Transcripts For BLOOMBERG Bloomberg 20240703

Across the markets. Driving the stimulus, miss confidence. The effect we had, what it did do, nasdaq is up. We continue to see property stocks. Hong kong markets are the first. Theyre cutting down down payments, mortgage rates. Country garden is lifting property, most sectors are in the green. U. S. Markets are closed so we will not see too much in terms of treasuries. The jobs report was talking about moderation. Certainly you are seeing hong kong lead the charge as well as the csi 300. We broke out of declines after the best week we saw since july. We saw seven weeks of gains for the index. In your which is quite rare. We just mentioned. 5. 3 up for the property gauge. Just to reeducate on the welcome stimulus playing out. Lets have a look. We have some important trade data with how the Chinese Markets are doing a deep dive and michelle is taking his place as the last meeting of governor. Rate decisions as well. We will see. It will be interesting to see that the timing cycle may be over. Whether we are and trade numbers come out in australia, are we going to see signs of bottoming out. Lets bring you in the head of asia macro it seems like the stars are aligned, youre getting the housing stimulus nationwide and more signs of stabilization in the stock market, i am wondering if we are seeing signs of an early turnaround. Good morning. Releases have been helpful, we have a goldilocks data situation and china has been meaningful. We have been arguing to watch out for the accumulation with sentiment. Housing in home sales underscore. All in all, good reversal of sentiment. Its a question more are asking. If you look at the composite pmi , thats also edged up a little bit. Manufacturing picture is coming together. Developments tend to highlight. Chinas import intensity has come up quite a bit. Still think, last week, will they drag the economy down significantly is not sentiment we agree with. What would trigger you . We are a long ways if china is to week to go short. , it offers a hedge in the month of july against mobile markets where we could see some setbacks. We have had other politicians visiting beijing. Things could stabilize, does that mean better prospects . I would love to believe that the better case. Its good the two sides are engaging. How you manage. The fed is welcoming these numbers. Wages are growing down. Like fixed income. Stretch it out. Not quite at the fed, Research Shows the jump is explainable because baby boomers we think there is a shortage of labor. If you look at things on a forwardlooking basis, you need to ease visa caps on immigration. If growth accelerates and there is tightness, we acknowledge the goldilocks scenario. Tightness is palpable and we need to see further. That is on a tactical basis, if the fed signals a pause in september, we think we will. Most likely raising the growth forecast. Keep in mind, growth projections are week. Clearly need to be pushed higher than was doing so is not quite obvious to me that the signals a peak in policy just yet. How it plays out will drive u. S. Exceptionalism but they are in a much stickier position with inflation being surprising to the upside and the downturn on the core inflation side has been slow and pmi has been surprising. They are in a much stickier situation. They could get a small bump lower because of the fed signaling a pause in policy but underlying it is the u. S. Is looking better off. Always a pleasure. Still to come, Global Electric Vehicle Market is heating up even more, mercedes causing squarely with chinese consumers. How they are planning to do that. Breathing space from Country Garden. The bond payment. This is bloomberg. Rishaad the property sector, bloombergtechtv intelligence index. Country garden. 22 . The Coupon Payment in relationship to a denominated bond. People dont want to be identified and on friday extending to the yuan bond. The china credit at her group guru. This is piecemeal, quite small. 600,000 is a drop in the bucket. Because it is Country Garden to make bond payment. Some concern is about the potential of increased contagion the movie had two years ago. Rishaad this will be a long time to sort it out. What are the next hurdles . The bonds are combined in interest, the grace periods and later this week. We had 3. 9 billion yuan part of the pond the just got extended. If they were fighting to extend that on as far as any early repayment they would have to make on those. Yvonne im wondering in terms of if we have seen a bottoming the property market, how likely will this impact home sales revivals . Thats it. Until we see the home sales going up again . Cutting down payment requirements. All of the august sales out on friday for some developers. Lowest in nearly a decade. Until the homebuyers, if we buy now and we dont pay more than what we would and another year or so, thats when we might start seeing some buying. Rishaad a lot more on the way including metals getting a boost. A lot more on the way. Your with bloomberg. Grand canyon university, an affordable private Christian University ranked top 20 campus in the country, offers over 310 dynamic academic programs informed by industry and Student Learning outcomes. In addition to federal grants and aid, traditional campus students received nearly 180 million in scholarships in 2022 with many attending for less than the cost of a State University and less debt after graduation. Looking at scholarship offers . See how gcu compares at gcu. Edu myoffer yvonne it continues to be green arrows. Were watching the property space, you continue to see asia market extending gains as well. Lets talk about germany where carmakers are showing off the next generation of models bmw, mercedes for these legacy automakers proving they can stay ahead in an industry in full evolution. Here we are to show the European Market what they have to offer to break in to the international stage. Lets not forget about tesla. Automakers dont know how to make that kind of money, how do they stay relevant . How do they break in . Rishaad the key question, lets have a look at some movers. We have confidence with what we are doing, the yuan bond helps avoid a firsttime default. A bit of a respite. They are wide on a payment, bonds, stimulus efforts helping to lift up the general Industry Group. Certainly knew a lot going on, brent crude is up at the moment. 86 per barrel, we have seen oil prices. We have seven weeks of gains particular saudi arabia. Export curves. Monday when they did not. We have one Corporation Stock up about three quarters of 1 . Line town resources is saying its willing to back a takeover, the worlds top producer of lithium. One country is holding shipping at the mine. Base metals are getting taken out looking here, lithium is up. Looking elsewhere we have certainly, are we not at some asian sovereigns . Yvonne there was a bit of a reason why we are scratching some heads. Why we see treasuries selloff . Were seeing across asia with treasuries shut this morning, were seeing that across the region, its a sign that you are seeing more selling, more bonds. When it comes to your global macro movers across the table. We are seeing a retreat, it is still hong kong. Expectations of tighter markets, the outlook is. This is bloomberg. If you average at the last three months, it is 150,000 jobs being created. This is the transition from the breakneck speed of the fast recovery we saw initially. Disturbingly low Unemployment Rate finally taking up is good news, but you have to be careful. The labor market can be a slippery slope. I think the fed should begun unless you got something significant on