Transcripts For BLOOMBERG Bloomberg 20240704

We are down on the hang seng index, jakartas coming online. We are also seeing u. S. Futures starting to also point lower. We have a series of data points, we should be watching out for trade numbers, inflation is out tomorrow. Im wondering if the market is starting to sniff out a soft inflation number. What is top of mind for you . Yvonne yeah. You mentioned what is going on when it comes to the macro picture. The whole recession debate in the u. S. Is lingering in the bond market. You have the likes of goldman, Morgan Stanley saying, save the move we saw last week that was a bit overdone and by treasuries, its a sign that that may be what we saw was a bit too far. They are talking about going bullish when it comes to the fiveyear for jp morgan, going along when it comes to 30 year tips. They are seeing signs that maybe we are not really the news did not really drive it. The boj was tweaking, the downgrade on u. S. Debt also all of which is what goldman is saying is not showing meaningful moves to sustain what we saw last week. That is interesting i think as we count down to all of these options coming out. Rishaad one 3 billion coming into the market. We are seeing steepening take place. But not in your usual end of cycle steepening when you see the yield curve become less inverted. This is a bearish one. Instead of the twoyear remaining where it is, you see a longer duration. Bond prices are going down. You see a lower end of the yield curve, this is quite interesting. It is not the only share down, you have cpi down not just out of the u. S. , we are also looking at what is going on with the yen. Numbers out of china and beyond as well. Trade is going to be rather important. Yvonne looking at the estimates for trade. David soft numbers are expected out of china. It i also bring up the fact that taiwan is coming out with exports today. I believe i remember correctly, we should be seeing an 11th month of contraction on the expert front in taiwan. For the better part of the region, for the better part of the year, we have seen export contractions. That is the softness to the conversation. If there is money on the table right now given the backing up of yields to yvonnes point goldman and Morgan Stanley say if you look at real yields that is perhaps decent returns. We are also going to think of earnings season, right yvonne . Yvonne you take a look at japan, all of those coming up here, the likes of li auto, hsbc, they didnt upgrade, raising the price target did an upgrade raising the price targets on evs on the prospects of better oil sales. Where are we when it comes to these price wars. We will be talking about smart evs. Were getting into this autonomous driving era, when it comes to the ev sector . Rishaad we have a guest coming in to talk about things all ev, looking at the big ease of their. You got the current ding from hsbc. What do the global macro movers at the moment telus overall . Tell us overall . David there is a fullsized shape on the wall. That seems to be where some of the money is headed, particularly when you look at hong kong. Most parts of the region, taiwan is down 1 . There is a stronger dollar here today. To help us understand whether or not what seemed to be a strong fix and it was not as strong as earlier expected, does not open up more room for the dollar . Mark cranfield is here. What you make of the vix . Mark it is about 7. 15, it gives more headroom, probably because of dollaryen. The dollar yen has been drifting higher. It has not been coming down. The pboc is finally saying, lets allow the yuan, move closer to the yen. It is below 720. The sequence over the past couple of months is weve had the fix is below 720. Eventually pushing it below, we are now back to 7. 15. That will probably stay there for a while. People are secondguessing, do they mean there is a higher threshold, 7. 30, or higher . Probably not. The pboc moves fairly slowly and methodically. We are not likely to see it. The,. Off in. Hong kong as well the equities down there. It needs a bit of explaining and we have the cpi coming out which they may be putting some of the pain in advance. Some of this is guesswork but obviously a big talking point for today, why was the dollar yuan . Allowed to go home today . David is there something along the strong dollar story . Mark the fact that treasury yields have gone up, and is sticky on the top side. The yields will probably stay higher throughout the week. If the u. S. Treasury does not start raining in the amount of data needs to sell the yields will stay higher thought the day. Even if it is on pause, they may not have as much impact on the u. S. Yield curve. The demand supply factor there are too many bonds being sold. You cannot get yields at the long end of the curve if that is the case. The u. S. Government will have to show some if they want to stop doing it, the fed is in the middle. Yvonne i am wondering hedge funds have ramped up their bearish bets. On the others, you take a look at these long only funds and they continue to buy. How will this play out in a way, now that we have washed out some of the positioning, is that a good time to add positioning . Mark you have so many factors in the treasury market, so many people investing. You have distortions because of the distortion curve. You have some on the short end, they still see that being the most vulnerable to changes in fed policy. Youve got people who are duration hunters. They are looking for 10 years plus, up to 20, 30 year. On a historical basis it does not look too bad, particularly, as we are beginning to get stimulus in inflation which should just there a real yields to capture. That does not appeal to a wide sector. Of people. Youve got people like Insurance Companies and others who go there. Youve got to kinds of markets going on in treasury, the people who want to go with the fast money and then he of the more resilient people going for the longer end of the curve. This can go on for some time. The fed is looking to keep rates higher for a long time and yet the jobs market is still pretty resilient in the u. S. It will be changes, changes in the yield curve will be down bouncing. We could have an inverted yield curve going to the end of the year. David thank you. Yvonne Mark Cranfield joining us from singapore. Theres a lot going on when it comes to china. There is a selloff in hong kong. We are also awaiting the july trade were work due any time now report, do any time now. Rates are shrinking, on the face of softer demand. Lets bring in stephen engle. This week was going to be seeing the key data coming out whether it is the trade picture or inflation picture. We will talk about deflation. The export numbers have several ways to look at it. Is a bad number. The consensus estimate for july experts will fall 13. 4 yearoveryear, 13. 2 in july. Bloomberg economics expects it to be worse at 15. 