Transcripts For BLOOMBERG Bloomberg 20240703

Shery you are watching daybreak asia live from new york, sydney, and hong kong. Annabelle we are counting down to asias major market opens. Haidi risk off mood in asia. Treasury yields higher along with the dollar. U. S. Crude prices hitting a fresh one year high with shrinking stockpiles in the larger storage hub spilling demand for physical barrels. In battled Country Gardens takes a step towards restructuring its debt after narrowly avoiding default. Shery how u. S. Futures are trading early in the asian session, marginally higher at the moment after stocks finished mixed in the new york session. We have the s p 500 fluctuating throughout the session, just to finish where it started the day. At least, it ended up erasing some losses we saw earlier in the session after President Biden counted Artificial Intelligence. We have the vix declining a little, still at the highest levels since the end of may. We have the nasdaq 100 outperforming today. We saw treasuries slumping again today. It yields rising to multiyear highs. The 10 year yield past the 460 level at the highest in about 16 years. We have the dollar continuing to gain ground. At the highest level this year. That is pressure in oil. We saw u. S. Stockpiles drop to the lowest level since 2022. Wti now jumping to the levels we have not seen in about one year or so. I did afterwards session it was about mike rounds ms. Microns miss dampening tech optimism. We are talking about their forecast being painful. Sales improved but we are talking about what we are expecting for the fiscal forced First Quarter a loss of as much as 1. 14 per share. We have seen the likes of samsung, sk hynix, really seeing a brutal 2023. That lackluster demand for personal computers and smartphones is hitting all these companies. Perhaps it is worth putting micron at least into a little perspective. You can see their yeartodate gains still above 30 and sk hynix gaining more than 50 . Of course there is a lot of ai optimism as well. Haidi you have to wonder how much of that pullback is really taking profits off the table given the huge runup. When we spoke to Wedbush Securities earlier it really was this idea of micron management being both quite conservative in its guidance and maybe there is managing expectations there. But certainly, china continues to be a concern. Part of what they said is really that the rules when it comes to the borrowing of micron chips and the escalation of the u. S. China Technology class continues to impact their revenue. We saw that move back in, what was it . May a couple years ago really talking about the fact this will be a market that continues to prove to be a source of volatility and an issue for their bottom line. We will continue to watch that and of course some of that passthrough will be seen perhaps in taiwan markets. In japan. With south korea, arguably its a little bit of a sigh of relief for broader markets given there are already quite a lot of factors driving sentiment lower. Annabelle right area of course, asian chick stocks we watch those in japan and taiwan. They could dip. Weaker sentiment across the board here. Yes there are other factors at play in the session that we will get in a moment. More macroeconomic issues. What bond markets are signaling and the farmer dollar. In terms of what could be the counterweight to what is going on it is interesting to see china futures are one of the few ones pointing higher today given yesterday we saw stronger industrial profits coming through. We are seeing as well analysts have a graver earnings forecast. That tells us perhaps we are finally starting to see a bottom for chinese stocks. First, we have said that a couple times in the past. Lets change. I mentioned bonds. The aussie 10 year yield at a level we have not seen since 2011. Similar in the kiwi 10 year. Likewise, tracking around a 2011 high. Big moves when you see the farmer dollar. It really does play quite heavily into the japanese yen story. We are still seeing is very close to the 150 level. Likewise, the outlook the chinese currency reflects the macroeconomic issues in the country specifically around the property sector and the woes there. At the same time, very much really it weighs also on what is happening with the fed and the rate differential at play as well. Haidi our next guest is, given all of these risks, stay neutral on equities but more favorable on fixed income in light of what we are seeing. Carrie craig is the Global Market strategist at jp morgan asset management. Lets start with moves across treasuries ended the view potentially the dollar would come sooner if there is another u. S. Government shutdown. Is it too early to call the peak when it comes to yield . Kerry the move upwards in yield has been surprising. We did not express expected to reach this level. We are very close to the point in our mind where maybe we get another rate hike come the end of the year. But that is a really finely balanced position given we expect progress outlook to slow fourthquarter and disinflationary pressures are still there when you look at the outlook for core inflation. So as those peak end of the rate hiking cycle comes through we think it will be reflected in a peak in yields. With is the yields today that is a Good Opportunity thinking about the return potential from that as we see inflation comes down. So far investors are being rewarded for that in the fixed income market. Haidi or else do you see opportunities . With micron numbers today and reaction across partner markets you think its another step back for the ai and big tech related trade given we already think there will perhaps be greater pressures coming from a further leg of the tightening cycle . Kerry there is a delayed impact from the sensitivity from the u. S. Economy for the rates. The market is different to the economy in thinking about a more goods oriented market, a more Services Oriented economy. For less i think the u. S. Market when it comes to growth stocks, they will be supported as yields come down and you look to duration in the equity market. We also believe that the ai theme is one that will be quite circular when it comes to the outlook. A lot of people make this comparison to what we have seen today to back in the tech bubble of 2000. I mean, these companies are actually profitable now. Valuations have gone up a long way. But as a come down i think there will be a lot of interest from investors is not perhaps have missed out on the rally so far. Again, this is one of the reasons we have been more neutral on the equity market rather than thinking about an underweight position. We do see the risks of recession being about what they would be in any normal year. But, they have faded greatly. I think investors need to be mindful of the upside potential that could come through even if they do have an eye on some risks that are building in the background. Shery lets talk about those risks. It seems the u. S. Government shutdown is just around the corner. When i ask market analysts about this, most people seem to dismiss it because it usually does not lead to longterm effects for stocks or bonds. At the same time, we are seeing so many other challenges. Oil prices are rallying. Student Debt Repayments are coming due. Not to mention of course labor strikes as well. Is this time different . Should we put recession back on the table . Kerry i think the market narrative has moved away from thinking about the Recession Risk towards a soft landing at what is really dropping the markets is the cost that comes with the soft landing is more growth slower Inflation Higher rates. When it comes to the outlook for the growth, those are banana skins you have the verily you have a very clearly outlined there and attribute the cumulative effect is worrying the market to a degree. When it comes to Government Shutdown historically it is short in duration. A few days of the week. They dont Significant Impact the economy, even the last one in 2019 it was over a month but the economy rebounded when the government restarted again. It also depends on which parts of the government actually do end up going into shutdown. If its the whole thing or only a select number of sectors actually impacted. So, we would not be dismissive of the shutdown we just think that Material Impact given what else is out there in terms of risk for markets. I think the bigger issue when we u. S. And around the situation billions around the level of debt, the deficit, and the sustainability of higher rates. I think that is what the markets are thinking about longterm when they are honda plating were bond yields in the u. S. May be. Contemplating were bond yields in the u. S. May be. Shery heidi just alluded to a potential peak given the Government Shutdown. Kerry i think the dollar is really driven by the fact you have more of u. S. Exceptionalism coming through. Obviously looking at the rate outlook in the u. S. We are thinking about the strength in the u. S. Economy relative to what we are seeing in europe. So movement i think in the u. S. Dollar will be more a factor of seeing perhaps the u. S. Economy started come back when the euro is such a big white. A similar situation with the british pound. Again as we started to think about the potential for rate cuts through 2024 that will really be what determines how far the u. S. Dollar false. For now, it seems the u. S. Dollar is supported by the rate and Growth Outlook in the u. S. Haidi if you wanted a d correlations i do you look to china . Be it the sovereign bonds or equity markets for valuations looking quite