Transcripts For BLOOMBERG Bloomberg 20240704

Really something that has been weighing on equities over the course of this week. We saw it heating japan stocks broadly but tech feeling the brunt of it. Today we are actually moving a little high. It is a reflection of the other theme we are tracking today. The u. S. Inflation print a little hotter than expected but not too hot to really shock markets. We saw stocks on wall street climbing to fresh records. So that is positivity coming into the session. But as we said, a lot of unions in japan will be reporting on wage or pay deals this week, and wednesday will be the heaviest day or amongst the heaviest day for announcements before we get that first tally being reached and reported on on friday. Lets shift into korea now and take a look at what is going on in the session so far. Of course a market heavily correlated within the dynamics of wall street. Unsurprisingly you are seeing stocks moving to the upside. Tech names are the ones to be watching because we saw the likes of nvidia, oracle, although that was also an earnings story. Both of those moving higher. The korean won just a little bit of weakness coming through but fairly steady so far. We are of course in asia really bracing for that impact from a stronger u. S. Dollar. So that is Something Else we are tracking so far. Haidi the currency effect will be quite interesting to watch even as we see a pretty mixed picture. The aussie dollar holding up quite well. We are also getting positive news for the australian markets when it comes to the balance relationship it were hearing potentially ahead of the visit in the next couple of weeks that we may get and easing to these trade tariffs on australian wine of 218 that have been in place for almost three years. We are seeing a pretty outsized reaction. The broader markets are trading quite well. Getting support from financials, Consumer Discretionary stocks, a pretty modest rise of just under. 2 . The aussie dollar is Holding Steady at 6608. Oil markets as well. New york create just declining u. S. Stockpiles. There are seeing in advance for crude for the first time after four days of losses and that is offsetting the wavering situation and it comes to opec cuts as well. We saw the industry funded American Petroleum Institute Reporting industry inventory file last week. So much of the focus has been on how we decipher the various elements of the mixed u. S. Cpi report. Good news in terms of rental cost coming down. But the super court gauge still much hotter than what the fed would like to see. We have seen treasuries extending those declines and a pretty weak demand when it comes to the 10 year option. That result trailing the selloff sparked by the inflation data initially. Everyone still pricing in a nearly 70 chance of a cut by the fed by the time we get to june. Annabelle it does seem at least that there is a little bit of life in the sticky inflation narrative but lets discuss with our guest daniel lam. Dan, what were your Key Takeaways from the u. S. Inflation print . And when it comes to the bond space, how should you be patient and yourself . Be positioning yourself . Daniel it continues a theme we have seen since the nonfound payroll. That was also of the bit mixed. The picture is not so clear in terms of how much or when the fed is going to cut anymore. Because they need to watch the inflation number. There is stickiness in that front. In the equity space you are seeing a broadening out of the rally. We have seen that during the earnings season when many analysts are cutting that my deficit 76, to the Magnificent Six to seven, to five, etc. Many are being concentrated into even smaller segments. The rally has been broadening out to other sectors. So we are seeing some selective Health Care Stocks doing well because some investors would like to have some defense of exposure. And also some other sectors. What that means going back to the bond market is that the oneway train of the news coming off and treasuries rallying, its becoming a murkier picture because of that. So, probably the u. S. 10 year yield is likely to have upside from here. I would believe that the treasurys weakness is not finished yet. It could well go to 5 , 4 , the u. S. 10 year yield. Annabelle a lot of investors have been really wrongfooted with bond trades over the course of this year. What would you say to people who are perhaps getting a little attracted to the security of cash, for instance . Daniel with cash, always in times like this its an easy way out. Because you are saying here is a very good deposit rate. And you are away from the volatility in the bond market if you put it into cash. But cash deposit is not really a longterm solution. You could lock it in for six months but after that, what . You have reinvestment risk. In the medium to longer term it is still better to lock in these quite good current levels for the treasuries. But you can time it better and add gradually. Annabelle you mentioned the magnificent seven that has really been whittled down to perhaps around four names now. Would you still be adding to any positions in the likes of nvidia or meta . Daniel basically those seven stocks are a longterm growth story. You should be adding on dips because they are really the stocks for the future. Having said that, and for the shortterm, the one to three month horizon, adding them right now could be too high. You have to be very selective on the seven names. We have been adding to health care because earnings have always been stable, and there are some quite outstanding fundamental stories as well within that space. Haidi are there any constructive themes out of china for you right now . Daniel right now