8 . That will be the worst headline number for exports to fall since that infamous month of february 2020 when china closed, because of covid. Its pretty dire. You also have to take it with a grain of salt. Yearoveryear base effects do impact these numbers because june and july last years when we saw a bump up, because shanghai open after months of being in lockdown. These effects will affect it, but really it is an external demand story, as well as the trade and imports, and the internal demand story which also feeds into the deflationary story that we are going to talk about. Rishaad well, dont forget deflationary pressures mount here. We have the ppi numbers confirming probably what we were hearing, also the deflator. Thats a measure that is showing the economy is already in deflation. If you look at the last five months on cpi it has been in deflation. We have seen falling prices month over month. Even though the july numbers, which will be coming out tomorrow i believe will show the first time in white some time that we have gone into deflation. The consensus estimate is a fall of 0. 4 yearoveryear. As i said, it has fallen five consecutive months through june on a month over month basis. Essentially, the Pricing Power is not therefore retailers or producers. Input cost for producers have gone up, but they are not having are having to slash the price is to get the retail letters retail houses. In a market where people do not want to buy pig bigticket items. Everyone is offering discounts right now. There are good spots on the inflationary front, if you want to call it good. That has been tourism, people of had pentup demand, services have seen strength. But bigticket items and Retail Shopping has been pretty dismal. We are going to see ppi and the cpi head into deflationary territory. Yvonne our chief north asia correspondent on what to expect out of those numbers coming up today and tomorrow. Still had, the li autos has been ramping up deliveries of its suv models. We have high securities joining us, to preview the automakers today. This is bloomberg. 76 of 23andme Health Customers surveyed reported taking healthier actions. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. Fabulous surroundings. But everyones looking at their phones for Financial Insights from merrill. Is he hailing a ride to the concert hall . No. Hes making sure his portfolio and retirement plans work in harmony. They want to adopt a child and build a new home. So theyre talking numbers with their merrill adviser. Shes not researching her next role. Shes learning how to handle market ups and downs without the drama. Personalized advice so impressive your money never stops working for you with merrill. A bank of america company. woah. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. I need it cool at night. You trying to ice me out of the bed . Constant contact. Baby, only on game nights. You know you are retired right . Am i . Ya save up to 500 on the new sleep number® smart bed. Plus, free Home Delivery when you add an adjustable base. Shop now only at sleep number®. I supported raising the federal funds rate at our july meeting, i expect additional increases will be needed to lower inflation to the goal. Ill be looking for evidence that inflation is on a consistent and meaningful downward path as i consider whether fed further increases in the funds rate are needed and how long the funds rate will need to remain at a sufficiently restrictive level. Rishaad we have got her talking about more restrictive rates. This is what John Williams had to say, i expect that we will need to keep a restrictive stance for some time, saying it is an open question. If inflation keeps falling, than the central bank may need to lower rates to ensure that real Interest Rates do not rise any further. Data dependency again, Monetary Policy is in a good place. We have the policy where we need to be. That was John Williams talking to the new york times. That is the narrative right now. David yeah. Ill believe the rate cuts when they come. We have been trying to time that for some time. Dollar strengthening today. Thats engendered some risk aversion across equity markets, now. 8 , a lot of that is the pain we are seeing in china. Joining us in singapore, the investment director at eagle asset management. Good to see. Before we get into the rabbit hole of your em world, what is the case for equity markets, given the yield that is on display for grabs, cash from various ports of fixed income . I will make the case for emerging markets. Emerging markets are not a come margin a set. Homogenous said. You have latin america. They behave differently. This year, latin america has had a fantastic year, up about 20 . That is on the back of real rates went up much faster into this inflationary spike so the Central Banks were vigilant. You had commodities holding of the markets. The currencies have strengthen. In dollar terms you have done well. Unlike in asia where you have had headwinds largely on the back of the growth problems and in china, youve got places like greece that has done well, the middle east, parts of it have done really well. South africa has struggled. It depends where you are. One thing investors have forgotten is that macro does matter in emerging markets. This year we have seen that macro play out. That is why you the big differential of returns. David we went into the pandemic altogether. We had that synchronous response. We are coming out at different rates of speed. You are overweight in china, how long have you been overweight in china . What adjustments have you made . We third Third Quarter of last year. Time moves very fast have to think about these things. It was largely Consumer Services and energy transition, the kinds of things we look for are in fundamental change, things that will change or improve and have sustainable returns. That is what we look for. Without the consumer would be stronger than it has been. The First Quarter played out as we expected, the Second Quarter has not. The markets sold off for other debt reasons we were not investing in. I kept the positioning and the energy transitioning and we adjusted other consumer related positioning. Yvonne this is yvonne in hong kong. Great to have you on the program. A great concern in china is the economy heading into deflation . Given the fact that we have seen emerging markets benefit when it comes to higher inflation. If we are seeing deflation in china, what does that mean for earnings, for overall Pricing Power . I will break that into several parts. One youve got goods deflation in china. You have Services Inflation in china the same time. You have two kinds of inflation going on, which you see in other parts of the world. It is clear to understand what kind of inflation you are seeing in china. What that means for earnings, there are High Expectations for earnings and the second half of the year. The estimates are in the mid20 . I would be surprised if we hit that number. Next year we may see a lowering of earnings expectations, maybe in the third order and for 2023 and 2024. On the deflation side, i will give you an oblique way to think about it. In china, food inflation is a key component of the inflation basket. Youve got the risk of higher food inflation going into next