compelling at this stage . Kerry is hard to look past china on a valuation basis even theo even though the economy does not look strong. We think eventually there will be positive growth from incremental measures that have come through but there is not much there that will spark the Market Reaction or even spark the economy shortterm. When we look for its other markets, we think japan is a strong structural story that has been playing out throughout the course of this year. You could look to the u. K. And the ftse 100. Thats been one of the bestperforming markets over the last month benefiting from the improvement in the Energy Prices and the fact that the currency has been weak. Or more broadly, look outside china in terms of e. M. Whether india or some parts of southeast asia. Globally when we look at equity exposure it is still the case of thinking about the opportunity. To have that more diversified outlook rather than thinking about one particular market. For em china is obviously a big white andy dick sentiment effect. I think more and more investors are looking for opportunities inside and outside china when it comes to the investment world. Shery always great have you. Coming up, we discussed the cascading economic effect of a likely u. S. Government shutdown. We discuss the impact with robertson sealants chief economist later in the hour. Country gardens said to be in talks with advisors to put together an offshore debt Restructuring Plan. The details ahead. This is bloomberg. 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 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. Shery chinese Property Developer Country Gardens said to be in talks with potential clients to put together debt restructuring. Corresponded Stephen Engle joins us from hong kong. It seems things are moving along. What we know . Stephen things are moving along of course and it is widely expected. Look what happened was evergrande. We will get to that in a little bit. Of course, their debt Restructuring Plan has been thrown into a bit of disarray with chairmans detention, obviously. Also, the revelation that perhaps they need to be think there Restructuring Plan. Now, two Different Companies but similar issues of liquidity obviously. China evergrande, the biggest it is the worlds biggest indebted Property Developer, Country Garden, it was once the biggest developer in china it is the new poster child for the quiddity issues in the sector. Country garden according to sources has engaged in initial talks for Financial Advice as well as preliminary plans for debt restructuring with the likes of China International capital corp. , chinas biggest investment bank, as well as debt restructuring specialist houlihan lowkey. All three parties, cicc, houlihan lowkey, and Country Gardens, have declined to comment with when contacted by bloomberg news. Discussions are set according to sources to be at a preliminary stage and there is no guarantee come as i just prefaced, no guarantee a debt plan would actually emerge from these initial talks. Country garden has about 11 billion of offshore bonds outstanding. It recently did when investor approval to extend payments on nearly 15 billion you want, to billion u. S. Dollars of on short notice but had two onshore bond payments due yesterday. On 40 million of the bond as well as a 40 million Coupon Payment due yesterday on the u. S. Dollar bond as well as another 1. 6 6 million u. S. Dollars in a ring get bond that has interestingly only a five day grace period. Technically Country Garden has not defaulted yet. There is another bond in there. Its own payment on the u. S. Dollar bond in the current 30 day graceperiod. It has not officially defaulted. It was only a five day grace period on this Coupon Payment of 1. 66 million it runs the risk there could be imminent default as well as on the dollar Coupon Payment that reportedly or might have been missed yesterday, we have not gotten confirmation yet whether they missed those payments. Again we are coming up to the weeklong holiday next week, usually a huge time when people are not working. They go a look at flats to possibly buy. Its traditionally a time when a spike in sales is seen. But, it is really a gloomy scenario right now with investors confidence in the sector really low. Nobody wants to catch a falling knife. Contracted sales for Country Garden alone plunging 72 in august. Yearoveryear after it warned of major uncertainties about its ability to repay its debt. Yeah. Its an ongoing story obviously. Haidi given what we learned this week about evergrande pickup in its Restructuring Plan, theres really not much certainty Country Garden can pull this off, right . Stephen absolutely. That is why we have to caution and say these talks for Country Garden are in the preliminary stage. Albeit, that is expected given their Debt Repayment woes. The potential Debt Repayment woes. They have not defaulted, as i said. But, it will be a complex thing to restructure right now. With the outstanding liabilities of about 11 billion no doubt. Keep in mind, China Evergrande with the detention of its chairman, and also, these latest surveys we have gotten from various think tanks indicating that people really do not want to go into the property sector right now. They are holding off on to the sidelines. So, Investor Sentiment is extremely low right now. Again, as i mentioned, this weeklong holiday coming up this week, thats usually a good litmus test on investor demand for the actual physical property. But, right now, with bonds, you know, chinese developer junk bonds trading at 610 cents on the dollar right now there is so little appetite as well from the Investment Community to go into the sector right now. Garfield bloombergs chief north asia correspondent Stephen Engles with the latest. Lets look at some top corporate stories. Lululemon agreed to a fiveyear partnership with peloton involving tapping its online workouts and teaming up on apparel. Lululemon will make branded closing peloton will sell on its website and retail stores. Peloton fitness content will be offered to users of the lululemon studio mirror. Elon musks spacex won its first contract from the u. S. Space force to provide customized satellite communication for the military. The socalled star shield service will be provided over the existing spacex constellation of starting satellites. The contract adds to the growing spacex defense portfolio. The pga tour is considering highprofile u. S. Investors to help finance its deal with the saudi back to liv golf to ease political opposition. The pga has had unsolicited interest from investors and is evaluating opportunities. U. S. Lawmakers have been vocal about opposition to liv golf despite pga assurances that the saudis would only be minority investors in the combined entity. And, get a roundup of the stories you need to know to get your day going today on todays edition of daybreak. Terminal subscribers can buy that that dayb and its available on the mobile in the bloomberg anywhere app. You can customize settings to get news on just the industries and assets you care about. This is bloomberg. Shery the United Auto Workers union is putting more pressure on the big three u. S. Carmakers gm, ford and stellantis, threatening to expand strikes if there is no progress in contract negotiations by a friday deadline. Su keenan joined us with the latest. It a lot of backandforth this past week whats next . Su the plan is for the union to continue to pressure. A source close to the union says now they remain flexible and are focused on how negotiations are going and taking their cues from there. We know gm was scheduled to meet late today with the autoworkers to negotiate. We also know ford and stellantis are not having a media talks set. But the walkouts will expand according to the union by friday at noon if there is not a major progress in these negotiations. And, this is part of what the uaw has called a stand up strike rather than their traditional strategy in the past strike actions of striking every facility of one automaker. They are now slowly ratcheting up pressure on all three automakers. It started out in midseptember. September 14, just one plant each. Then, last friday the union expanded the action to 38 gm and stellantis Distribution Centers. Ford was actually spared a step up in strike action because they did come back with some concessions. Earlier this week we heard the uaw was actively negotiating. A source close to the union tells bloomberg that right now it looks like ford may not be spared from the step up in strike activity as of friday. And, everything, at this point, is on the table. One of the parts of the strategy is to keep the automakers guessing as to what plants and facilities will be targeted. Meanwhile, a video is expected to be released highlighting violence at a flint, michigan picket lines. According to police there was a truck that was exiting one of the gm Distribution Centers and picketers were in front of it and it drove right through striking five picketers, one which was hospitalized. Again, one of the things the union wants to do is make sure there is not any further incidents such as this as they try to work their way towards a resolution. Haidi meanwhile, Pension Plans seem to be the Sticking Point here. Su that is certainly a concern for all three automakers that have under the past offered generous Pension Plans that went away in the financial crisis. Since 2008, all new autoworker hires have gotten 401 k s. But, that is what the automakers want. You are looking up President Biden that met with picketers tuesday. President