cpi. You were seeing the goldilocks scenario that the fed once. It will be unlikely that they will move during the next meeting. This is the report the market was looking for. We are on track for a soft landing. A technical recession does not look likely as now. Yvonne our tv is reacting to those august job numbers out of the u. S. On friday. Goldilocks still remains that theme it seems. Take a look as we count down to markets, labor day before the u. S. Reopens for the week. In asia, most sectors in the green if not all this morning. Asia dollar index pretty much flat but a little bit of red, but it is a good day when it comes to asia stocks, and we continue to watch what is going on in it comes to crude markets. You are starting to see a mentor and across these oil markets. Rishaad the fundamental reasons is over the idea that we will be seeing further supply cuts by opec was leaders, wti up. Nearly 86 a barrel, up for eight straight sessions, a 7 gain last week. Underlying metrics have widened, saudi arabia setting the tone of the opec alliance, expected by traders to follow a move to cut supply on a voluntary basis into october. Lets have a look into more detail as to what is going on now. Asia Pacific Petroleum conference, the president of commodity insights and he is at that conference taking place in singapore. Thank you for joining us. Lets get a sense of where you think the oil market is right now and whether this is a tightness of supply problem, and how much is the stabilization in demand also responsible for the surge in prices we are witnessing . Thank you for having me. Oil markets are in a very interesting place. What is happening right now is a combination of a little bit of multiple things. There is tightening of demand. The u. S. Economy has been more resilient than anticipated, so there is a nice, robust demand. At the same time there has been tightening of supply with the opec was cuts, and that has led opec cuts, and that has led the price to be in the mid to upper 80s. We anticipate oil prices to cool down a little bit but not by much, and in the runup to the end of 2024, we should see Oil Prices Get back to the high 80s , and that is the median scenario we are planning. A lot of the work we do is scenariobased, because you know where will will end up. The scenarios we have have the maximum amount of divergence. All the way from 70 per barrel to 110 a barrel as we think about the runup to 2024. Yvonne it has been such a rocky year when you have a china slowdown, opec supply cuts and people still guessing when the fed is done with this tightening cycle. What are investors talking to . What are they most concerned for now . There is a different view in the shortterm and the longterm. In the short term, what is opec going to do next. Geopolitical tensions, will things go differently . What is going to happen to continued demand growth in the United States . Will the Indian Economy continue to have outsized growth . Will demand in china come back . There is a huge conversation around the product mix. Jet fuel and kerosene have done really well. The longterm conversation is quite different, and investors are very measured and thinking about what Energy Transition will look like over the next few years, and how capital deployment should change as a result. And it is less so about some of the things that we worry about on a quarterly or six to month basis, and that divergence we believe will continue as the longterm story it will be one of secular change driven by pretty large geopolitical and socioeconomic factors. Yvonne when you talk about opec, what is the alliances longterm plans . And how do you see the power dynamics, power structures changing in the midst of this Energy Transition you were watching out for . We think that opec will evolve with the times, with changing supply patterns, that is bound to happen. I would like to start by pointing out one of the things we talk a lot about to market participants, the death of hydrocarbons is much exaggerated. Even if you look at the scenarios we put out there all the way to 2050, hydrocarbons make up 80 of the energy mix. In our scenarios they range between 35 and 40 all the way up to 60 . There are some sectors like mobility and Power Generation where the mix will change rapidly, but there will be went to give other sectors that are hard to decarbonizing. On the margin, there will be a fair amount of change, and we have no reason to believe opec will not grow and evolve itself to adapt to changing markets rishaad . Markets. Rishaad take a look at the other side of hydrocarbon things and what is going on with the gas market. We see a series of strikes in australia, and what about also just generally what we have seen in terms of an upcoming winter. It was fortunate that europe had a mild one, but this year longterm weather projections are for not so much warmth. Gas will be big out there for the next 12 months or so. As you rightly pointed out a lot of that depends on what happens with winter in the upcoming year. The storage levels are high, etc. , but that only accounts for 15 , 20 of the swing. The big impact will be what happens with winter in the upcoming year. Having said that, we do not believe prices will go up to the extent that we saw in the early to mid 2020, because markets have had a chance to absolve the new reality, the new normal, and europe as done a good job of changing the demand mix, and they have used the time over the last 18 months to level up their contingency plans. A lot depends on what the weather will look like, but in the near term, the next six than 12 6 to 12 months, a lot of alternative supply sources will not move the needle the way it will over the next five years. Rishaad looking at hydrocarbon, holding that complex, how is the moment faring in the face of a slowdown in china . Are you seeing anything visible . Yeah, if you look at the source of demand growth, and that is an important number to track. Mobile consumption is 103 bi llion a day. The growth is estimated to be 2. 2 million barrels. 1. 6 of that is coming from asia emerging markets and one million of that is coming from china. So china is still an important part of the growth story as far as hydrocarbon or Oil Demand Growth is concerned, but it has been a lot slower than it has been anticipated, and going back to the product mix. Jet aviation, kerosene, much stronger than anticipated. Guess, oil, much weaker than anticipated. The question as you move forward , is it the view that the next will continue to be as it is right now . Will it change . The worst case scenario, overall consumption goes down, which will not be helpful to support the markets. We will see more production cuts in that scenario to cool prices, but we are generally of the view that the markets will sustain where they are right now. Yvonne thank you so much for joining us, president at s p global commodity insights. Returning to geopolitical stories we are watching in the region, italys foreign minister is on a threeday visit to china discussing the possibility of his country leaving the belt and road initiative. He told us the investment pack has fallen short of expectations. The message is very clear. We want to work with china. It is a competitor, of course, for us. We want to work in the chinese market. We are ready for Chinese Investment in our country, but we need a living flail level playing field. Yvonne italy is membership is turned into a dilemma for the government after making it an outlier for the g7. It must decide by the end of the year to renew its involvement in the program that was once the backbone of president xi jinpings efforts