year, because the green war, between russia grain war between russia and ukraine, and you have el nino forecast, which is supposed to be intense according to noah. And if that does come up, as they predict, it could cause Drought Conditions in the midwest, which could affect the main feed source for pork, which affects china. Rishaad everybody is facing el nino, inflation is part of the indian basket as well. Give us a sense why you are overweight in india. Do you have a preference in the two what do you invest me and what you invest to make . India is a structural change story. The Modi Government has come through with regulations and reforms that are market friendly. And its played the china plus one card well. It continues to attract investments. Earnings growth is very strong. The central bank has been on top of the inflation situation. Inflation is moderating, i would say. Youve got elections next year. Modi is expected to win that. You have another five years of inflation tailwinds in india. To us it is a steady place to be. Valuations are high, but then they reflect all the positive that is going on in that market. Rishaad well, when we look at this, youve also got emerging markets also looking at the resurgence of the developed market, i am talking japan, does this have any Material Impact in em in your view . Yes. Youve got to potential impacts from japan. One is the more obvious one which is capital allocation. If you can take money out of em and out locate it to japan, that is a simpler one. The more nuanced one is the carry trade. If you look at the yen mexico cross, the yen mexican cross, mexico the peso has depreciated against the yen. The reality is about 25 and the indian rupee is about 25. They have been beneficiaries of the carry trade funded at the expense in the yen. As the yen strengthens, you can see some of that potentially unwind which will be negative for capital flows in those markets. Yvonne i see your overrate overweight sectors are in health care, underweight consumer staples. Walk us through the rationale, why not ai . Why not . Ai is on the tech side. That is technology hardware. We are neutral. That is taiwan tech. I would say, we are exposed to the ai story through taiwan tech. The industrials one is the most interesting, it is playing in to the growth in energy transition. At the same Time Investment in the middle east in hydrocarbons. Whether you are building wind farms are drilling for more gas for hydrogen or what oil more oil, as the middle east is doing, there are beneficiaries on the industrial side. So, it spans anything from korea all the way to india and brazil. That is a broad global thing. On the health care side, again, its pharmaceuticals and hospitalswith aging populations and people being more health conscious, indias our primary market. David thank you so much. It is great to see you. Mohammed zaidi there. Well look at markets and talk about it a bit further. A lot more on deck. This is bloomberg. Rishaad a quick check on things affecting the chinese market, it had south. Pharma and the crackdown, Country Garden seeing shortsellers swarming over the company, facing increased scrutiny over its operations amid the property slump and looking at tencent. Tencent, getting a goldman cut on david we are heading to the lunch break. The market just above bob turner water. Growth in japanese worker wages. This is something which may support the boj assessment of price gains. Yen fallen victim to the strength of the dollar. The yield is that. 63. We are looking forward to soft. Yvonne they are reporting later on and certainly one to watch. Will they be able to swing the bat profitability after we stop orders of losses . Ai and investor interest helping it recover. One to watch a given what we are seeing here. Analysts expecting 7105 with 80 yen below that. Maybe some upside. David just a little bit of upside. Lets stay in japan. Japanese online lender brekke towne bank says rakuten told us how they are set to benefit fear. I think the biggest opportunity is japan is steadily becoming a cashless society. While the Adoption Rate is so low, it means significant further growth as possible. I believe Refining Service will lead to greater revenues. The challenge is concern for security. During the pandemic many people got comfortable shopping online. But when it comes to digital banking, we are hearing questions about security and safety from our customers. Our job is to resolve customer concerns by explaining the safety and reliability of our services. It is not an easy task and it is a great challenge, but prominent is promises a great opportunity. Do you think that will help your business . The majority of our assets had a floating Interest Rate, probably the highest proportion among japanese banks. What does this mean for us . Most of our Interest Income will increase in tandem. The decision is up to the bank of japan but we believe the end of negative Interest Rates is a huge chance for us and would result in a significant increase in profits. What about tweaks to ycc . Does that impact your business . We believe the tweak to the yield curve control will have a positive impact. We can switch to a higher rate. The fairly rapid pace of increase in deposits means an incremental boost to our assets. That allows us to enjoy the positive impacts of rising longterm Interest Rates. May be even more so than other banks. David that was the banks ceo speaking exclusively to our colleague. A lot to talk about. There is a deal which we will get to in a moment. A couple of movers to tell you about. The big drop is easing somewhat across some of these health care names. We are looking at it again. The superconductor stock still in focus today. The company itself [indiscernible] but the markets are continuing to run with that. 26 up. Rishaad it was up nearly 22 at one stage. Is this a case of, i do not know if you saw life of brian. These are some of the earnings we are looking at. Softbank and lee auto. Yvonne the first and one of the few ev makers in china. Lets bring in the analyst behind these calls. Some of these stocks have doubled if not tripled. Since the reopening back in november. Why more upside . We indeed raised the target price because we see autonomous driving might happen. The whole space is rolling into the iphone times. The autonomous driving will be the next game changer for ev and we see li autop might have a favorable position in the second half of the competition. We do see revenue increasing as the progress rolls forward and more cities here that has been one of the primary drivers for our revision from the autonomous driving angle. David what do you think of valuations right now given that some of these stocks have doubled or tripled over the last few months . This is triple level of trade. In the Second Quarter, we see overall person starting to stabilize. The consumer has been waiting on the sideline will finally revert to consume. This is coupled with more new model launches in the Second Quarter. And also the general inventory in the sector has been quite healthy. Another layer on the autonomous