ial candidate trump is there today. But, neither of them are fully embracing all of the uaw requests. Which includes, a 40 pay increase and they want these pensions. The union is demanding them for all the new workers as well as those that were grandfathered in. Some say it might be part of a marketing technique because if they do not get the pensions at least maybe they will get a higher pay raise. It is interesting to note that analysts with Bloomberg Intelligence find if gm were to agree to pay uaws proposed three endorsement of these pensions, it could lead to a pension liability of about 129 billion. All proposals remain on the table but such a move would shift the pension burden back to the company. You are looking at yearly gains for the companies and they are significant. Back to you. Haidi bloombergs su keenan theyre looking at the latest when it comes to ongoing strikes. We are seeing reverberations of the big moves in treasuries overnight with yields continuing poste cycle highs despite a pretty resilient 5year note auction with the reception theyre deemed quite positive. We are seeing that really play off it comes to australia and kiwi bonds as well. The teen year been hitting the highest since 2011 and also when it comes to the three year and in new zealand there as well. Cpi came in as expected but still really showed the potential for further tightening. Or at least, rates staying at this level for longer. Still out of the 2 3 inflation target. Auto strikes are looming a looming Government Shutdown, hot the power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. I dont want you to move. Im gonna miss you so much. You realize well have internet waiting for us at the new place, right . Oh, we know. We just like making a scene. Transferring your services has never been easier. Get connected on the day of your move with the xfinity app. Can i sleep over at your new place . Can katie sleep over tonight . Sure, honey this generation is so dramatic move with the xfinity 10g network. Shery a looming u. S. Government shutdown, the auto workers strike at renewed focus on abortionrights will provide a volatile backdrop for the second republican primary debate in a few hours. For more, let us bring in Laura Davidson in washington. Of course, the front runner of the republican primary nomination former President Trump will be nowhere to be seen, so among the candidates that are present there who has the most at stake . Ron desantis is the guy everyone will be watching. He has consistently been in second in the polls to donald trump. He has raised a bunch of money that has had a lot of struggles recently. He had to lay off in his campaign, he change Campaign Managers as well as what some people say are policy missteps on going too far to the right, so this is seen as a Pivotal Moment for him, and if he is not able to gain on donald trump the question is is there someone else in the field or is donald trump too far ahead do have any of these candidates catch them before the primaries made voting starts in january. Haidi one of the hot topics will be the looming Government Shutdown. Where are we at and what do we see as being the economic and political costs . Who potentially benefits if it happens or does not . The talks are great, and it is not just federal workers who were not paid during the time of the shutdown. Congress almost always votes to pay their back pay once the shutdown is over, but for those who more than 3 million workers, they could go for a month without workers. A general contractors do not get back pay at all. There are estimates that a federal shutdown of any length would be a drag on gdp. This comes as Consumer Confidence has had a four month low, so there are a lot of repercussions not only in washington but across the country where there are large concentrations of federal workers spread across the United States. The upside is quite limited. There is not a lot of upside in the shutdown. We joke in washington the traffic is lighter, that is the only benefit. Haidi congressional reporter Laura Davidson in washington. We will continue to monitor those top stories. Sec chair gary gensler said his department will only have a skeleton staff on duty to oversee any tumult in trading if Congress Fails to fund the government by friday. Nearly 93 of the sec employees would be furloughed in the event of a shutdown. With the possibility of a Government Shutdown, i would note as our Oversight Committee that we would be down to a small skeletal staff, about 7 , 8 of our staff, everyone else being furloughed. Normal oversight of the markets will not be possible, and to the sec dependency in the event of a shutdown. Shery lets get to our next guest to things risks pose increasing threats to scurve. With us now is the chief economist at robertson stephens. Great to have you with us. When we ask about the impact of a potential u. S. Government shutdown to market analysts, the consensus seems to be that not much happens. A longterm effect is not great on the market. What about the economy at a time when we have the last major Credit Rating agency that has the u. S. At a top notch rating is now warning this could have an impact and reflect poorly on their credit standing . I think you have touched on the big issue there, and people have been very copacetic about what is happening here until just recently, maybe just this week. There is so much focus on the impact on Economic Growth and potentially Consumer Spending that perhaps at the market is discounting that a little, because for example, today, the atlanta fed gdp number came out and they estimated 4. 9 Economic Growth is the trend for this quarter. We do not think it is that high, but it is a Strong Economy right now that i can probably sustain the hit to growth, but i am quite concerned about what the impact might be on Interest Rates, especially if there is a change in Credit Ratings or threat of a change in Credit Ratings. Right now, the movement upwards in treasury rates over the short period of time is really presenting i think some problems were equity markets, and this would not help things. Shery an issue for equity markets, but how much is it an issue for the Federal Reserve when at the same time we have real yields rising but not necessarily Inflation Expectations . Does that actually help what the fed is trying to do . Yes and no, and the reason i say no is because i want to give credit where credit is due. I think chairman powell in the last press conference kind of went out of his way to say, i am really happy with what the economy is doing right now and i am happy that inflation is. He never use the word happy, but he says soft landing is ok, things are coming together. And he has been very clear he does not need to create economic problems for the fed to get to where they need to go. At the same time to the extent that it takes heat out of the economy, that certainly would feed into his notion that things are going to slow down, and that will make the inflation fight easier. Haidi how problematic are two of the other trends we are seeing at the moment, which is higher Energy Prices and a stronger dollar, which could be exacerbated if we do get some sort of shutdown . I think the Energy Crisis is very interesting. That is absolutely ticking through markets right now and also through the thinking of central bankers just about everywhere, so that is an issue for where we are at. The strong dollar is certainly an issue for where we are at. From the standpoint of Monetary Policy, you have to pick and choose your battles, and the fed is never going to really be focused on trying to manage the dollar. They have got enough to do with managing Interest Rates and Economic Growth, so we will be what it is going to be. Haidi what about external factors . Is there much concern within the u. S. About china at the moment either from a demand perspective, from an export deflation perspective at all . I do not want to diminish the importance of trying it to us from a trade relationship standpoint. In terms of direct impact of chinese demand on u. S. Economic growth, it is actually fairly minimal, but on a company by company basis, you can see some very large impacts working your way through. A Different Companies have much greater dependence on china than others, and that may start to show up in our earnings reports as we start to get them in october. I think that is the expectation. Probably the greater concern right now is for people who are into this is that central bankers are in very different places right now. Christine lagarde is sending somewhat different signals than chairman powell. Chinese Monetary Policy is in a different place because the economy is in a different place. There is quite a bit of differences here, which is not always a good thing. Shery there are so many challenges right now, but i do not where to start because i do not think we have addressed in depth what is happening with the labor action and what the implications are for potential wage increases . If this is actually expanded to other sectors, not to mention we do have the student Debt Repayments coming up as well, which could depress the economy. What do you with the most pressing issue for the u. S. Economy right now . You have to understand my background is in fact is a labor economist. I am very popular by the way. I think the most pressing issue is labor force, shortterm, mediumterm, longterm, and in the United States i just think we have not begun to absorb the fact that we have actually not enough people with high enough productivity, which is a business fixed investment