china is not looking so bad. Judging from the radius latest price action reactions. Of course they had quite a big pullback on the day of the npc but after that it seems investors have been coming in with very good volume. Hence, the index is now back above the 17,000 mark. So things are looking ok. I would say that for selective consumption names, china is looking quite interesting on that space. Plus also the banks have been doing quite well. Course they always have the dividend angle. But in times like this in the early stage of the rebound they have been doing pretty good. So i would say some of the consumption names, the banks and the soes in general. Haidi there is a big question mark over japan at the moment in terms of where the equity rally goes. How endangered and correlated is that relationship depending on how the bank of japan proceeds from here . We have been seeing that the bank of japan is very likely to be tightening policies. So that has always been a key risk for japan equities. But we see this risk as an opportunity for investors to be adding to positions. The improvement in Corporate Governance and valuation is still attractive. Those are key factors for a medium to longterm rally. Yes, there will be hiccups and it seems that these couple of months would be a little rough with japanese equities. But at the same time they can give you opportunities. Sector wise he would need to do some rotation. So we have always believed that the financial sectors, insurers, and the banks in a tightening boj environment, they can do pretty well. Investors should really be looking at those. Annabelle daniel lam, head of equity strategy there. Coming up, the result of japans spring Wage Negotiations are due before the bojs Monetary Policy decision next week. We will have the details ahead. This is bloomberg. Okay yall we got ten orders coming in. 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So far i think they want to cut and we expect to see that in the may or june timeframe. Haidi bloomberg tv guests there. U. S. Dollar in focus after the release of the cpi print. Strategist seeing Dollar Strength coupled with higher treasury yields will be hard for asian bonds and currencies to shrug off. Lets bring in Mark Cranfield for more. How much conviction is there in the direction of the dollar coming off the inflation print . Mark i do not think it has made a huge difference to what Exchange Traders were thinking. The two major events coming up this week, the bank of japan meeting followed by the Federal Reserve. That was always going to be the big picture on the agenda. Where the cpi may come into the picture is it could make a marginal difference as to what fed people are thinking in terms of their dot plots. But they have probably already made up their minds anyway, whether it will be changes to those plots. Traders will certainly be interested in how the plots are projected when the Federal Reserve announced that next week. But in the immediate picture, arguably the bank of japan picture ways even more heavily. Because if we get more surprises from the bank of japan, the extent to which they are willing to make policy changes will have a big impact on dollaryen, and where that goes he will move the rest of the market. We have seen the past couple of weeks that when dollaryen starts to pick up Downside Momentum it moves everything with it. The euro, the pound, the australian dollar, even the chinese yuan, are all in its tailwind. Now its a question we have been told the bank of japan meeting is too close to call and what traders are trying to gauge is are we going to get a big whammy, will it be the end of negative rates, is it all going to be done in one measure, or are they going to try and stagger . Test out the waters may be by dropping yield curve control at the next meeting, then dropping negative rates at the meeting after that. So that is what traders are trying to weigh up. Where dollaryen goes, the rest of the market will follow. Annabelle as you have been writing about this morning, the bank of japan may be too close to call this point, but as you say, negative real yields are not. Mark a long way. If you look at japanese 10 year yields, we have not even reached 1 for 10 year japanese yields. The way the bank of japan has been defending the market, making sure that moves are very gradual, it is going to be a very long time before 10 year yields get anywhere close to the inflation. Headline inflation is around 2 in japan. Even forecast within bloomberg surveys are not looking for anything like 2 yields. They are looking for only 1 yields next year let alone this year. So the upward movement in yields even in the long of the japanese market is probably going to be pretty slow. If you look at core inflation of course it is even higher. We are going to have negative real yields for a very long time. That obviously has a slightly downward impact on the japanese yen. Whatever happens in terms of dollar yen movements either triggered by the fed or the bank of japan come everything will be moderated when people take into account that real yields are going to stay negative for quite a long time in japan. Annabelle that was Mark Cranfield there. Of course the direction of what the boj does next week really hinges on the outcome of wage talks. We have a wide range of unions that will be reporting over the course of this week. Lets get more with our asia economy and government Senior Editor brian fowler joining us from tokyo. The signals so far are looking good for salary rises in japan. Brian that is exactly right. We expect wage increases this year to out page outpace those achieved erdogan we are getting signals every day. Raincoat is a huge