driving is starting from june we have started to see supportive policy environments and consumer acceptance on the rollout of more aggressive commercial commercialization of autonomous driving functions has been quite strong. They will be rolling the autopilot in cities scenario, a huge breakout from highway, in more cities in china. The momentum has been strong. The autonomous driving hype has been part of the source of the stock outperformance. In the latest weeks, we notice there is a micro beta rotation that has been driving the space. Rishaad who is best to come out of the price more gentle a price war . The ev tax break extended to 27. That is why we are forecasting more than 50 . We also should point out the source of the ev growth is more independent. Between that, consumers leaning on the ev site. Strong supply pool, consumer acceptance and favorable user economy will continue to support ev growth. Although we are passing the Inflection Point. We would say this is still a sweet spot among the auto space. Yvonne how do you look at overall where we are in the smart ev era . You mentioned we are getting in the iphone phase . When are we going to see the Inflection Point . The ev supply chain is very dominating in china. Are there opportunities there too . On autonomous driving, we see a supportive policy environment and strong consumer acceptance that would drive a strong adoption, smart ev sales by 2025 could be reaction 10 . We could see the ev hype to happen as early as 25. The Technology Environment is getting more improved. When the Technology Becomes more mature, more users will use it and that will accelerate the big data accumulation and push the industry into the Inflection Point. We are seeing more aggressive commerciality and in the business you have a potential Inflection Point around 2025. On the supply chain side, [indiscernible] the majority of the global battery production is chinacentric. David you raised your target prices for the stocks. If i listen to your advice, i would have lost a lot of money. I wouldve lost 60 of my money. What are the risks to your viewer right now . In the near term, the expectation was raised to high and most of the mediumterm catalysts could be largely materialized. From my near term perspective, i would say we would acknowledge if the correction happens, that should provide a better entry. Given the autonomous driving hype and the micro beta rotation, that should change the investment duration from focusing on mostly the quarterly change. In the fourth quarter, there will be another round of new model supply coming. Next year, that should also provide more opportunities as autonomous driving it rolls forward in china. That should drive consumer acceptance during the process. In the coming 1218 months, but in the near term i agree. That should provide a better entry. David thank you so much for your fantastic insights. Head of China Auto Research there. Just ahead, we are talking about the shakeup at ubs. We have more details on the story just ahead. This is bloomberg. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh did you know you can get someone to shop for you . Stitch fix really gets me and what i need. Even better . They save me a trip to the mall. Its easy i share my style, size and budget. And they do the shopping for me. Stitch fix sends me things that fit and make me feel like a more stylish version of myself. I keep what works, and send back the rest. No subscription required. No commitment. Just my style. Stitch fix. Rishaad the hang seng down 1. 1 . The tech side of things responsible for some of this fallback taking place. China equities flat. We are looking at unusual volumes, hstech up 1. 7 . Lets have a at ubs. It revamps the leadership of its Investment Banking unit. It is merging with chris weise and our reporter has more. Reporter this is a longawaited reorganization plan and the leadership was the big question. We have a memo that was circulated to employees. What is fascinating is that among 40 appointments announced for heads of different parts of the investment bank, six Credit Suisse bankers are at the top for global cohead of coverage and global chief of staff for instance. Jeffreys Financial Group hired 20 bankers from the Credit Suisse private fund group as they try to boost its own advisory business. Of the 20 additions come about eight were hired to be manage and directors. Managing directors. We should point out that while the integration of Credit Suisse increase the workforce, swiss bank intends to do our reduction by 30 . That is what we have been reporting earlier. Ubs has said it plans to reduce costs by about 6 billion over the next several years. There has been a big focus on how the consolidation is taking place, how cuts are taking place. Ubs will give further details on august 31 when it reports combined secondquarter earnings. David what about asia . Reporter asia is a very big question. They are going to cut two thirds of the Credit Suisse Investment Bankers the asiapacific. The first major reduction in the region. That would cost about 200 jobs as it cuts its Global Banking division in asia over the next couple months. Ubs is letting go about 80 of Credit Suisse investors in hong kong and beth is starting this week. People close to the matter say ubs is looking to retain more than 100 Credit Suisse bankers across asia, with many of them focus outside of asia. The domestic security venture in china is largely unaffected by this. Back to you. Rishaad su keenan for us in new york. Goldman sachs has promoted its research chief. They announced his departure on monday. He has no plans to take on another job. The position will remain vacant for now. He rose to fame after correctly predicting the china driven boom of the 2000s. A change at tesla, cfo Zachary Kirkhorn stepping down after 13 years. He was considered a top contender to succeed elon musk as ceo. Kirkhorn will continue to serve in an unspecified capacity through the end of the year. Tesla is the largest contributor to ark. Cathie wood telling us she will miss kirkhorn about presence. It is a tough job. I guess 13 years was a really good run for him. I cannot say enough good things about him and what he did for tesla. I think he train his successor well. Rishaad this is what markets look like. Were off for a break. 76 of 23andme Health Customers surveyed reported taking healthier actions. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. He snores like an angry rhino. Youve never heard an angry rhino. Baby i hear one every night. Every night. Okay. Ill work on that. Save up to 500 on the new sleep number® smart bed. Plus, free Home Delivery when you add an adjustable base. Yvonne one story we are shop now only at sleep number®. Tracking, about what is going on with the aunt valuation. Carlisle actually skipping this buyback after this valuation has slumped 70 . Talking about overall people are not too optimistic about what could come out of this ipo we have been talking about for years now. David we have been waiting for that. We are also waiting for trade numbers coming out. On the valuation front, he tells you something about how different this transaction looks from that time. Was it 2019 . I know forget november of the year when it was pulled. Some of the backers reportedly pulling out of this. Trade numbers, is this what we are expecting . Rishaad exports may weaken. What about imports . That should give us a sense of what is happening with the domestic economy. We are expecting these numbers any minute now. Import number contracted by 5. 