issue as much as it is anything else to support the pace of growth that we sort of one, 2 , 3 growth. This is one reason i do believe these tracks are very interesting or the threat of strikes, the labor force unrest. When it really is for me part of is a much broader, longerterm signal that Labor Relations are going to be different because of different conditions in terms of labor force applied and demand supply and demand. I do not see it as a temporary thing being entirely related to the rate of inflation. I think it has much more to do with, you know, a commodity. You do not want to call it a commodity, but it is a commodity, the production process, and in short supply. Shery has the pandemic essentially changed Labor Dynamics . We have talked extensively about quiet quitting. Now we are talking about pensions and all of these labor unions wanting them back. How did this happen, and what are the implications for the next few years . Are we going to see this escalating into other sectors as well . I dont know how much to be expected to escalate to other sectors. I do not think what we are hearing right now will mean we will see a large wave in the United States of a return to pensions. That has been a long time that we have not looked at that to be the solution for longterm security for the labor force. There are other ways to do it, the fact that data is entered into the discussion is a sign of what is going on that is so different in labor markets in the United States. I do think that we have to realize that the conversation has changed. I think it is only partly related to covid. The demographic conditions that were in place, the aging of what we call the baby boomer population, the early retirements, which have not all come back into the labor first force is a demographic trend many years in the making, was accelerated and exacerbated by covid, which really shone a light on what the issues are. We have not confronted. Haidi jeanette, always great to chat with you. Lets get you to annabelle for a look at this thursdays session, how we are setting up. Annabelle picking up on a couple of things you were discussing, because when you take a look at the direction for markets today it will be determined by u. S. Rates. We continue to see yields move fire, and that is what you were getting as well. The levels for the kiwi tenure, aussie tenure that we have not seen since 2011. The dollar coming into it, and we will keep an eye on where the japanese yen is, but very close to the 150 level, and wti as well close to the 94 level. Brent crude opening at the top of next hour. When you have higher rates, higher oil prices, this is not a good outlook for equities. When you take a look at what is happening in china, this market is pointing to gain still coming through. We had industrial profits rising yesterday, so that was something that led to optimism, but here it is the property sector that is the big uncertainty over the coming 12 months. Taking a look at this investor survey, you can see when people in Mainland China were polled on the way they plan to increase or decrease their investment in the domestic Real Estate Market over the coming year, around 30 or just over 30 are planning to cut their exposure, so that tells us a lot of investors still concerned about the likelihood of projects being finished, and also what they are really concerned about is the likelihood the property prices in china continue to decrease, so something that is negative for the outlook for equities in the economy more broadly. Haidi a qantas executive facing tough questions from lawmakers over a series of scandals. We get the details next. This is bloomberg. It has come to an end, this does not mean demand is going down. Demand is strong, but last year with the we put on the table . It was consumed. This year it is normalizing. What we are looking at now is sustained demand at higher prices coming at us for many of our routes. Demand is a strong, particularly leisure demand is amazing. The corporate is one. Demanded stronger stronger than i wouldve expected at this time of the year. It will continue to be pretty good going forward. Haidi Top Airline Executives speaking at the World Aviation festival in lisbon. Qantas executives have faced a grilling question over the airlines treatment of staff, customers, and competitors. It has not been an easy ride in this grilling . The new ceo very conciliatory in her remarks, admitted the problems that qantas and promised to do better but was immediately challenged by the Committee Chair on this new direction. Hudson was there, she supported all of his policies, and these are the policies that led to the ghost flights, illegal sacking of 1700 workers that all build up to this. U moment where she asked a number of questions, to which qantas had no answers. Lets have a listen to what senator mckenzie had to say. Guess what, when you come to a inquiry we ask the questions, and you were supposed to come with the answers. Failing to hand in his summation, not having details about when you made significant decisions in partnership with the government just shows a level of disrespect. This hearing was intended to investigate the governments decision to block Qatar Airlines request for more flights into australia but perhaps predictably it did descend into a wider attack on qantas record. Shery what will happen to the qantas chair, because he seems to be in the firing line right now . We have been talking about this for a few weeks, the pressure on the chairs job. He said he met with the major shareholders last week who place their support to them. He made it clear he is not going anywhere. While i returned the confidence of our shareholders, i will continue to serve, because i think we have got very significant challenges in front of us and issues to deal with, and i think that is the best outcome for qantas. If that confidence is not maintained, i will review that decision. Qantas pilots have already requested that Richard Goyder stepped down. The ceo of the Australian Shareholders Association Richard Waterhouse says he should go, sankey bears as much responsibility as the former ceo for problems at qantas. She points to the gm in january for the perfect time to outline his succession plan, but as we just heard for now the chairman intends on sticking at his job. Shery paul allen with the latest on qantas. We have more to come on bloomberg daybreak asia. This is bloomberg. Shery we have some sad news coming from american zoos, it seems chinese pandas will leave america. We are talking about some of the most popular attraction in washington, d. C. s choose not to mention memphis, atlanta, san diego. I personally have not seen them, look at that . Who does not want to see pandas . It just makes us happy, but given the ongoing tensions between washington and beijing they will no longer be available after more than 50 years spending time in the u. S. Haidi we have still got one pair of giant pandas left in the Southern Hemisphere at adelaide zoo. I had seen the pandas in hong kong. It is so interesting, this concept of panda diplomacy that has been perfected by beijing. They are on loan. There are agreements that usually tend to be extended. The pandemic caused chaos in terms of pandas around the world. One dutch panda is headed back to his home in china as well, but the pandemic upended plans to return them. There are a lot of theories as to whether this is a case of panda diplomacy being used in reverse, that because of these deteriorating relations that this is a reprisal or punishment so that the American Public do not get their daily dose of cuteness with these pandas, but it could also be with the success of the domestic panda Reading Program they may not feel the need to have these and does bread and conserved in overseas locations and they are bringing them back home. I find the idea of panda diplomacy really fascinating. I guess time will tell if we do see a more marked improvement maybe well see an extension of some of these loans and then you will be able to see them. Shery they could to be a way to a breakthrough in the relationship. It is the end of an era. The u. S. Got there first pandas went Richard Nixon normalized relations with china back in the 1970s, so really an end of an era for pandas. We will be watching more than pandas in the next hour. These are the stocks were following in japan and australia, airlines could follow their overseas peers lower. Wti could impact stock prices. Micron predicting is deeper loss than expected in the current quarter, and we have rivals like sk hynix and samsung we are keeping an eye on. Broadly could have futures are trading, u. S. Stocks finishing mixed. We had declines when it came to some of the s p 500 names with the vix hovering around the highest level since the end of may, and downside broadly when it comes to asian futures. We continue to see strength in the dollar and risk off sentiment broadly as well. Haidi we were just talking about and us. You missed a prime opportunity for some funds there, a bearish outlook as we look at currencies. Shery i am giving them to you. Haidi the trajectory yields to the dollar, that is pretty black and white. Coming up in the next hour, maybe ponds and white equities are expected to seek a balance. We take a look at Energy Markets as well. Crude tanks are beginning to run dry. We have the market opens in sydney, tokyo, south korea for a holiday. That is coming up next. This is bloomberg. So. I know you and george were struggling with the possibility of having to move. Hows that going . We found a way to make bathing