to deepen economic ties around the world. Ukrainian president for letting a zelenskyy is replacing his defense you can name president zelenskyy is replacing his defense minister. The minister defies claims that they paid inflated prices for equipment under his watch. An overhaul could help give the president cover against concern the graft is undermining flight against russias innovation. Rishaad all right, we are now also looking to this weeks asean conference taking place in jakarta. Waste water the Fukushima Nuclear plant casting a shadow of prospects of improved relations. Our reporter joins us now. What do we expect . This one to one summit taking place between china and japans premier . The chances of that look extremely low. Japan had been helping earlier in the year that this might be a possibility and a way to help continue the momentum and ties that they started last year. But since the release of the water from the fukushima plant, china has it turned extremely cold, and at the relations have gone into the deep freeze. Not only has at the government taken part in this backlash against japan by banning all japanese imports of seafood, but there have been incidents of harassment of japanese facilities in japan such as the embassy, consulate. Japanese schools having stones thrown and bricks thrown. So the chances that they could have a friendly sitdown are pretty remote. What we will see is the asean leaders plus three, china, korea , and japan are holding a meeting, and the concern in japan is this could be an opportunity for china to prorate japan further over this release, and they will have to make a rebuttal, and it will not be a friendly meeting at all. Yvonne this is all on the back of china releasing this new map in the gaming area that it sees as its own territory. What has the response been so far from some of the Southeast Asian countries . We have not seen anything from asean as a whole, it reasserts to china possibly has claim over most of the South China Sea including some parts that other southeastern countries claim. We have seen complaints from the philippines and vietnam, and i think we can expect at the summit that those countries will use the opportunity to raise this again with china and to make their objections clear. It is rather interesting timing for china to be doing this, given with President Joe Biden not present at the summit, it could have been an opportunity for china to strengthen its ties with these countries, and instead it seems to be doing the opposite. Rishaad that is my question. How are other countries likely to react to that . We have seen at least in the media from analysts a lot of disappointment that joe biden will not be there, and a sense that the u. S. Is perhaps not taking the region as seriously as it might do. On the other hand, the white house has argued that they have taken a lot of noticed of Southeast Asia. They even held a Southeast Asia summit at the white house last year. They have reached out on a literal basis with several of the countries, so it is difficult to say what exactly the content is, but Vice President Kamala Harris will be on the ground and reaching out to people as far as you can. The Vice President is not the president , so you do not get the kind of glamour of hosting the president in jakarta. Yvonne isabel, thank you. Coming up, we have heard from economists telling us why stocks could cite as 10 in the second half of this year with a soft landing not yet guaranteed. Our exclusive interview with Nouriel Roubini next. This is bloomberg. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Rishaad u. S. Futures flood, nasdaq on the way up. A feeling the fed may have come to the end of its tightening cycle. Indeed, we got Nouriel Roubini saying global stocks could drop as much as 10 in the second half of the year if the economy does not pick up and inflation remains i. Telling us exclusively there is no doubt about whether the Global Economy can actually achieve a soft landing. Compared to six months ago where there is a series of real art landings for the Global Economy, those risks are reduced right now. That is the good news. The Global Economy achieving a soft landing versus a bumpy landing. It will be a short and shallow recession. That short and shallow recession has started in the euro zone. The u. K. Is probably headed toward that recession as well. In china, there is a slump on growth. It is more cyclical. The United States, the jury is out on whether it will achieve a soft landing or whether there will be a short position. Short recession. Is a fed policy or a tight labor market . The economy is grown recently above potential, tight goods market. That is good news in terms of achieving a soft landing but is bad news for the fed, because it implies that the fed is not done yet and may have to hike once more or twice more. Eventually the fed funds rate may be six rather than five. There might be a short and shallow recession. The economy has been reasonably strong. What do you make of china right now, and what are markets understanding right now . China, their Production Growth is not cyclical, it is structural. In the aging of the population, leverage, housing overhang. Corporate, geopolitical depression. The policies that are not affecting. 10 or five is the best 3 or 4 , and that is not going to change, because it is emphasizing Security Control over opening up. On the markets in my view, if the Global Economy will weaken, if there is a minimal chance of a bumpy landing, markets are probably too much today. That could lead to a correction in the second half of the year. If economic did it is weak and Central Banks have dried more as a way of combating inflation, it means probably bond yields may go higher and not lower while inflation is still high. I 10 correction in equity markets, or is that too high . A 10 correction is not totally unlikely if the economy starts to soften up if you have inflation that has evolved. Europe, centralbank spiking, i would not be surprised if in the second half of the year you get a 10 correction in Global Equity markets. What would you do if you were the bank of england governor . Bank of england is facing a dilemma. On the one side, growth is lower. The brexit decision by the u. K. Decreased production, so there is likely stagflation. The economy is heading for a slight slowdown, and on the other sidecar inflation is too high. If it is a dilemma you face a dilemma because of the bank of england will cause a recession, and high interest will cause financial instability because private and public debts are high. You might have a perfect storm in the case of the u. K. Is there anything fiscal policy or government policy can do to me that . Fiscal policies are a dilemma, because if you want to maintain growth you have expensive fiscal policy, but now cross purposes with monetary policy. If you have too much inflation because there is too much demand, the opposite should be happening, and that is made the goal of Central Banks achieving price stability harder rather than easier. Yvonne that was Nouriel Roubini speaking with francine lacqua. We have plenty more ahead. This is bloomberg. Wake up, achievers. Youre making the most of every hour of your life. Except the hours that youre sleeping. 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[whip sound] take the first step to see if your Small Business qualifies. Yvonne all right, it is a risk on session on this monday morning and check out the hang seng coming back in a big way after the typhoon checked on the market on friday, and what is really gaining is Property Developers on the back of housing policies we saw, the cuts in mortgage rates, minimum down payments. Seeing double digit gains across major Property Developers out there. Country garden up close to 15 . Sunac china up 25 . Iron ore is up for another day and some of these miners in china as well. It take a look at what is moving, csi 300 of 3 on that edge. Chalco up 9. 