6 . Lets have a look at what is going on with developers and insurers. Country garden 4. 5 to the downside. This Company Keeps getting shellacked. Short seller swarming all over their shares. A long car crash in slow motion that is the property market. Asiapacific index down right now. Cpr in focus as well. One eye on china, the other one on the United States. This is bloomberg. awww. Awww. Awww. Nope. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. Wow, you get to watch all your favorite stuff. Constant contact. Its to die for. And its all right here. Streaming was never this easy, you know. This is the way. You really went all out didnt you . Um, its called commitment. Could you turn down the volume . Here, you can try. Get way more into what your into when you stream on the xfinity 10g network. Wow, you get to watch all your favorite stuff. Its to die for. And its all right here. Streaming was never this easy, you know. This is the way. You really went all out didnt you . Um, its called commitment. Could you turn down the volume . Here, you can try. Get way more into what your into when you stream on the xfinity 10g network. Haslinda welcome to Bloomberg Markets asia. Rishaad lets have a look at the top stories. A broadbased stock some up in hong kong, dragon the regional benchmark toward its lowest close. Of the month. Deflation danger growing in chinas Companies Cut prices to survive, with consumers deferring spending. Qatars Sovereign Fund taken a stake in Adani Energy Green as a vote of confidence. Haslinda it is a risk off in asia. Currencies stronger across the board. Japanese stocks getting the left from the strongerthanexpected earnings. The hang seng index is down, direct down by all sectors across the board, in particular tech and real estate. Nikkei 225 giving a left from that weaker dollar. The yuan currently down 3 10 of 1 . We await the trade data, expected to show further wickedness. Weakness. Cpi and ppi in focus. In the commodity space, it is about crude oil, on the upside. In the bond market, pretty mixed picture. Ozzie 10 year yield trending higher with yields down about 12 basis points. Rishaad lets go to bangkok for the open. We have been dragged lower by what is happening in china. We are seeing some renewed baht weakness. The Country Planning to promote the use of the yuan and other currencies. This is to help reduce exchange risk. India, flat start to the trading day. We have both the nifty and this insects settling into the green. We are also looking ahead to the reserve bank of india about decision on Interest Rates. No change expected. We are looking at july trade numbers due any time now. We are likely to see exports shrinking at a possibly faster pace because of softer external demand. Stephen engle joins us now. A really important week for data this week. What kind of picture will lay paint for the economy, which has been struggling a bit to say the least . The data is going to show continued export and import weakness. External demand has been a week. There are also base effects here because junejuly last year saw a bump up in exports following the end of the shanghai covid lockdown. Base effects will have an impact. In june we saw a decline in exports and also the survey suggests a 13. 2 percent decline in july yearoveryear. Bloomberg economics already expecting it to be even worse. Their survey is for ball fall of 15 point 8 . The numbers are not going to look pretty. Obviously, imports is expected to fall for a fifth consecutive month. The number still have not crossed just yet. The second half of this story is the deflationary picture on the mainland. Yvonne you said it is not looking pretty. Will cpi and ppi numbers confirm what we already here anecdotally . Yearoveryear cpi inflation or deflation is likely to take hold for the first time in many months. The consensus estimate yearoveryear is for a fall of Consumer Prices of 0. 4 . Month over month, it is already falling for the past five consecutive months through june. We are already seeing pricing weakness in china across the board. Consumers reluctant to do the big ticket numbers. There are price wars going on in the automobile space and retailers stopped up on expectations. The surge in demand did not really happen. That is potentially threatening to undermine the government about efforts and its narrative that the economy is doing just fine. They said there is no evidence really of sustained weakness in prices, but we are hearing though that some economists in china, as part of the anecdotal evidence, that some economists are being asked by regulators to downplay or not to even mention deflation because it goes against the narrative the Chinese Government is perpetrating and that is the domestic economy is strong and well will get stronger. The big question is what will the numbers show us as far as a outward trend for a deflationary environment . The Producer Price index has been in deflationary territory for nine months. Haslinda the other big story, to buy or not to buy chinext . Thank you. Our next guest is sam rhee from endowus. Good to have you with us. When it comes to china, it is a double whammy. We have concerns about deflation, also a very weak currency. Do you buy china . It is a tough call, it has been a tough market to predict. Valuations are supportive, pretty much nothing else. It is difficult to be bullish china right now, especially where the macro is and growth slowing despite the expectations we had. Demand remains anemic, especially consumption. Haslinda how close are you looking at the data coming out . Does it even matter once sentiment is so low . The data is important, but most people are expecting negative news so i think that is priced in. How much is what will drive the markets. The data itself i do not think will surprise. External demand is weak, domestic demand is weak and that causes manufacturing slowdowns, consumption remains weak. So a lot of it will be more negative news. On price cpi and ppi, it is another way to reflect the increased price input that we had from Producer Prices. We had only a bump up. Consumer prices i see it very difficult that we will get out of this deflationary spiral. Rishaad the wiggle room is there for Monetary Policy, but when you have rates as low as they are, they should be giving some impetus. There is not much room on the fiscal side of this given the debt situation. What do you make of this . Great question. Even Monetary Policy, obviously they are cutting rates, but china still gets a lot of liquidity from external sources. The balance of payments trade is an important source of liquidity. On the fiscal side, they are making a difference. Rishaad we have the figures coming through. Imports year on year for july for china, contraction of nearly 12. 