collection of unions and a bunch will be releasing their taoist today. That is an indicator for what the ultimate number it will be. Today we have toyota coming out with this deal. That is Just One Company but it is a huge the Weather Company for the rest of japan. That will be a big piece of news coming in just a couple of hours. Haidi what is the danger of an undershooting . It is not necessarily one clean date out. It takes a while to bring it all together. Brian an undershooting would be a huge shock and everybody is pushing for big wage increases including Prime Minister kishida. His support rating has come to a new low this past week. Part of that is households getting really frustrated with the steady decline in real wages as wages dont keep up with inflation. So that would be huge if it did not undershooting. But i think the chances are that that will not happen. Everything points to bigger increases. There is so much pressure both in terms of society demands but also the labor market has a chronic shortage of workers and that is forcing companies to lift wages in order to attract the people they need to keep their businesses running. Annabelle are we seeing a virtuous growth cycle in terms of confidence in that real inflation affect . Is that leading through to confidence in households and what they are spending, given we are seeing the mystic assets trend lower . Brian that is an excellent question. And no, we really have not. Consumer spending in the last quarter, we have revised data a couple days ago and that data was actually revised down. Household spending has fallen an 11th straight months from earlier levels. So far consumers are really reluctant to spend. However if we get wage hikes of the magnitude we expect somewhere around 4 or higher, that would outpace inflation. So maybe for the first time in a long time consumers would feel like they have a little more wiggle room to spend money and that could pay shas that last inch towards achieving that Virtuous Cycle the boj has been looking for for so long. Haidi brian fowler there ahead of what is a crucial few days for japan. You can get a roundup of that story and the others you need to know to get your day going in todays edition of daybreak at dayb. It is also available on the mobile in the bloomberg anywhere app. You can customize your settings so you just get the news you care about. This is bloomberg. Hey you, with the small business. Whoa. Youve got all kinds of bright ideas, that your customers need to know about. Constant contact makes it easy. With everything from managing your social posts, and events, to email and sms marketing. Constant contact delivers all the tools you need to help your business grow. Get started today at constantcontact. Com constant contact. Helping the small stand tall. You dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh annabelle taking a look Energy Markets this morning. Brent crude and wti moving a little bit higher. We did see Oil Prices Dip following the u. S. Inflation print. There was also a report coming out from opec around countries not meeting their production quotas. They have acceded for a second straight month, so that played into the dynamic. But lets focus more now on energy and oil markets and bring in andrew janes in singapore. We are focusing a lot on two of the most consumed fuels gasoline and diesel. They have been seeing price gains that outpaced we have seen for crude oil. Andrew thats right. In the u. S. We have seen gasoline futures up by about 20 this year ahead of about a 7 rise in Global Benchmark oil prices. Diesel in europe is up about 10 . There are a number of factors behind this. We have had some unplanned outages at refineries unplanned and planned. We have had drone attacks on russian refineries. This is coming on top of all the transport disruptions we have had from the houthi attacks in the red sea, which is adding transport costs. That, in turn, is on top of disruptions to the market caused by western sanctions on russia. So all those fact errors are sort of funneling into fuel prices more than oil at the moment. Another interesting factor is high octane blending components which are added to gasoline. There are a shortage of these in the u. S. And that is mainly down to the sanctions on russia. Because that restricts the flow of heavier crude which you used to make that. So all those factors are funneling into this big surge we are seeing, particularly in the u. S. , for gasoline prices. Haidi we are also seeing heading into the start of the peak u. S. Driving season. There are political implications too. Is there anything President Biden can do before november . Andrew if you look at prices at the pump in the states at the moment they are now about 60 higher than they were at the beginning of november 2020. So, that is potentially a big headwind for biden in terms of how well people are feeling about the economy, feeling about their own Economic Health as they make up your mind who to vote for. We also have various fuel stockpiles running pretty low and the u. S. Strategic reserves are also pretty low. And you mentioned the peak summer driving period coming up. All of that adds up to a fairly grim outlook for biden in terms of oil prices and they may not there might not be that much he can do to get vaseline prices down. Gasoline prices down . Haidi what are we hearing from russia . We did hear from Vladimir Putin supporting the opecplus cuts but also warning of the risks. Andrew well, russia is in a bit of a unique position with the cuts, and it has the unique ability to flip between production and exports. It can adhere to the production cuts but keep exporting more. Obviously we have another opecplus