5 . Rishaad the Aluminum Prices down 6 but up about. 7 of 1 on the month. Great, there we go. Looking at country, 4. 6 , but these are the different Industry Groups that are currently moving the market we have at the moment of the hsi, just 11 stocks on the way down. 68 on the way up, one unchanged. The biggest winner is Country Garden at the moment, adding just a couple of points, but certainly long for other property names doing well. Also some life insurers too in the mix, and at the moment the hang seng setting the pace with a gain of 2. 5 , up on the day thus far. This is a look at what is also going on in taipei, up. 51 . More coming up in the next half of Bloomberg Markets. Do stay with us. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com its an amazing thing when you show generosity of spirit to someone. And you want people to be saved and to have a better life, then you dont stop. The idea that we have saved five million peoples lives, its overwhelming. Its everything. Yvonne haslinda it is almost 11 00 a. M. Welcome to Bloomberg Markets asia. Rishaad asian equities on the way up this after u. S. Job did a boosted optimism about the Federal Reserve during the end of its monetary policies tightening cycle. Ill call up outperforming the region on its posttyphoon reopening. Property stocks extending their advances, Country Garden winning approval to extend a bond repayment. A ceo resigning earlier than expected saying his sudden departure is the right thing for the bank. Haslinda over the less holiday, it is up to china to lift market sentiment, and it has not disappointed. Take a look at where we are in terms of the benchmarks across asia, hsi up by almost 2. 5 . Property developers getting a lift. Tech also getting a lift, there was a holiday on friday because of the typhoon, and now it is playing catchup. Taking a look at the Country Garden getting a massive lift, up about 15 at this point in time as it repayment gets extended. Csi also getting a lift up by 1. 5 . Some say we have probably seen the darkest days for the csi in august, which was down 6 in that time period. Positive gains will be coming in the coming days and weeks. Of course, it is all about china, china property. Rishaad absolutely, having a look at who is at the center of the maelstrom, and we are looking at Country Garden of course. You on yuan bond extension was partly paid, the company says. We have a result Country Garden off the highs of the day. Sunac up about 25 . All of these measures to make it easier, and reduction of some of the hurdles one needs to jump over in order to buy property in china, and on that very topic we can take a look at all of this in the company of our bloomberg property Intelligence Analyst who joins us in our hong kong studio. We have got these fresh waves of policy stimulus here at the moment. How much help is there going on right now, because others are suggesting that it could perhaps be a shortterm fix . What is our sense of this . The central bank said last week a uniform down payment ratio across china, but if you look at chinese cities, smaller cities, a lot of the ratios are already at 20 for first home, 30 for second homes, and we think that through these policy measures it is strong tier one and tier two cities that will benefit, and they are just 1 of the market. What about the remaining 2 3 of the market . The bank is focused on these smaller cities, meaning the sales are unlikely to get any boost from this waiver policy stimulus. Rishaad what about Country Garden . What is the sensory getting here, because it has avoided default on this and will extend on the yuan payment, but it has 178 billion in total liabilities. There is optimism in the share price today, but if you look at developers, the grace period is coming up for the bond payment in the next two days, and even if it misses it we are looking at sizable debt maturities were the end of this year, and with sales in august down over 60 for these developers, ones that are showing signs of repayment strength, it is a downward spiral for liquidity, because sales as well as financing will deteriorate from here. Haslinda the news is good enough at least for today up as much as 15 . Any thoughts on the august contractor Sales Numbers . For the top 100 developers, sales are down over 30 yearoveryear in august, and we expect the level of decline to persist in the rest of this year despite the last way the policy stimulus measures. I think it does not matter how much the government is making it easier for developers or households in china to buy homes. That will not overcome a lack of confidence. There is pessimism toward the economy and to help of the property sector we see more and more developers imploding one after another. Rishaad thank you very much for that, our bloomberg Intelligence Analyst for china property. Lets talk about what this week holds in store. Highly important, looking at what is happening with trade with china, Inflation Numbers out of china at the end of the week, cpi and ppi numbers, rate decisions coming in the form of malaysia on thursday, but tomorrow sees phil lowes final rate meeting. Michelle bullock will be taking over governorship of the reserve bank, and meanwhile there are also more gdp numbers out of south korea on tuesday as well, looking at eight. 9 growth rate for the second quarter. So there we go. That is a look at what we have in prospect, and no doubt it is something that our next guest may be very interested in. Haslinda the chief economist at bank of singapore, but do happy with us. Lots of investors digesting trade data coming up this week, likely to be impressive, likely to disappoint. Take a look at the overall stimulus over china. Is that enough . I think your colleague from good news but it really well right now when she said there was a lack of confidence in the economy, and you can see that from the consumers, firms, and exporters as well, so we think the economy needs something more dramatic to turn confidence around. A clear source of that drama would be the central government. We think they have a Balance Sheets to loosen fiscal policy and give a job to the economy, but so far they have not been willing to do that. Haslinda unlikely to be willing, that is the sense you are getting. Is the risk of a fullblown crisis in china . We will not have a lehmans moment in china at all because banks are well positioned, but we are worried about chronic lack of demand continuing, which could cause china to fall into a longerterm deflationary track. Last year rates were negative and china, and we had a return on the lockdown policy and things rebounded quickly, so we should not rule out a change. Haslinda when you look at how chinese assets have been trading , are they fully reflecting the weakness in the economy. The yuan has been supported by the pboc, stronger fix it since midjune. Is it already reflecting the rest of the chinese economy . There is a lot of bad news, equity markets, property markets, as well as the currency well. The worry for investors is has all of the bad news been priced in and is there a catalyst . Any good news is obviously helping. We probably need broader news on the economy to change sentiment and bring that confidence into the economy. Rishaad we talk about the fixing of the yuan, they try to stop it falling too