safer with a kohler walkin bath. A kohler walkin bath provides a secure, spalike bathing experience in the comfort of your own home. A kohler walkin bath has one of the lowest stepins of any walkin bath for easy entry and exit. It features textured surfaces, convenient handrails for more stability, and a wide door for easier mobility. Kohler® walkin baths include two hydrotherapies whirlpool jets and our patented bubblemassage™ to help soothe sore muscles in your feet, legs, and back. A kohlercertified installer will install everything quickly and conveniently in as little as a day. They made us feel completely comfortable in our home. And, yes, its affordable. I wish we would have looked into it sooner. Think i might look into one myself. Stay in the home and life youve built for years to come. Call. To receive 50 off installation of your kohler walkin bath. And take advantage of our no interest all of the work that were doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. The idea that we have saved five million peoples lives, its overwhelming. Its everything. Haidi shery this is bloomberg daybreak asia. We are counting down to the opens in sydney and tokyo, south korea closed. We saw a lack of direction from equity markets, but the treasury slump zooming and yields at multiyear highs as well. Annabelle the highs we have seen for the 10year yield since 2007, playing out in the currency space because we have seen the dollar trending higher for a six straight session, and combined that with the most pressing and Energy Prices and put together it is not a great outlook for asian equities in the session today. Haidi and we are just getting the numbers when it comes to australia i should state new zealands business outlook. We are a couple of weeks away from the election. September Business Activity outlook falling to 10. 9 according to anz. The confidence insects index rising. According to Australia New Zealand banking group, the activity outlook falling as well as an exports contraction falling for. 10 of a percent from 7. 5 in august. Inflation expectations are continuing to fall from august. Annabelle probably a bit of a welcome relief to the rbnz. Lets take a look at japan at the start of trading, because there are couple of Different Things we are focused on, but chiefly among them are the moves raising rates, because treasury markets coming online for cash trading, and 10year yield still hovering around a level we have not seen since 2007, so that will be playing out across the space today. Likewise, we are seeing that move coming through in the japanese yen trading close to the 150 level. It is the level we watch for further intervention, which we have seen from the finance minister on a verbal basis over the course of this week. Also keeping an eye on the direction for stocks today. Nikkei225 down again for another session, off to 1 as we get underway. Lets take a look at what is happening in australia, korea it shut today for a public holiday, but Energy Markets playing into the dynamics. Brent crude trading around a level we last saw about 12 months ago, but also tracking higher again. Iran has concerns around stockpiles and inventories even though the macro backdrop is looking weaker. Brent crude rising near the 97 level. Stocks coming online fairly flat in the session, but retail sales, another data point we will be watching. Still expecting them to trend higher on the month, up 3. 3 , but it is a weakening trend we are seeing overall, which points to the weakening macro backdrop we are seeing and a lot of economies. Shery lets bring in our next guest to says the u. S. Government shutdown is a shortterm risk but eight reacceleration of inflation trends is something to keep an eye on. With this is Marc Franklin, a senior portfolio manager. Great to have you with us. In this environment, given to longterm and shortterm risks, how do you stay invested . Good morning. It is quite a difficult investment environment because of those shortterm a mediumterm factors, so what we need to do is be opportunistic and nimble. Look for opportunities inside of markets. If you take fixed income, clearly there has been a sizable output moving yields, but the front and has been more anchored, less volatile, and that is where we prefer to take our fixed income risk right now, because given the duration at the front end, you would need a significant increase in rates or yields to offset the income that you are getting from in excess of 5 yields right now. Shery do you risk missing out on any rebounds in the equity space . Any time we have this rise in yields, they came back down and equity markets rallied. There is definitely the prospect, the potential for a shortterm bounce and equity markets. They are technically oversold, but if you zoom out there is a distinct lack of risk premium and equity markets. It has gone down in the last six or seven weeks despite that equity markets have drawn down by 7 . That is the result of high Government Bond yields. While in the short term the earnings cycle looks intact, there was a lack of risk premium on the table to be able to invest long equities with a high degree of confidence over the mediumterm. Haidi how do you feel about the chip sector as well as a broader ai adjacent tech . Quite a bit of pressure when it comes to the broader sector as a result of micron. Do you think the rate cycle of fire for longer will exacerbate that . Clearly when the cost of capital goes up, the markets has its way of spitting out strong, resilient Business Models for more speculative models, so what you will see at this point in the cycle is markets start to differentiate on a security specific basis. We shift away from everything a test of the thing coming up to be more selective. Haidi if you were looking for value, you cannot go past china at the moment, right . How do you look at the risk reward analysis there . That is a good question. Sentiment is clearly depressed right now. Earnings have been steeply negative in the Chinahong Kong equity space. You have seen the pboc and other Government Agency starting to introduce easing measures targeted that the real estate sector, but more broadly as well. While there is more work to come, there is a potential for a Short Covering bounce, but longerterm would take the view particularly in terms of real estate prices and other financial asset prices, it is going to be difficult for the equity market more broadly in hong kong and china to rerate on a sustainable basis, but there is the prospect of balance is technically driven. Shery do you go now well valuations are still cheap . When would be the right time to get into that market, because the real estate sector does not seem to be rebounding anytime soon . That is a good question. There are clearly very powerful macro cost currents affecting the Hong Kongchina equity markets, so to be specific if you saw a period of time where Interest Rates stabilizer cooldown, that will feed back into way broader Risk Appetite reemergence, and on the back of that markets have been particularly hit. Hong kong and china should lead any technical balance, so you want stabilization and these powerful macro headwinds the markets are challenged by. Shery lets talk about those headwinds when it comes to the weakness of the japanese yen. Do you see 150 as intervention level and what would that mean for broader assets in japan . Historically ended recent times people of definitely alluded to that 145, 150 range as a point at which the bank of japan in finance minister might start intervening in the market, but if we take a step back the challenge of any intervention directly affecting markets is that basically the yen dollar cross has been driven by rate differentials and the carry trade, which are powerful forces. What is more likely to trigger intervention by policy shift as a sign that this experiment of running also loosen Monetary Policy resulted in serious of breakouts and inflation in japan. There are early signs of a movement up in inflation, but not a powerful breakup we saw in the u. S. And europe over the past two years. The political cycle dynamics do not rule out the possibility the japanese government calls a snap general election in the next few months, and within that window the bank and will not want to do anything dramatic in terms of Monetary Policy settings, because it could describe the political domestic narrative and the events that will unfold in that situation. Haidi Marc Franklin with us there. Thats get you back to belle with a look at what we are thinking is the few sectors that could see upside on the back of this will move. Oil move. Annabelle Energy Stocks are in focus today given what we are getting in for brent crude, now trading at its highest since june of last year. There are concerns about inventory levels in the u. S. , but broadly bank of america has got a note out saying they are expecting global oil stock files to by nearly 70 Million Barrels in the next three months. That puts concerns about supply, so something that is quite bullish for oil prices generally. And there is saying brent crude will be averaging 96 per barrel in the Fourth Quarter on that lack of supply in the market, so this is the state of play as we get Energy Producers online. We have the ones rating for australia in just a moment, woodside and santos following those moves. Korea is shut for a public holiday. Lets change on, because another sector very exposed to moves in Energy Prices is what happens in the airline industry. We did actually see u. S. Airlines declining in the prior session, the likes of united, american, delta trending lower, and the outlook for airlines in asia a little bit mixed, you can see them lagging in tokyo as we get trading underway 10 minutes into the session. Still in tokyo today, there is another sector and focus given what we had after the bell. Micron out with its earnings after hours, and it forecasted a steeper loss than anticipated for the current quarter, so that tells us the industry slump and chips is still waiting, because micron is the biggest u. S. Maker of memory chips. These are major supply tinto micron, a mixed picture but we are seeing losses. These two at the top are the biggest suppliers into micron forecasting losses for the current quarter. Shery we will have a little bit more when it comes to the price of oil and despite we are seeing with venda insights. Country garden said to be in talks for a Restructuring Plan on its offshore debt. 