5 . 12. 4 . Export wise, worse than expected , 14. 5 . Both of these numbers worse than they were in june. Our things nosedived been . What do you make of the export number . Exports in line because i think we were expecting worse than that. Imports is really bad because they reflects the domestic demand weakness and the weakness of the consumer even more. The Manufacturing Sector affects Industrial Production and that is impacted by both domestic demand and exports being weak. Goes to show that domestic demand is relatively weak. Some of it may be Producer Prices, but generally it is pretty negative news. Especially on the import side. Haslinda what would it mean for chinese assets now . It depends which assets. Real estate remains relatively weak. A sector that is really problematic. One of the structural problems of china is the really high indebtedness of the system and that is very inefficient. Even if the government throws loans at growth, it will be a low return, a low growth spurt. Maybe it will be a temporary boost. It will be very short. We need to deal with the structural problems, the mist enough capital misallocation of capital. Rishaad we have a lot more to discuss here. We just got those export, import numbers. Worse than expected exports. The july number for import, big contraction there. Csi just above the gain line. The dollar strengthened and a bit strengthening a bit. More on all this after this break. Still to come, ather energys ceo. This is bloomberg. Fabulous surroundings. But everyones looking at their phones for Financial Insights from merrill. Is he hailing a ride to the concert hall . No. Hes making sure his portfolio and retirement plans work in harmony. They want to adopt a child and build a new home. So theyre talking numbers with their merrill adviser. Shes not researching her next role. Shes learning how to handle market ups and downs without the drama. Personalized advice so impressive your money never stops working for you with merrill. A bank of america company. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates, exemption certificates or filing returns. AvalarAhhh Ahhh Ahhh ahhh haslinda chinese benchmarks, on the back of trade data which came back worse than expected. The hang seng in the negative, led pretty much biotech. Confidence index in china just barely in positive territory. Deflation pretty much accelerating. Sam rhee from endowus is still with us. Are there pockets of opportunities in china . Valuations are very low. Valuations are cheap across the board. We need news flow and sentiment to improve and underlying earnings to improve meaningfully. The defensive sector, i would love to see i. T. Come back. That is the one sector that would make a meaningful difference. Haslinda is the clampdown on i. T. Over and is that enough reason to look at that . Tech is a broad sector so you would have to look at the individual stocks. The macro Regulatory Environment seems to be easing. The government is trying to improve sentiment with policies and also in terms of economic boosting measures. Rishaad when you look at u. S. Markets, the bond market getting crushed of late. Does this prevent present an opportunity . Are we inventing flagship point in the United States in your view . Is it time to be looking elsewhere . I think a lot of people make the mistake of trying to be contrarian and catching a falling knife is a dangerous business. I do not think the u. S. Market is where we would say the knife is falling. I think china is the example. In the u. S. We had a good rally and are having a pullback. The earnings season we just had suggest the u. S. Is the most robust economy globally. Earnings are down, but betterthanexpected as well. The most important thing is there is significant demand and there was a flush mountain of liquidity. People on the sidelines with a lack of cash. Putting that back to work and buying the dips is the strategy most people will follow. Rishaad also, you look at the u. S. Market and you are looking at valuations not exactly enticing right now. Where is your conviction going . When you looked at a income, do you look at investment or perhaps highyield . I think overall fixed income looks relatively attractive. I think equities you may argue is a bit overbought and so we are due for a correction. Growth is slowing although it is holding up better than expected. This is a cycle that is in a downturn. Therefore there is not a strong case for valuations, but at the same time valuations that 12 times or 20 times is not an expensive market by any means and therefore valuations is not going to be the catalyst that will break the market. In fact, liquidity, demand and supply, these are the factors that drive markets more strongly. Trade has had a massive bastion because of the u. S. Debt downgrade. The Financial Condition and tightening is having an impact, but i think Investment Grade and even highyield i think is doing betterthanexpected and we should continue to overweight those sectors. Rishaad thank you so much for joining us. Sam rhee from endowus. Worse than expected data out of china. Trade plunging more than anticipated. The Third Straight month we have seen exports drop. Oversee shipments 14. 5 down. Imports nearly 12. 5 to the negative. Shipment figures the worst decline since the pandemic started. Investors in china seeming fairly sanguine for the time being. This is bloomberg. 76 of 23andme Health Customers surveyed reported taking healthier actions. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. If you wake up thinking about the market and want to make the right moves fast. Get decision tech from fidelity. [ cellphone vibrates ] youll get proactive alerts for market events before they happen. And insights on every buy and sell decision. With zerocommission online u. S. Stock and etf trades. For smarter trading decisions, get decision tech from fidelity. I need it cool at night. For smarter trading decisions, you trying to ice me out of the bed . Baby, only on game nights. You know you are retired right . Am i . Ya save up to 500 on the new sleep number® smart bed. Plus, free Home Delivery when you add an adjustable base. Haslinda the hang seng under shop now only at sleep number®. Pressure. Alibaba front and center. Several Global Investors said to be opting out of the proposed Share Buyback after the valuation was slashed. Our reporter joins us for more. Not really surprising, right . That is true. For most investors if they are able to continue investing in china. Selling out now at a point that some would say is the bottom level of the valuation would not be the smart move, but if you do not want to go in front of u. S. Congressional hearings, if your now might be a chance to get out. Haslinda some are betting the prices will improve. Will they be right . It is a hard one to say. If you think it cannot get much worse, then why sell now . One argument we did here is that over the longer term, if you do believe there