far too fast. Is there a line in the sand you think as to what level they would defend with all of their might, or is it some policy of not benign but certainly a bit of neglect when it comes to having a weaker currency, because it acts as a stimulus for the manufacturing . I think the authorities do not want the yuan to slide too quickly, so there policy on changing the fixings or what we saw on friday to reduce the effects of the reserve, that is to try to slow down the weakness we have seen so far, rishaad. There is no signal that the authorities want to push up the currency. They could do that easily by raising Interest Rates, but the domestic economy will not allow them to do that, so it is a policy to keep that yaun yuan weak. Rishaad what is the readthrough for other countries in this part of the world from that . If you think about the strength of the economy in china, it is really important for the whole region here. You can see whenever china turns around as we saw at the end of last year, as you can see from australia, japan, then you get rebounding markets. This is what we need to follow chinas market very closely. I think the sentiment is clear rate negative, so weve we do get a stronger catalyst from the authorities and terms of fiscal policy in particular, that will benefit all of the asiapacific and the Global Economy in particular. Haslinda there is concern we may see a japanlike deflation in china. Is that a possibility . There are lots of similarities between china and japan, but we do not think that is the central case. Authorities and china can restore growth and confidence. China and japan arent at very Different Levels of development as well. A more worry and concern is a for months and months, that will cause confidence to stay weak, but for a deflationary track to occur you need demand to be weak for years and years. Haslinda we are seeing a economist downgrading the forecast for gdp in china. Might we see upward or downgrade if we do not see the stimulus from the government . That is a very good question. We thought this year growth would be about 4 , but we recognize now if we do not get the fiscal stimulus to authorities will struggle to meet their target, which is growth around 5 . Haslinda stick around. Our guest will still be with us. Oil prices rise as asian Industry Leaders gather for a Regional Energy conference. We will get an update on g7 price caps on russian crude with the u. S. Treasury department. Rishaad the former head of the Singapore Central Bank becomes its newest president. His landslide when win and what it means for the city states political future. This is bloomberg. If you average the last three months it is about 150,000 jobs each month being created. This is the transition of the breakneck speed of the fast recovery result initially. The stubbornly low Unemployment Rate finally picking up i think is good news, you have to be careful. The labor market can be a slippery slope. I think the fed should be done. Unless you got something very significant on cpi, i think they are not coming in september. Erasing the goldilocks scenario the fed once. I think it will be likely they move in the next meeting. This is the report the market was looking for. We are on track for a soft landing. The fall to a technical recession does not look likely as of now. Haslinda bloomberg tv guest reacting to the august job numbers out of the u. S. Lets get insights, effective, a chief economist at the bank of singapore is to with us. Isnt that clearcut . There was a sense that we saw the end of tightening, but if you take a look at sentiment and projections, 40 of investors still see a chance of a 25 hike by november. It not clearcut. We think the fed had finished the rate timing cycle. There is a clear risk if the Inflation Numbers stay sticky, the fed may have to come back to the table. Probably not september, even november or december, but at the moment the markets are worried about that risk. Any data that is strongerthanexpected gets reaction in the dollar in the treasury market. Haslinda you say only a recession would take inflation back to 2 . Powell said there is no recession expected. We are very much against this view that he can get us to a soft landing, a benign scenario that allows inflation to get back to 2 . The labor market is too tight, and our worry is core inflation get stuck between 2 and 4 , so the fed needs to engineer a much greater slowdown to get inflation back to 2 . It does not need to be a deep downturn like we had after 2008. Rishaad the thing is the dangers are inflation remains sticky, which it may well do, and there is an anticipation things will go back to what they will in the era of free money. That will not happen. Is the fed to going to be relatively comfortable with Interest Rates at any level we are out at the moment . That is very true, rishaad. We think the fed will want to keep the Interest Rates higher or longer now. Lets say they do not raise Interest Rates anymore but they keep the fed funds rate between 5. 4 5. 25 or 5. 5 . That will surprise investors if they see that the fed has cut rates at this level all the way through until may be as late as june next year, and they are likely to have to do that if they want inflation to get down. We think that will eventually her growth and tip the economy into recession while doing so. Rishaad absolutely. Does the dollar than stay higher for longer as well with regard to that . And with the european economy, which is showing huge signs of creaking, does that play into that narrative . The dollar is getting supportive for a couple of reasons. The fed is being more hawkish than the data saying in europe, china is clearly weaker. That is helping the dollar as well. We think a lot of good news is priced into the dollar here. The worry is if the fed key rate is higher than the u. S. Economy will start to slow appreciatively and the markets were shifty pricing rate cuts, and that will push the dollar down. We do not want to be biased at this level. Haslinda taking a look at oil, what would that mean for the inflation fight . It definitely complicates things, because we all look at the price of oil. If the can stay supported, it will just make the fed have to keep Interest Rates higher for longer. That will push growth down over time. Haslinda rate cuts in asia at least . It is possible regional Central Banks could be ahead in terms of cutting rates. I do not think we will get that anytime soon. They will want to see what the fed is doing. When the fed has signaled they are finish with the rate hikes, they could consider cutting rates. Rishaad with the latest nominal gdp numbers, etc. , we may be leaving these last decades behind. What is your view, and tell me about the yen in that makes mix . It is interesting, because for the last 30 years japans economy has stagnated. Nominal gdp as onside words for the last three decades, and now finally it is breaking out again. Q2 numbers were stronger and expected, nominal gdp growth was 6 on an annualized basis. We think that will continue, because the bank of japan hasnt learned its lessons and is staying dovish to entrench inflation around its 2 goal. That is inspiring confidence from the economy and foreign investors. If you start to get further inflows both from portfolio investors, foreign direct investment, and tourism as well in the end it should start to strengthen again. We think it will not happen immediately, but we think next year the boj will raise Interest Rates, so the yen should be back at 120, 125 and a years time. Haslinda optimism testified, thank you so much for your insights today. Plenty more ahead. Remember, the dollar has been up for seven straight weeks, it is stable at this point in time. The yen, 146. 