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. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. 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 shery chinese Property Developer Country Garden is set to begin talks with potential Financial Advisors to put together an offshore debt Restructuring Plan. For more Stephen Engle us now in hong kong. What do we know about this process . It is to be expected given that liquidity problems are Country Garden, raising a lot of issues given that China Evergrande, a smaller developer but more indented and also the poster child for the problems in the property sector. China as indicated this week that it has to rethink its Restructuring Plan, so nothing is certain, but what we are hearing from sources is that Country Garden, which at one point was the largest developer in china, has reached out and said preliminary talks with the Largest Investment Bank in china as well as restructuring expert mr. Loki. Those three parties have not confirmed this report from sources when contacted by bloomberg news, and again, we are hearing that the discussions are said to be in the very preliminary stages, and that it does not necessarily guarantee a debt plan would emerge. Country garden as we have been reporting has about 11 billion dollars in offshore bonds outstanding. It recently did win investor approval to extend payments on 2 billion of onshore notes as well as two offshore bond interest payments. There were do yesterday due yesterday, and one of them is a u. S. Dollar Coupon Payment on a ring get ringot bond that is a five day grace. Bank. When these indented developers do not meet their Coupon Payments, they exercise a mutually agreedupon 30 day grace. Bank, but a five day. Bank could put them in a tough spot. Country garden as avoided actual default, and investors have become doubtful on all of these developers ability to pay and meet their Coupon Payment schedule. Contracted sales plunging 72 . Contracted sales of apartments in china plunging 72 in august for Country Garden yearoveryear after it warned of major uncertainties about meeting its debt obligations. Another saga in this ongoing story. Haidi the other saga is evergrande, given that there is not much certainty that we can see Country Garden pull off a restructuring easily. That is right, as i prefaced this report with evergrande, its problems continue to mount with its chairman being put reportedly into Police Detention right now. It acknowledged this week that it perhaps has to rethink its Restructuring Plan just at a time when we were thinking perhaps this plan would help it at least alleviate some of its shortterm pressing Coupon Payment needs. It also comes at a very critical time in the chinese calendar, because next week is the weeklong National Day Holiday when people are not going to work. Traditionally they go out and hunt for apartments. That does not look like it will be happening. A lot of these Developers Need that upfront cash and downpayments to keep this ball rolling, and without significant bailouts, significant relaxation of government llc, it will be making it much worse. There is this new survey that came out, a Quarterly Survey by a Business School in beijing indicating that a Record Number of chinese investors plan to cut their allocation in property over the next year to a record. 31. 7 of respondents said they will be cutting their holdings in property in china. The negative sentiment keeps on piling up. Haidi that was Stephen Engle there. Lets take a look at the trading day ahead, so much pressure when it comes to china without asian stocks managing editor. There are signs we may be bottoming out when it comes to this prolonged selloff, particularly if we look at china and we see risk off the rest of the region. China did finish in the green yesterday, but there is global weakness thanks to a supply jump of industrial profits. We have seen a pickup in economic data, including Industrial Production and retail sales, and also analysts have been revising up earnings estimate for onshore listed companies. So those are tangible signs that we may be nearing a bottom, and also the selloff has been pretty drastic already in the past two months, making some of those china indices the worst in the world. I think overall the bottom may be here, but it is finally bullish at this point, because northbound outflows have continuously been quite happy heavy. Investors are not comfortable putting money into onshore stocks right now. Shery especially when it comes to those property stocks trading at the lowest level in 12 years, but we have golden week starting from friday. What would you be watching upward to gauge the strength of the chinese economy, and will markets like what they see . Two things really that traders are watching out for for the golden week holiday data. One is consumption. The other is property. For the consumption side, recent data has been encouraging in terms of restaurants visits and domestic travel. If you look at the msci china Consumer Discretionary index for the september quarter, the index is actually up 1. 3 , and that is outperforming the msci china index is down 4 , so any upside surprise i think is what investors are looking out for in terms of travel booking, hotel booking, restaurant spending, movie tickets. In terms of property, all of these negative headlines are not encouraging buyers to dip into the seasonally very strong period for property purchases, so i think traders are looking at firsttier tier sales and secondtier sales because first tier sales have been held up quite strongly, but secondtier sales have not picked up at all since the major easing we saw recently. Any kind of data would probably provide a clue to see whether regulators and governments will ease a bit further. We have been hearing chatters that beijing and shanghai may come up with some kind of relaxation after the golden week period. Haidi our asia stocks managing editor there. You can get a roundup of stories you need to go in todays initiative daybreak. Bloomberg subscribers go to dayb and their terminal or right there in the mobile app. Customize the settings so you get the news on the industries and assets that matter to you. This is bloomberg. What do you see on the horizon . Uncertainty . Or opportunity. Whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined Risk Management are needed most. Drawing on deep expertise across the worlds public and private markets in pursuit of longterm returns. Pgim. Our investments shape tomorrow today. Haidi this is the picture when it comes to futures in europe opening up, as we have seen the downside a broadly speaking across the board for asian equities. We have seen quite a bit of pressure when it comes to trading in europe as well, the downgrade weve expected from the earnings picture really expected to push another leg lower. We are seeing a valued effort at upside with euro stoxx 50 futures up by. 2 of 1 . German dax futures up by. 25 of 1 . German stocks hovering near month lows. A european stocks hitting broadly that six month low on concern Central Banks are said to keep rates higher for a longer period of time. The 600 index falling for a fifth straight session and sitting at its lowest level since march. Potentially a little bit of recovery rally today. Shery here in the u. S. , plenty of issues to watch out for, including a u. S. Government shutdown. The autoworker strike, and a renewed focus on abortion rights. Those will provide a volatile backdrop for the second republican primary debate beginning shortly. For more, lets bring in bloombergs medical news director Jodi Schneider in washington. What should we be watching for in tonights republican president ial debate . There will be seven candidates on the stage. It will not have donald trump, any of them. He will be counter programming in michigan tonight, going out with uaw workers, but his opponents for that president ial nomination, for the republican nomination will be we think a bit more critical of him than they were in their last outing. Which he also did not attend in august. It seems that they will be really trying to sort of separate themselves from him more. Last time there were not so eager to do so, partly because the audience would boo that when they did, but this time it seems we are getting a taste that they will try to criticize him at least on certain issues. They are also trying to get that second place finish behind the former president , who is well ahead. His next closest competitor is ron desantis who is more than 40 points behind him and has been slipping in the polls and in donations. So they are all trying to get that spot, and among them nikki haley who did well in the him an slipping in the polls