are a lot of metrics pointing in the right direction, that chinas crackdown is easing and that over time people will need more access to financial services, then it could look like a better bet going forward. Rishaad surely the buybacks would be good news for investors, but there is a . Even there. If you went in at 2018 at a much higher valuation that what is being offered, you may not have written down the value of your investments. Except in it might be inevitable but you do not really want to participate in it. So why not ride it . Why not see it go up from here and even take the opportunity to buy a little more. Rishaad always a pleasure. Checking on alibaba, 2 down. We do have a slump in some of the trade playing out here. Trade numbers certainly have been an impact. The export numbers we have just now worse than expected. Looking at the offshore yuan. Going to look at some of the superconductor stocks. This company said it has nothing to do with this discovery with what happens with the speed of Processing Power which can be done at ambient temperature four times the speed. They denied any link to the compound and the stock was up over 21 at one stage. Haslinda the Broader Market under pressure under the softer than expected data out of china. Plenty more ahead. Keep it here with us. This is bloomberg. Rishaad we are seeing equity markets in china heading off for their lunch break. Trade data, imports and exports weaker than expected. At the moment, people are being fairly sanguine about this. Looking of course against the stimulus, but we have to wait on the inflation news that is on the horizon too. The csi just above water. An onshore rmb weaker against the strength of the dollar. We have tokyo coming back. Haslinda the nikkei 225 has been pretty resilient. It is on up when most of the benchmarks are in negative territory. Earnings in japan coming in betterthanexpected. The weaker yen 143. The nikkei 225 up. Rishaad lets go back to the trade numbers. Falling for a third strength month, these are numbers for july. Imports also plunging more than anticipated. Rebecca Choong Wilkins joins us. What stood out for you . It is the triple whammy were seeing, the exports and imports and deflation risks too. Export numbers, the mist from the forecast i have your drag on the economy then we initially expected. The yearoveryear comparison was always going to be tough because last year we had this left after the lockdown on shanghai was lifted and that helped boost numbers there. There was always going to be a challenge, but this is certainly more negative than people were expecting. The other issue is this global drop in demand. We saw pmi numbers signaling a contraction for several of chinas key trading partners the United States, there euro area, japan. Yet another worry. Haslinda the triple whammy. In general, economists were not expecting to see any of the promised stimulus showing through in this set of data. It will take a long time to implement any policy. I think there is moderation of expectations. We saw this dovish tale help to spur the rally in some chinese equities, but there was more of a sanguine reassessment. The worry is there is not just the lack of capacity, but also a lack of willingness to rollout a big bazooka stimulus. We have to keep watching the pressure on corporations and factories. Looking at some of the deflation pressure on business owners. Looking ultimately to trim and narrow their profits in order to remain competitive. They are using the excess inventory they built up from covid and trying to sell that off. The weakening cpi and consumption in china is a real overhang for them too. Rishaad it points to people not wanting to spend. The comparison it has drawn, have to be careful not to end up like japan did 20 or 30 years ago. What does it tell us . We have had the inventory overhang for ages. There is this idea back china may be locked in this downward spiral, lots of comparisons to japan, struggling to pick themselves up. There is a confidence issue, partly because of the crackdown in the property sector. It is one of the most surefire ways for chinas middle class to increase their wealth and that is not rising in value. The other worry is not just an issue of confidence, but perhaps there is a reduced capacity to spend it too. That is slightly more worrying because this suggests policy, even if it came in the form about direct handout, even that might not be enough. Haslinda it is all a blow to the recovery story. Thank you so much. From china to india. We begin with Qatar Investment authority buying a stake in adani green energy. Lets bring in our reporter. What do we know about this investment . How different is this from the original fundraising plans . This is different because if you recall adani green energy, Adani Transmission have decided to raise a round worth 4 billion. Qatar Authority Investment is putting a lot of money into this fund. This is also an endorsement that the hindenburg report is a matter of the past. [indiscernible] analysts asking why only no other investor coming in. They have already invested in Adani Transmission. They have announced a financial disclosure. There back into the business and they are reason loans, liquidity. Rishaad we are expecting some good numbers Given Container traffic boosted by the indian economy. It is the second line of defense. Adani ports is like a breadwinner for the flagship company. We are waiting to see if there will be additional bond buybacks. They announced a few months ago. There could be more initiatives. The Shareholders Meeting is also happening today. Two big things are happening for adani ports. Rishaad watch this space. No doubt we will be talking about this tomorrow. Our conglomerates reporter there. Coal india today. The price of the black stuff continuing to rise. Coming up, tarun mehta from ather energy will be joining us. He will be speaking exclusively to us. That is next. Fabulous surroundings. But everyones looking at their phones for Financial Insights from merrill. Is he hailing a ride to the concert hall . No. Hes making sure his portfolio and retirement plans work in harmony. They want to adopt a child and build a new home. So theyre talking numbers with their merrill adviser. Shes not researching her next role. Shes learning how to handle market ups and downs without the drama. Personalized advice so impressive your money never stops working for you with merrill. A bank of america company. Haslinda welcome back. Turning now to india about ev market as the worlds thirdlargest Greenhouse Gas emitters seeks to reduce its omissions. How big is indias ev market . Which factors have contributed to the growth . The market has been growing steadily over the past couple of years. In 2022, annual electric record sales surpass the one million mark for the first time. We estimate 1. 