16. This is bloomberg. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Haslinda china lifting most benchmarks in Southeast Asia, take a look at that. Sti up about. 3 of 1 , gains too for benchmarks in the philippines and jakarta. Back to the lion city, the deputy per minister as one partys president ial election. Voters have shrugged off recent scandals involving the ruling party. We have the details, the significance. A lot has been said about the margin of the victory tharman has shown, but it was the degree in which this landslide victory came in, and it really tells us voters were willing to shrug off those recent scandals involving the ruling party, and the focus was on the abilities of the candidate. Lets not forget she was once finance minister, later on deputy minister, so he brings credentials to the table, a strong track record as well. There is a lot that is been said about the thinking of the electorate. Because this is seen as a wave that proves the theories of ethnic voting, seen as vote, some representation coming through as well. Voters really focused on the abilities of the candidates more so than other factors. Haslinda perhaps suggesting that majority of the electorate. You have to wonder about what this means, because the president ial role is a ceremonial role. What can tharman bring to the table . You and i both know it is the Prime Minister that runs the show in singapore, with the president does have some powers. For example, vito spending bills or requests, and this is something we saw his predecessor do during the pandemic. We had the predecessor approving special request for spending and dipping into the countrys reserves, so it is seen as a president ial role ceremonial, yes, but there are also they are also the second key to the nations reserves, so it is important to the checks and balances in place. Haslinda the country is quite excited. What a landslide victory for the man. Look at property go. Rishaad it is quite something. A rising tide lifting all of it, disapproval to the lake that you on bond repayment yuan bond repayment. The Malaysian Ringgit helping the stock engender overall competence here. Shares of Property Developers on their way up very shortly, and got more Major Chinese cities saying they will ease mortgage policies in a bid to shore up this Industry Group as well. It beijing, shanghai, lowering mortgage requirements for xoma buyers as we area it is a nationwide policy, and we have got supportive policies helping these stocks. Looking at ev makers as well. We have got at the moment lee auto with a 600 increase on the year of his deliveries. Byd also seeing big gains, august sales grew 83 of the year. 224,000 units compared to last year. We have got also hyundai done a fraction. Kia. 25 to the upside. A limited signaled there will be even more competition in the ev space. We look at asias most prestigious energy conference. We will be asking the u. S. Treasury department about whether g7 price caps on russian oil have achieved their goal. That is next. This is bloomberg. Rishaad china markets heading for the lunch break, and we are having a good morning with lots of moving parts and Property Companies hoping to lift these hedge marks across mainland china. Hong kong going on break and just half an hour from now, and the yuan much stronger than anticipated fix, seven point 26 is the level against the dollar, pretty much unchanged overall did looking at property helping things, oil related stocks doing great. It will extended its rally to the highest levels we have seen since november. All about supply cuts by opecplus leaders and alltime in the market. H shares in hong kong moving that out, three point 34 , text doing better, but look at the last one. It is a property, and that is the big thanksgiving impetus big thing giving it dos encouraging risk. Haslinda at least for the moment. Try not lifting japan as well, nikkei225 back from lunch, expanding its gains to 15 of 1 . We are taking a look at how all sectors are into the positive, especially real estate currently coming gangbusters up more than 2 . Taking a look at again, 146. 16, expectations the fed could be close to the end of its tightening policy could support again. Currently pretty flat versus the usd. It is nine months since the g7 agreed to cap the price of russian oil and Petroleum Products in retaliation for the invasion of ukraine. The move bans western companies from providing services such as transportation insurance and financing for russian oil sold above the cab. Lets get an update on how effective the cap is proving to be with the acting assistant secretary for Economic Policy at the u. S. Department of treasury. Eric is in town for the asiaPacific Petroleum conference. Welcome to my city. How effective has the cap end . Thank you for having me. It is important to remember the cap has two goals, reducing russian revenue while keeping oil markets multiplied, and we are confident the cap is working at we are seeing russian revenue cut by have since this time last year, while oil markets have remained stable. That is the piece of this some people tend to overlook when they think about the price cap. If we had let will trade under restrictive in the wake of invasion, he would be earning a wartime premium for the very work he started. Haslinda we are getting a report russian exports are being sold for above the cap. What have you seen . The price cap applies to the g7, and there is a lot of trade that exist out of the g7 that is not bound by the cap, so some of the numbers you see suggest trade above the cap, but it is important to emphasize we do not measure its success by just how many molecules of oil travel under the cap specifically. We use it as a mechanism for changing incentives and giving more buying power to markets across the globe whether they are in the g7 or not, and even buyers in Southeast Asia who might not typically used g7 services and are not bound by the cap targeting discounted prices because the mechanism is in place. Haslinda might you respond to the breaches . If they are, they are acting in violation of enforcement authorities, Global Coalition that supports the price cap, and they are looking closely at that. At the end of the day the price cap is a macroEconomic Policy designed to give oil buyers leverage it to get discounted oil prices from russia, and receive reports of that all over the globe at the same time will markets are remaining multiplied. I think conventional economics 101 if you are price cap said we should not be able to limit russias revenue keeping the oil on the market, but through this innovative tool of economic statecraft we have managed to do both of those things at the same time, and the g7 is encouraged by the work. Rishaad russias marginal cost of exporting oil is much less than the average country, so they are still making money from this, and we have had incidents and reports of them actually exporting a lot more than has been suggested, and that is been covered up. What is were take on this . That is a great point, because controlling the quantity of exports out of russia is something we are very happy to see them continuing to keep the oil market well supplied. We went to win at the revenue they are getting on those sales. One there to be more supply for consumers and businesses ending emerging world who rely on global oil to keep running their businesses, and we are very cautious about making sure that we do not disrupt the Global Oil Market in a way that could lead to instability. At the same time that we are giving