meeting coming up. I think it is a couple of months away. There is probably going to be more pressure from russia and others in the group. The saudis are keen to keep the cap going, but some other members want to pump more. We heard earlier about iraq exceeding its quota. So that will definitely be an interesting meeting to watch. Haidi energy and commodities editor andrew janes. Take a look at futures in europe at the moment. We continue to pass through not just the implications of the print, but looking ahead to Wage Negotiations in japan and how that plays into the bank of japan. We are expecting to see more upside when it comes to european futures. We did see the stoxx 600 really extending gains and hitting a new record after that overshoot in u. S. Inflation did not have much of an impact when it comes to european confidence and Risk Appetite in the markets in that previous session. The biggest jump since january and a pretty broadbased play across sectors. Annabelle china vanke is said to be in talks with banks on a debt swap that would help the developer stave off its firstever bond default. For more lets bring in Lorretta Chen. Does this signal that vanke is in quite deep liquidity trouble at this point in time . Lorretta that is true, it is the first time we have heard of vanke trying to get that reprieve on its public bonds and that will have more impact than the private debt talks we have reported the last few months. So it seems the liquidity crunch at the company is reaching a new level at this point. Haidi how important is vodka vanke . It is a broader name. Lorretta they have a systemic importance to chinas real estate sector. It is a company that really manages debt really well. Its sales have dropped much less than many of its peers. People are counting on the government backing to come out. I think this will be a moment that tests that Government Support vanke has. Most importantly, if vanke ever misses a payment it will trigger a lot of cross defaults on its massive onshore liabilities which is over 1. 3 trillion which is a massive amount. Also peoples confidence will really waver is there if there is any problem in the company. If it fails, then people will ask who could ever survive this crisis. Annabelle a debt swap perhaps pushes the can down the road to an extent. So how much breathing space with this give the company, and with that really be enough to give it time to turn things around as well . Lorretta those talks are happening on multiple fronts. There is the public bond discussion that is still ongoing and we dont know if the banks are going to agree to extend or help. Swap all of these bonds. On the other hand, vanke isnt honks with banks we know in the offshore market some chinese banks are still having reservation in terms of how much they are willing to provide the company with. I think the shenzhen government is very much closely involved in these talks about credit lines. A few months ago they came out to say they will continue to support the company. So we are looking for that sigma that similar signal to come out again at this time. Haidi Lorretta Chen there in hong kong. A bull market begins in a number of sectors in china, indicating investors are seeing an upside amid efforts to bolster the economy and markets. Lets bring out our reporter. The first part about efforts to bolster the economy, arguably we did not get much of that in terms of the strategy from the recent National Peoples congress. Is this more evaluation story . Disappointed only at the margin. China has not been pursuing a big bang fiscal stimulus move for a while so it was foolhardy to expect one. Having said that, markets have started moving higher. This is possibly the biggest up move in the csi 300 we have seen since the reopening gains which started last year in october. In this context if you look under the hood there are sectors from new economy, solar and materials, which have bonded to the socalled technical bull market. This is backed by beijings resolve to stem the route. There is a serious apart from that, liquidity moves the market in the mediumterm. And liquidity has been positive. Saw a turnaround in february. The flows have been positive this month. If you look at the longterm picture, earnings and economy seem to be giving budding signs of recovery or stabilization. Put together, this essentially means that the debate would now move from just a tactical rebound to perhaps a sustainable uptrend in chinese stocks. Annabelle we showed this terminal earlier and we can bring it back to take a look at some of these sectors which had been rallying. Materials is standing out. Renewables as well. Some of the more smaller cap tech companies. Are the names or areas you want to be getting into at this point in time . Abhishek these are definitely rallying. Most of them check into this new talk developing about china. What is this new china going to be . 