and in donations. U. S. Debate, she is hoping to have a good repeat performance. We are expected to hear more this time from republican senator scott, who really did not break out last time, even though there were high hopes for him, and he had good donor support. We also have chris christie, the former governor of new jersey, who has been perhaps most critical of president u. S. Trumn the past, and mike pence, his former Vice President who has increasingly tried to separate himself from the president , the former president while also trying to run on his record as Vice President. Haidi speaking of the former President Trump, not on the stage again. He is likely to be criticized more than he was in the previous debate, but we are watching and speaking at the moment to autoworkers in michigan, taking to the stage in suburban detroit for that speech, which is being positioned as a counter program, the gop debate he is skipping and appealing to more workingclass union workers, so we see this rival business really giving them the chance to appeal to bluecollar america as it were as we see these ongoing autoworkers unions threatening the economy and that battleground state. Is he likely to be a lightning rod for much witticism than he was in the previous debate . I think you will be criticized and not showing up to the debate will be another part of the criticism. Of course, it is no coincidence he is going to michigan, which is a state he was able to win from Hillary Clinton in 2000 did not win in 2020. A joe biden won that state, and they both badly one penn state in 2024. Want that state in 2024. Haidi Jodi Schneider with a sydnee washington. We have more to come on bloomberg daybreak asia. This is bloomberg. Annabelle this is bloomberg daybreak asia. I am annabelle droulers. We are 30 minutes in to the session for tokyo and sydney, seoul a shut. When you look at the direction for equities, markets broadly, there are two key themes at play. U. S. Rates and also Energy Prices. Kicking off with treasuries, because the 10year yield still hovering around a level we have not seen since 2011 or rather 2007 going even further back, but generally being felt in the bond space this morning, because we are seeing them rise in the kiwi 10 year and the aussie tenure at a level we have not seen in more than a decade. When you have high yields, it does play out in the currencies base, and a stronger dollar we have seen a firmer gauge for the last succession socio succession or so. The currency to watch as the japanese yen, because it is extremely close to the 150 level. If it trades above that the session, whether we get any further verbal jawboning coming from japanese officials. Equities wise, have an hour into the session for japan and australia, we are looking lower broadly for the index. Nikkei down more than 1 . Lets change on and take a look at sectors that are moving in particular, because here it also tells a story of stronger commodity prices, because we have every single sector in the red. The lone exception is energy, brent crude, wti trading at levels we have not seen prior to this going back to june of last year. Haidi lets bring in event on a hurry vandana hari. How long do you see the persistent upside risk when it comes to Energy Prices given that there are also a great deal of macroeconomic risks at here as well. Good morning. That is an interesting debate. What we are seeing, huge risk of diversion, economic worries creeping back into broader Financial Markets are not playing out in oil. In fact, it is the opposite. Both are in charge of the oil complex, and it boils down to supply, concerns over supply tightness continuing, even exacerbating going into the Northern Hemisphere winter months. We know that opec cuts of nearly 3 Million Barrels per day, the deepest they have made since 2020 are said to continue until the very least until the end of this year, and inventories are draining. 2. 5 to 3 Million Barrels per day shortfall is not a small amount, it is what we sell reflected overnight in the u. S. Crude inventories dropping to multimonth lows, so you have a market which is very tightly strung right now. Almost on the verge of panic. Haidi the other thing that is intriguing to me is this continued decoupling or correlation we have seen from the u. S. Dollar and crude prices, right . What is your expert for why we are seeing that . When we talk about there being a negative correlation between the u. S. Dollar strength and commodity prices, oil prices , it is not a hard and fast rule. That correlation does change occasionally. It is even positive correlation, and remembering correlation is not causation in this case. What we have seen surprisingly since the start of september is a strong positive correlation between the u. S. Dollar and oil, and what it really means is that the u. S. Dollar is continuing to gain strength and presumably will as the market adjusts to a higher for longer Interest Rate regime, but will is to some extent insulated from that. Just as it is insulated from economic worries and demand concerns. So a stronger dollar is not putting downward pressure on crude, and i am not surprised and i do not expect that to change, because it is all about supply. Shery especially when you have russia banning temporary the export of diesel. How focal is the issue of diesel in the Energy Markets right now . Very much of the epicenter of supply fears right now. So, yes, there is overall concern that you have inventories already raining quite rapidly over the past six months in the oecd countries and expected to drain at a faster rate going into the winter months, and on top of that you have opec continuing to cut. It is not looking good, and when you talk about diesel, the problem is that opec cuts are removing the medium and heavy grades of crude from the market again, a situation that is not expected to change as long as opec plus cuts are in place, so diesel tightness is worrying. We have seen diesel rocketing to more than 40 per barrel. Diesel also is needed if europe for instance wants to switch from gas to oil for whatever reason, a gas shortage strike again in the winter months. There was probably a bit of stockpiling on diesel on an anticipatory basis going on in europe, so i see no relief valves for diesel supply. China could perhaps export a bit more, but right now it is unclear whether they will actually get the permits to do so. Shery if we are so laser focused on supplies, why are we talking more about u. S. Shale at this point . Actually, we are talking about it, but there is just one narrative around it, which is that the u. S. Stopped being a producer several years ago, and that essentially is because shale as a new run, the past few years of cash discipline, returning money to shareholders, paying of debt. They are also battling higher production costs, higher material costs, so what we are seeing recently from the Shale Companies even as prices have been rising is the executives are saying we are going to stick to whatever we had planned in terms of drilling. Drilling rigs in the u. S. Have been steadily declining, which shows shale is no longer in that situation where it will have a kneejerk response to higher oil prices, so u. S. Crude production will rise. It is steadily rising. For four months to october, it is actually declining a little bit. It is not in a position to anywhere near a position to plug the supply gap, the shortage that opec cuts are causing in the market. Haidi what are you seeing from the demand side, particularly when it comes to the prospects of chinese recovery . Chinese demand is growing year on year. There have been a whole range of estimates, rejections out there, anywhere from 700,000 800,000 barrel per growth as well as to Million Barrels from iea and very far from the very optimistic production projection of demand growth. From what im hearing with an ear to the ground in china is it will be closer to 800,000 Barrels Per Day year on year. The two halves of the year we have been talking about on china, actually it looks increasingly that in the highpriced environment that we are going into the next few months, china will be destocking. It has moved 800,000 Barrels Per Day into stockpiles for the first seven or eight months per year. We will probably not see that high year on year growth in its crude imports, so oil in china, demand continues to creep higher, but it is certainly not going to cause a huge boom in demand in the coming months of 2023. Shery vandana hari, great to have you with us on the conversation on oil as prices are now at this years highs. If you missed any part of the conversation, tv is your function. Watch us live, dive into any of the securities or bloomberg functions we talk about and become part of the conversation by sending us instant messages. This is for bloomberg subscribers only. Check it out tv. This is bloomberg. Shery take a look at how currencies are trading at the moment as we have the bloomberg dollar index on its longest winning streak in a year. On the other side of the break, we have seen significant weakness for these pairs especially when it comes to the swiss franc after weakening for a record 12 straight days. It is now the most oversold and about 30 years. 