that supply on the market , the price cap is designed to limit the money putin can you make of that, and we are seeing that admitted the russian finance ministry, russian central bank. A lot of consternation coming out of the kremlin over how much money they are losing all the oil trade despite keeping those barrels on the market for consumers in the emerging world who need them the most. Rishaad erica, you look at how they get it out, and they have been able to sell according to other reports for oil which is higher than the price cap shortly as well. How do we know this, because the settlement has become so opaque in the russian oil market itself . That is a great point, and one thing we have seen occur over the past nine months is we have seen putin and his cronies build an ecosystem outside of the price cap to channel his oil out in ways that are not subject to is sanctions. Frankly, that money he has spending building of that ecosystem is also a benefit of the price cap, because that is money she would have otherwise spent prosecuting his barbaric war in ukraine. We recognize as that ecosystem grows we will see some trades above the cap from actors operating outside the g7 reach, by discussing the kremlin a lot of time, money, and intention to build up that ecosystem, and that is what we like to see. Rishaad the ultimate aim is to limit Vladimir Putins were fighting capability. Have we seen any Material Impact on that . It does not seem so. Is the war fighting capability diminished by lack of manpower, trained troops, and, of course, military, which is been hollowed out by corruption. On your first point we disagree pretty strongly, because the oil market is the lifeblood of how putin funds his work offers, and revenue is down almost halved from what they were last year it a response to not just the price cap but the broader dignified system of sanctions brought on by the western coalition. That is preventing his ability to fight this war with the same gusto he otherwise would. We have a lot of work to do and we come to this policy with humidity, but as the ap reported this week we are seeing a slow poison with regard to sanctions where russia is making less money off its oil and spending more money to try to get around our sanctions, both of which are leaving him with less room to fight this barbaric war. Haslinda we have to ask you your thoughts on the latest job reports. Is there enough heat coming out of the labor market . As we saw in the jobs report, we are confident the u. S. Economy is it a very resilient place. We have seen professional forecasters postpone their estimation for a recession, optimism about u. S. Economic growth, and the strength of our labor market, at the same time we are also seeing inflation moderate, which is not normally what happens when you have a hot labor market like this one. And that combination of moderating inflation, which is down six Percentage Points from its peak last year, and a really resilient labor market the continues to surprise to the upside is a path to the good economic outcome we think we are on in the United States. Rishaad what is your biggest worry for the u. S. Economy right now . Well, you know, even the optimistic outlook that we have right now, we do spend a lot of time thinking about risks despite our confidence in the overall outlook. I think the risks we are focused on are mostly external at this point, as we think about potential destabilizing shocks coming out of putins war in ukraine, but internally our confidence in the strength of the labor market coupled with the moderation we are seeing inflation is giving us a lot of confidence about the strength in u. S. Haslinda how about the slowdown in china . I think china has a lot of problems with high youth unemployment, and pervasive problems in its property sector, but also longterm structural challenges. As my boss secretary yelena has said several times, it is a risk we are paying attention to, watching closely, given the domestic resilience of the u. S. And are relatively limited dependence on exports to china relative to the strength of our domestic consumer and business, we are very optimistic. Haslinda one final question. I am headed to the g20 in new delhi. One are the expectations . Secretary ellen will be there too, and one of her focus is not to sound too repetitive is to make sure we do not lose our focus on the economic response to putins barbaric war, enter engagement with partners at the g20 we come to the sanctions effort with humility, and how we can continue to push the wall further restricting putins war effort. Haslinda great to have you with us. Rishaad what we have got coming up, the founder of Indias Mahindra bank stepping down earlier than expected. We will have more on kotaks surprise departure and the succession plan. That is next on bloomberg. Id like to thank stitch fix for always making me look great. For taking care of the shopping. So i can take care of this. Id like to thank my stylist, now getting dressed is so easy. Thanks for getting my fit just right. For finding me looks that work for me and my budget. For finding me my favorite pair of jeans. Id like to thank stitch fix because, i look good. Thanks stitch fix, you just get me. They get me. You just get me. And theyll get you, too. Take your style quiz today. Rishaad indys richest anchor kotak has resigned certainly as manager of Mahindra Bank and is becoming a nonexecutive director with gupta taking charge of md and ceo in the interim. Lets have more on this get over to our bloomberg Senior Editor in mumbai. It was expected, but not this early. Definitely not this early. It has come as a surprise to investors, and i will tell you why for two reasons. Kotak has ended overcharge to a temporary leader, and give me a few seconds to explain. The chairman was the managing director and the joint managing director are all slated to end their terms later this year. What kotak has done has advanced is stepping down by four months and handed overcharge to gupta, but his term is also coming to an end at the end of this year, so effectively he has handed overcharge to a temporary leader, leading to questions as to why he would do that . Why not just continue as the managing director and ceo for the next few months into your turn comes to an end. Well informing the german about is stepping down, he has cited a personal reason, and that is his son is getting married. It is rare to see a Bank Managing director and ceo and founder to say that he is stepping down early for a family wedding. I am sure it is an important event, but surely he can take time off. Haslinda exactly, now you have to wonder how investors will look at it. Does it alter the outlook for his company . I cannot speak to the mind of kotak, but the analysis seems to suggest that he is achieve two things through this move. One, a sense of detachment, and that is important. Let me contextualize that for you. It was to be able to separate ownership from management, and therefore the term has been limited to 15 years, as is the case with all bank ceos, and therefore he has to step down at the end of this year, so i think by stripping down early what he will convey is a sense of detachment. It saying, look, i am happy to stay in owner. He has saved board and shareholder approval to continue as a nonexecutive director on the board of Mahindra Bank. Whether the reserve bank of india will be comfortable with that situation or not is not yet known. The rbi does not speak publicly on such matters. The second thing kotak has achieved is throwing the ball clearly in the court of the reserve bank of india. If all three top management