highs from 2017. Will it hit those levels again, will it go higher . What is your prediction . Bit if we zoom in a little first, yes, bitcoin earlier and match march had its second largest drop in its history, but the reality is bitcoin is extremely volatile but the fact remains it was the bestperforming investment of the decade and is still one of the bestperforming investments in 2020 to date. Some argue that bitcoin is uncorrelated. If we look at Empirical Data from the last 10 years, bitcoin has been largely uncorrelated with equity and oil and others. There is a thesis that bitcoin is a hedge against a declining Global Economy and it should be noted that investors, while they continue to ignore it, there is a growing interest, and it is hard to big nor given the sexual investment history in performance to date given the sexual investment history in performance today. There are a lot of nonbelievers. One takes issue with the security. He says there is a lack of security. What is your response . Dave there are a lot of naysayers and they will continue to be for some time. The technology has changed over time, whether , fax machines,s it is a fact that everything in our culture has gone digital. Society will have to consider having a digital value like bitcoin. Now is are seeing right professional investors are much more likely to consider alternatives, especially since the money machines are printing an endless amount of money. Mentionedbviously we the covid world we live in at the moment and additional currencies. And digital wallets, some people are moving that direction. But they throw up a lot of privacy concerns. How do you assuage those . Dave talking about what concerns . Sorry. Rishaad people having digital wallets and how it affects your privacy and how u. S. Wage the impacts it has on people who are concerned. Dave thank you. Its a good question. If you talk about Central Banks and Digital Currency, theyve been looking into it for years. With the recent trials of programs in china, there is an effort to get to market as quickly as possible. I will admit, with some of these government issued digital currencies, there are privacy concerns. The fact of the matter remains that all of the Digital Currency will likely pave the way for wide acceptance of nongovernment issued Digital Currency, which is bitcoin. Theuote someone, he said most compelling argument for owning bitcoin is the digitization of currency everywhere, accelerated by covid19. There are a growing number of wellrespected, conventional investors moving into this asset class. Bitcoin is a real thing. Currencies that we have anyway are fiat currencies. This is another fiat currency, surely. Dave not at all. If you look at what is happening right now, with the exception of quantitative easing from Central Banks, it is leading to a growing number of investors to consider bitcoin as a hedge against their portfolios and inflation. I think at the moment, when you say it is another fiat currency, not at all. That because of its nature. It is extremely difficult different from a government issued currency with endless printing. Thats why we are seeing so many professional investors come to us to get exposure into the asset class. Bitcoin, apart from are there other cryptocurrencies standing out to you . To be anis going interesting future. Bitcoin was the first decentralized blockchain currency that came to inception in 2009. It is the most battle hardened and proven cryptocurrency. Where we go in the future, i personally think bitcoin will still hold the title for some time. , just theually seeing fact we are seeing wider acceptance of digital currencies, we anticipate you will see security tokens coming into effect, to tokenize investments, it will have an enormous amount of benefit for investors. Haslinda dave chapman, thank you for joining us today. Badl to come, we ask how things are looking for japanese automakers as toyota and honda report for the earnings. Fourth quarter earnings. This is bloomberg. Rishaad we are back. Due outnd honda are with their fiscal fourthQuarter Results a little later on. They should reflect a steep dropoff in Global Demand and significant disruptions. Stephen engle joins us. What are we looking at . Noting is buying cars amidst all of this. Stephen everybody is staying home, and peoples jobs, if they havent been fired, they are worried about their job, so who is going to buy a car at this time . Thats what weve seen in the fist First Quarter, the fiscal fourthquarter for japanese car companies. In japan alone and toyota has 55 of the japanese market. Alesare seeing retail s in the u. S. , japan and china sinking heavily and that will be reflected in the results we will get later today. Bloomberg intelligence expects toyotas fiscal fourthquarter operating and nonoperating profits to be dragged significantly lower. That is on top of toyotas sizable Stock Holdings because of the drop in the stock market. They plunged about 18. 5 in that quarter. You have demand issue but also production issue, the supply chain globally and the auto parts, whether they were made in china or mexico for plans in the u. S. They have been disrupted and it halted a lot of production facilities that are just now, overnight, monday, the United States and hold in alabama and elsewhere starting production on a limited basis. When the results come out after the midday break today, we are likely to see a significant downturn. The biggest question will be about the outlook. Thanina picking up faster most people are expecting . Nissan has been out with its first Monthly Sales increase in inna for 2020, up 1. 