4 million electric vehicles were sold in the country that year. Volumes are mostly contributed by electric makers in the two and three wheeler segments, which is where the total cost of ownership of an electric vehicle is cheaper compared with gasoline makers. When i say total cost of ownership, i mean the cost of owning it throughout its lifetime. This factor has been primarily driving sales in these sectors. Within these segments, i would say high mileage, commercial usage applications such as Home Delivery services and ecommerce players, are quickly snapping up electric markets. These customers do not need highend features, which means such electric vehicles are comparatively cheaper. We are also seeing a rise in demand for electric cars in india. In 2022, for the second year, we saw electric car sales triple to just under 50,000 vehicles. The chief factors driving the demand for electric vehicles in india is the low operating cost combined with a rise in gas prices. There is also more automakers launching the newer models in the market so the customers have a wider variety to choose from. Haslinda so it is looking promising. Will india meet its targets . What could stand in the way . India has ambitious targets for 2020. We assume no new additional policy could change the trajectory or improve the economics further. We see only electric three wheelers to be meeting the government apple hopes for 2030. Unless there out other measures that could help shift the gears. Rishaad how are these Vehicle Manufacturers responding to the rising demand of the evs given the constraints . Up until now, we have seen more makers launching models. More automakers are bringing electric models in the suv market, particularly the compact suv segment, which is where we see in rising customer interest and that is also helping sales. When we speak about automakers strategies, tesla motors has had perhaps the most targeted and focused strategy over the past few years. They have introduced models that are aimed at different customer segments and different price points, which has helped them secure their lead. For two wheelers, the market is dominated by startups. Overall, automakers announce concrete commitments for the ev sector. We have tracked commitments of over 5 billion from automakers. A rise in ev adoption is a factor that is bringing more automakers to the market. Also, the government about has also helped its by offering subsidies to automakers, which has helped encourage them focus on their ev strategy. Rishaad thank you. Looking at the annual bnef summit happen then in new delhi in august. It is to help shape a cleaner future. One minute of treating before the indian markets. The sunsets and the nifty just above the game line. Gain line. This is predicated on their not being a recession in the United States. This is as of course their own team in the u. S. Recently change their view from a mild recession to know recession for the United States. They are very bullish there at the moment, suggesting the nifty code rerate could rewrite. They are cautious on utilities and i. T. This is bloomberg. Plenty more ahead. Haslinda the nikkei 225 extending gains to 4 10 of 1 . The benchmark lifted by earnings in japan which have exceeded expectations. Getting a letter from the weaker yen as well. The japanese online lender is wellpositioned to enjoy profit boost. The ceo told us how they are set to benefit from japans transition away from cash. I think the biggest opportunity is japan is becoming a cashless society. While the Adoption Rate is still low it means significant future growth is still possible. I believe refining our service will lead to even greater revenues. The challenge is security. Many people got comfortable shopping on ecommerce sites during the pandemic, but we are here to questions about security and safety from many of our customers. Our job is to resolve concerns by explaining the safety and reliability of our services. It is not an easy task. It is a great challenge, but promises a great opportunity. Speaking of opportunities, what do you think of the boj policies in the future . Do you think the negative Interest Rate policy will help your business . The majority of our assets have floating Interest Rates. Probably the highest proportion among japanese banks. Most of our Interest Rate income will increase with the rise of shortterm interest. The decision is up to the bank of but we believe the end of negative Interest Rates is a huge chance for us and would result in an increase in profits. What about tweaks to ycc . Does that impact your business . We believe the tweak to a big yield curve control will have a positive impact on our revenue and profit. We can switch to a higher rate when they fixed rate reaches maturity. A fairly rapid pace of increase in deposits means a boost to our assets. That allows us to enjoy the positive impacts of rising longterm Interest Rates, may be even more so than other banks. Rishaad that was the rakuten ceo. Our next guest is tarun mehta from ather energy. Thank you very much. How big can this market get for electric scooters and where are you in the trajectory . The indian auto story there are 215 million two wheelers on the road. That is one of the largest sectors getting created out of almost thin air the last few years. In the last eight quarters, the sector has seen 50 or 60 year on year quarter on quarter growth. Haslinda how much of the market are you targeting . We are almost 70 of the premium scooter space in india. By 2030, india is the largest concentration practically in the world. Almost 1000 engineers. We think we have a solid chance of becoming the market leader. Rishaad what about fundraising . Where are you in the road to profitability . Valuations in this market are hard to predict. 200 plus later this year. We expect to turn profitable in the next year, year and a half. Electric scooters are the dominant marker market. We are exploiting them. The next two years we will certainly have a few electric bikes. Rishaad very quickly, ipo plans . About to go public in the next year or two. Rishaad thank you very much. Haslinda tarun mehta from ather energy there. Markets under pressure, trade data weaker than expected out of china. Deflation concerns accelerating their. Most benchmarks in negative territory. Dollar strength weigh in on asian currencies. We are awaiting the results of softbank. They may return to profit after six quarters of losses. Its fun has had a 40 billion of losses. How strong will it be . That remains to be seen. That is it from Bloomberg Markets asia. Do keep it here with us. This is bloomberg. Did you know you can get someone to shop for you . With stitch fix, it couldnt be easier. I share my style, size and budget. And they shop just for me. My shopper sends me stuff i feel good in. I keep what works, and send back the rest. Stitch fix. 76 of 23andme Health Customers surveyed reported taking healthier actions. I keep what works, and send back the rest. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. You dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh my cpa told me i wouldnt qualify for the erc tax refund, so i called innovation refunds. Their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your Small Business qualifies. Yousef this is bloomberg daybreak middle east africa. Market sentiment sours as d