leaders of the bank are gone in the next three months, reserve bank of india, one would imagine , probably could be more inclined towards appointing someone internally from the bank as the next leader. The names were suggested by the bank, and two names have been suggested, but the final approval lies with the reserve bank of india, who is the regulator of all banks in the country. I think speculation at this point in time is that the reserve bank of india may be more inclined to pick someone internally to create a sense of continuity. So this is a little bit of politics at play if i may put it that way between the regulator and a regulated entity, and we have yet to see how events will turn out. Haslinda bloombergs Senior Editor. Kotak mahindra down about 3 , underperforming the benchmark, and it is in flux at this point in time as india starts trading for the day one minute into the trading day in india. We are bringing Nouriel Roubini says global stocks could drop as much as 10 and the second half if the economy does not pick up and inflation remains high. He told us exclusively there is still down on whether the Global Economy can achieve a soft landing. Compared to six months ago, there was a risk of a global hard landing for the economy, the reduces risk. That is the good news. The Global Economy will achieve a soft landing as opposed to a bumpy landing, for a bumpy landing there will be a short and shallow recession. The short and shallow recession has started in the euro zone. The u. K. With high inflation is probably headed toward that recession as well. In china, there is a drop in growth. It is not just cyclical, it is more structural. The United States, the jury is out on whether they will achieve a soft landing or whether there will be a short and shallow recession. That depends on what . In the u. S. , is a fed policy or a tight labor market that could collapse. The economy has grown recently above potential, a tight labor market, a tight goods market. That is good news in terms of achieving a soft landing but is bad news for the fed because it implies that that is not done yet and may have to hike once more or twice more. The fed funds rate might reach a level of six rather than five. There might be a short recession, but the Economic Data has been a strong. What do you make of china right now, and what are markets most misunderstanding about the economy and how equities and bonds it should behave . China, there growth is not cyclical, it is structural. Aging population, property overhang, depressing three sentiment of causal housing. I think the potential growth is best 3 or 4 . He is emphasizing survey really control over opening up and reform. I would say on markets in my view if the Global Economy will weaken, if there is a meaningful chance of a bumpy landing, markets have rallied too much today, and that will lead to a correction in the second half of the year if Economic Data is weak and Central Banks have to hike a little more as a way of fighting inflation. That will lead to nominal real rates rising. That means probably bond yields will go higher better than lower brother while inflation is still high. A 10 correction or is that too high . A 10 correction is not unlikely if you soften up globally and you have inflation that is above essentially target in the u. S. , u. K. , Central Banks hiking somehow more. I would not be surprised if it the second half of the year you get a 10 correction in Global Equity markets. What would you do if you are the Bank Governor . The bank of england is facing a dilemma. On one side, growth is lower because of the selfinflicted gold that was the brexit decision by the u. K. The most likely case of stagflation. On one side, the economy is headed toward a sharp slowdown, potential recession. Core inflation is too high, therefore you face a dilemma, because he went to have lower inflation, but that will cause a recession and higher Interest Rates will imply financial instability because private and public debts are high. You might have a perfect storm in the case of the u. K. Is there anything fiscal policy or government policy can do to mitigate that . Fiscal policies are also a dilemma, because if you went to maintain growth you have expensive fiscal policy, but fiscal policy cross purposes with monetary policy. If you have too much inflation, that is because you had too much demand. The opposite is happening, and that is making the goal of Central Banks achieving price stability harder rather than easier. Rishaad Nouriel Roubini there. Loads more ahead, six minutes of trading in india, and we have got the indices there looking a bit like this. It is an up story across the region. This is bloomberg. 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. Haslinda the ceo of mercedesbenz says the german luxury brand remains unfazed by teslas price cuts and is sticking with the strategy of value over volume. They spoke to us as the munich auto show gets underway and told us more about their market outlook. Our goal is value over volume. We are not pushing volume. We are careful about how we go to market, our go to market strategy, and as you can see from the results of the First Six Months of the year that has been working well. Can you continue to regard teslas rise cuts . We are focused on value for the customer. The customer does not expect a roller coaster ride with something you can depend on. There is huge concern about the state of the chinese economy . Is it affecting demand . We have to take a cautious stance on that and see how things develop and not expect rapid growth as far as the economy is concerned in the short term. This car show will be marked by chinese automakers bringing cars to the market introducing them to the first time. How do give view that . The Auto Industry is in transformation, most of disruption. It is natural new players will comment, and we respect both the established competition as well as new players trying their luck, but that is not our focus. Our focus is on the mercedes customer to give the customer a perfectly between technology. What can we expect . It is an icon. It is almost impossible to get one. It sold out. Tonight, we are announcing or all of the fans out there there will be a little g, so a son or daughter of the iconic big g. If you wait for something good to, it will be worth the wait. Rishaad that is mercedesbenz chief executive speaking to oliver crook in munich. Hong kong getting off or its lunch break and just about five minutes from now. We are looking at electric vehicle makers, some good showings taking place on the way up. Lee auto lee auto up. 9 of 1 . Byd also seeing strong gains too , seeing 83 growth year on year, and there we go. That is a look at the overall market and overall sentiment for the asiapacific. Stocks in the green by 1 . This is bloomberg. Sy to get lost t research. Introducing j. P. Morgan personal advisors. Hey david. Connect with an advisor to create your personalized plan. Lets find the right investments for your goals okay, great. J. P. Morgan wealth management. Every business thats why comcast business de is launching theal. Mobile made free event. With our business internet, new and existing customers can get one year of unlimited mobile for free. Its our best internet. Powered by the next generation 10g network and with 99. 9 reliability. Plus one line of free mobile for an entire year. Its the mobile made free eventhappening now. Get started for just 39 a month. Plus, ask how to get one free line of unlimited mobile. Comcast business, powering possibilities. The following is a paid program. 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