14 day rsi dropping to the lowest level since 1991. The Swiss National bank just paused in his tightening, so you have more rate differentials to contend with as you have yields continuing to rise in the u. S. Take a look at the korean won, the south korean stock market is away on holiday, but that does not stop the korean won from weakening. Were watching the japanese yen also nearing the 150 level, which people say potentially could lead to authorities intervening in the markets, and that strong u. S. Dollar having an impact on emergingmarket currencies as well now on the brink of wiping out all of their 2023 gains. Concerns about chinas economy, u. S. Rates weighing on riskier assets. Lets bring in david for more, and we have the Brazilian Central Bank cutting and leading the way on monetary easing. It is it a matter of time when we have factors losing all of the gains for 2023 . I think at the moment, with u. S. Fields remaining elevated and 10 year yields continuing to perspire, it does lead to dollar strength, and there is a good chance emergingmarket currencies do end up declining this year. Trade becomes less attractive with yields watching higher, and your worries about china, higher oil prices. The general sentiment is definitely positive dollar and negative everything else. To fight that trend at the moment, you are basically on a losing trade. In the near term, if sales continue to push higher, emergingmarket currencies could default negative. That will be the general market sentiment. Haidi david, when it comes to some of the repercussions on trade as well as sentiment, who do we see is the biggest winners and losers here . On trade, it comes to basically i think the china economy, asia. You have to think china is basically a major export market for most currencies, for most countries, so if it is performing weakly, which of the Economic Indicator is saying so, that is not good for trade all around. You look at someone like maria, you see the korean won under pressure, korean exports have declined. Look at taiwan, again the same thing. Any heavy export nation, those currencies will be more susceptible. Other countries like indonesia, which is a bit more domestically related, its consumer creates its own gdp, i think they will survive better. They will still be under pressure, but currencies like korea and taiwan in asia will be the biggest impacted. Haidi David Finnerty there. A surgeon china sovereign debt issuances this evening pressure on the central bank to keep funding conditions loose. Authorities are pivoting toward stronger fiscal stimulus to spur the recovery. Joining us now is our correspondent. Why are we seeing this quickening when it comes to issuance . Chinas finance ministry is ramping up on issues, because the main issue is they want to accelerate spending to prop up the economy. Based on the data we found on our terminal, china issued a total of 1. 2 trillion yuan was sovereign debt, 60 percent higher than the average for the last three years in the highest monthly issue for this year. As i said, the main purpose is to ramped up spending, to help finance projects and other spending to help at this years gdp target, which is 5 , and china is under pressure because the Property Market is not doing well, and Business Confidence remains low following three years of covid lockdown. Only the Central Government is ramping up spending. Local governments are pumping up debts to boost the economy. What is also worth noting is in mongolia, the problems in northern china last month, sorry, yesterday announced a piece of interesting news. The government is going to issue 9 billion worth of three year, seven year local Government Bonds to help swap bonds issued by the local government financing vehicles in the province. The debts of local finance the government vehicles are considered a hidden liability for the local government, because they all enjoyed the guarantee of scale, the implicit guarantee of the local government, so by issuing such kind of bond, local governments will be able to raise financing at lower Interest Rates and with long tender, and it is a way tenor, and it is a way to help continue the financing of local projects. We have reported early that there is a program for a debt for equity swap amounting to one trillion yuan, and this is at the beginning. Shery if that is just the beginning, not to mention we have a depreciating yuan, does that mean demand will just not be there for chinese bonds . Demand, supply is a big, as you mentioned. And in the Financial System there is a liquidity squeeze at the moment. That is why the pboc have been ramping up support, liquidity support through open Market Operations using all kinds of tools, including reverse repo with longer tenor, such as a 14 day contract. As a result because of increased supply and also there are signs of imminent economic recovery as evidenced by the improvement in chinas industrial profit did it yesterday, china sovereign bond yields have been rising, now hovering at around 2. 7 , which is a four month high and 15 basis points from the recent low in august. Based on analysts that were interviewed, the trend may continue. At the pboc may have to continue wrapping up liquidity support. Haidi that was our correspondent reporting from shanghai. Tune into Bloomberg Radio to hear more from the days big newsmakers and get indepth analysis from our debris came live from our studio in hong kong. The sender via the app or Bloomberg Radio. Com. This is bloomberg. Haidi take a look at some of the ai and chip related stocks on the back of disappointing guidance out of micron. We do have pretty big heavy missing from this session of trading with south korea on holiday, so we do not get the Immediate Reaction from sansone or sk hynix. Micron fighting after predicting a steeper lot than expected, and we can see the space when it comes to softbank, tokyo electron, the strongest of those losses as these numbers even if they are a more conservative guidance, potentially calling into question the strength of that recovery that we have seen and whether markets so far ive gotten ahead of themselves. Meta platform says it is introducing Artificial Intelligence features to its apps to give the companys 3 billion users experience similar to chatgpt. An announcement coming at its Global Developers conference. They told more about what is coming. If you look where content comes from that is being recommended to you on instagram, we have been a very open about the fact that over the last year or two we were already leaning into having more recommended unconnected content. Content not connected to your family and friends but that are ai systems have been able to scour the internet and say you might find this interesting, you might find this fun, you might find this educational. You have seen an acceleration of ai systems not only recommending it but also generating content. One of the things we have been working on his aunt to make sure people can distinguish between the promenades, the origin of something, which is generated by ai rather than generated by human beings. So we will have a visible, clear watermark on the photorealistic imagery that people will be able to using something called slash imagine, which is our photorealistic tool integrated into metaai, a chatgpt equivalent where you can ask it anything from a restaurant recommendation to how to plan your next holiday. And this will be baked into messenger, whatsapp, and things like that. And all of that gets the baked into all of the platforms, the messaging apps as well as social media. I think this is a new departure. Some companies, look at character ai, they have tried this, is we will be leaning into the development of ai characters , personal note from jane austen to tom brady. That says a lot about your taste right now. As more people start to use these tools, i imagine that creates a really robust data set to drain these models. Do users have the ability to opt out if they do not want to be part of that training . They do, and they have the ability to delete the data, which they have when they are interacting with some of these ai characters that i spoke about earlier. Are they an alternative to having a friend . Can you message someone that you wish existed and to does not . I think it will be interesting. I think the truth is lets see how people use them. Often it is the most unexpected use cases that really take off, but you will be able to bring in these ai persona into a group chat, so you have a mixture. If you are a group of friends organizing a holiday, you will be able to altogether chat with one of these travel agent who is in ai persona, who will give you recommendations and that check group. Shery the metapresident of local affairs speaking to bloomberg originals. We have breaking news on China Evergrande, a Property Developer at the center of the years property crisis in the country, now suspending trading in hong kong. We are hearing China Evergrande and new Energy Vehicle group is suspending trading as well. Evergrande services suspending trading in hong kong. We have her that the developer has scrapped key creditor meetings and has had to revisit their plan to restructure their offshore debt. We have seen issues with the meeting the regulatory qualifications and recent weeks, and now we are hearing that evergrande has suspended trading in hong kong. Evergrande and ev services as well. This is bloomberg. se fue la luz pero todavia tenemos wifi para hacer las tareas. ¿y eso es algo bueno . Wifi y estudiar. Buenisimo. Wifi y pedir una pizza online seria buenisimo. Presentamos storm ready wifi. Solo de xfinity. Ahora puedes mantener una conexion confiable durante apagones, con datos celulares ilimitados y bateria de respaldo de hasta 4 horas para mantenerte conectado. Obtenlo solo con xfinity. El hogar del 10g network. Enterate mas hoy. aidyl hi, im aidyl, and i lost 90 pounds on golo. 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