1 april, it is a positive sign. Haslinda pretty much the same picture for honda. Like toyota, it is exposed to the u. S. In Chinese Markets as well. Stephen thats right. Honda suspended production at all of its plants in japan as well as north america, but we are hearing as well, just like toyota, the factories got up and running in the u. S. And canada on monday. That is an encouraging sign as the lockdown stars easing in places in a key market for honda, the u. S. Similar story as toyota, they are hoping easing of the lockdown and resumption of manufacturing and demand is going to help lift them in the coming quarters. The Passenger Car association of china has been pretty upbeat, saying yesterday demand based on government incentives and pentup demand is leading them to suggest a vshaped recovery has already taken hold. They had an 85 plummet, honda in, and chinese sales february and 50 in march. A little better but still dire. 70 plummet in february, but marked only down 15. 9 . Some encouraging signs but still way too early for the full year projection. Rishaad thank you. Stephen engle there. Lets get to the Indian Markets just opening up for their session about two minutes ago. It looks like this. We are seeing the Regional Trends being replicated. We are in the red. We have the bond market very ash at the moment in focus we see the yield curve steepening 20 basis points to the upside. Looking at the stocks moving in the markets. Lets look at indigo. Its owner is perhaps looking at virgin australia, which went bankrupt a few weeks ago. Billionaire behind indigo is considering a bid for that. We also have tata motors up 1. 1 . It was said that it was worth nothing without is a luxury unit. That in contrast with what is down on with suzuki, 1. 79 . Cateringilway and starting off real services, special trains and rail services, special trains and tickets sold within 20 minutes for that service. Lets to a quick check of the latest business flash headlines. Elon musk is headed for another showdown with california, demanding its tesla factory stay shut because of the coronavirus. He says he will restart production anyway, tweeting if anyone gets arrested, i ask it only be me. Teslas only u. S. Plant has been closed since march 23. The u. S. Treasury secretary weyden, urging california to prioritize reopening. Virgin group says it is considering a have a billiondollar sales and shares in its Virgin Galactic. It says proceeds will go toward supporting its global leisure and travel businesses, hit by covid19. In october, burton neglected became the first Space Travel Company Virgin Galactic became the first Space Travel Company. Onigo is looking to bid virgin australia, the First Airline casualty from the coronavirus. This is one of at least 20 potential buyers. They are seeking bids by friday and binding offers by june. Irgin collapsed last month and indigo plenty more to come. Indias lockdown may have helped to boost inflation, but will it last . We look ahead to aprils cpi data, next. This is bloomberg. Rishaad your back with Bloomberg Markets as we look at indian bonds. They sell their biggest selloff in years, the 10 year yield surging the most since 2017. That after the government announced more stimulus measures increasing borrowing by more than half. Even before the news, Foreign Investors have been headed for the door. We saw outflows accelerating. Panic stocking of groceries ahead of indias lockdown may have been enough to lift Consumer Prices in april, but economist expect a downtrend in inflation to remain. April will report april india will report april cpi later. With more, our reporter in mumbai. Why is headline inflation so sticky . Said, it isrrectly mainly because the lockdown saw a surge in demand for food as were holding up for the lockdown that started in late march and carried it through april. Food prices have gone up across the board. Spices, oil, all with an increase. Vegetable prices were also higher, with the exception of onions. Its not all bad news. The core cpi inflation that strips out the volatile food and petrol prices is likely to trend lower because the demand for services has fallen off a cliff. That should provide some comfort to policymakers, especially on the monetary side, who meet month in june to decide rates. Do they ignore this number when they meet . That is a good question to ask. Ofhink at the higher side inflation, 6 , theres no doubt it will give some concern. But this six member panel is pretty much dovish. What they are more focused on is growth, and growth during the apriljune quarter is estimated to fall off a cliff at 25 contraction year on year, thats what Bloomberg Economics is forecasting. Given those growth problems, inflation around 6 will probably be tolerable given the core inflation, which is a good indication of demand, is likely to ease, as well as headline inflation, which will probably ease toward the second half of the financial year. Question, i think the governor along with his member panelists will probably go with the april number of inflation. Rishaad thank you. Haslinda a quick check of the latest business flash headlines. Stallscoronavirus [indiscernible] a rise in debt due to prices, and a deleveraging plan delayed up to six quarters. Tata motors has been thrown a lifeline already. Further aid may be needed. Delivered ceo has more bad news for the airline industry, saying it is unlikely a u. S. Carrier is likely a u. S. Carrier will fold by november. Boeing shares have fallen 70 since march. Airlines are looking to cancel orders because of the kronos coronavirus. Reportedly discussing a possible takeover [indiscernible] not sure if talks are active or will eventually lead to a deal. Neither amc nor amazon made a comment. The wider entertainment history is currently battered by coronavirus restrictions. Tz is castinger doubts on his future as the coronavirus raises questions about its ability to pay its debt. They have been working with lenders to avoid bankruptcy but they may not have enough cash to pay its bills. There is a Bleak Outlook for car renting. Rishaad that is it for Bloomberg Markets. We saw more evidence of weakness in the chinese economy in the form of inflation numbers. Bloomberg daybreak middle east is next. Staying connected your way is easier than ever. Youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. Manus this is daybreak middle east. New turf. President trump says move followed yousef . Followed