7 trillion have been lost. Valuations are below nine. What does new china mean . It means high quality. It includes tech, things which will make consumers and citizens lives busier. It will also lives easier. Theres also this thought that consumption down trading is happening. Anybody making those kind of products where there is a low price meal, Something Like yum, china. Or anybody who has the power to make the price or demand. Something like cigarettes. This would be the new china that is getting formed now. To me, its legible to expect more sectors will be joining this framework. Stocks seeing more than a 20 gain from here. It will not be how electron it used to be but china is definitely looking for more space in portfolios. Haidi what is a rebound in china mean for Global Equity allocations . Abhishek china is looking to command some lost have to. Lost heft. This means there will be a little bit of moderation in that trend. Japan is still very cheap so there will be a moderation. The second thing is we established a sustainable upturn in china itself. And third, they have not really done how just the u. S. Have done. But with chinas participation we might be looking at a sustainable trend. At least september or october before people position for u. S. Elections. So an extension of the bull market to sum it up. Haidi our asian equities Senior Reporter abhishek vishnoi. Take a look at how equities are trading at the moment in terms of the markets that are already online. Which implications the next couple days when it comes to wage data we are expecting out of japan. Anything around 3. 8 , 4 , according to market expectations, will be enough to get the bank of japan over the line when it comes to scrapping negative rates. The nikkei 225 holding up pretty well, about. 7 . Trading higher is also the kospi. We are seeing muted gains in sydney. We were really coming off session highs. But outperformance when it comes to Consumer Discretionary names and financials in addition to the wineryrelated names on these expectations that china is proposing it end that almost 220 punitive tariff on australian wines after almost three years. We are seeing a little bit of downside the underside is really new zealand with kiwi equities off by about. 25 . We see a little bit of a move when it comes to currencies as well but strength in the u. S. Dollar. At this point a big question mark as to where we go next for the yen rally going into the bank of japan decision. We have much more to come. This is bloomberg. Get help reaching your goals with j. P. Morgan wealth plan, a digital money coach in the chase mobile® app. Use it to set and track your goals, big and small. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan wealth management. Annabelle the symposium is underway here in hong kong and it is one of the largest air cargo events. Lets discuss with our next guest who runs aircraft atlas worldwide which has a fleet of over 110 cargo and passenger aircraft. Joining us is ceo michael steen. Its been such a crazy few years for this sector, or this industry. You had covid, you had the pullback postcovid as well. Where are we now in the cycle . Michael thank you for having me. That is a really good question. We have had some really interesting years behind us with record demand for airfreight. Basically it supporting the Global Economy and saving lives with all the ppe shipments going on. Air shipment represent about 1 of global volumes. Where we are now after a very turbulent 2023 when demand dropped significantly is the market has bounced back and we are better this year and 4 better than 2019. So demand has come back but there are still some challenges from a macroeconomic perspective. Annabelle what are the challenges and how is that impacting you . Michael inflation of course around the world. We are seeing that in several markets. There is both a cyclical and structural change as well. On the cyclical side we see any upturn in airfreight demand lasts for about three years and then follows a downturn which last 12 to 18 months. We are coming out of that cycle now. There has been one shining light during that time, and that is the structural change in demand with ecommerce. We are seeing b to b, to b to c. The other changes we are losing capacity in airfreight market as well. Demand is continuing to grow with an average of about 4 yearoveryear. We are going to see supply not keeping up with that demand. Annabelle when you talk about the consumer segment growing it makes me think of some of the Big Powerhouse Manufacturing Companies located in china. What readthrough are you getting on chinas Economic Health and the airfreight activity as a result . Michael when it comes to Industrial Production that is still not at the level we are expecting. We have seen the pmi index at 49, so still not in a growth mode. But we expect that will change throughout the year and we will see growth coming out to china. When it comes to ecommerce it is growing rapidly. Ecommerce represents 18 of all Global Retail sales and is growing at about 8 to 9 a year. It is significant demand coming out of various markets and of course china is a very important market. China represents about 30 of global airfreight. Haidi in terms of the overlay of geopolitical tensions, it feels like we talked about every year but particular going into a politics and election heavy year, how does that play out for your business and some of the sensitivity that you deal with . Michael thank you for the question. We operate to 70 countries around the world, more than 220 destinations. So there will always be some form of geopolitical disruption affecting the industry. We are of course looking at capitalizing that where we can. And obviously be resilient where we can as well. We have diversified our business very much over the years not only geographically but service wise. I think we are very well positioned to deal with those challenges as they are happening. The impact it will have on the economy, we have to wait and see. We have seen disruption in previous years as well but we are very well positioned as a company. Haidi we have seen sea shippers confronting myriad challenges at the moment, be it the houthi attacks, supply chain disruptions, the drought in the panama canal. Has that has any kind of benefit for your business . Michael it has had some for us as a company and the air business in general. The suez canal has a Significant Impact on overall resources. You can count on up to 30 more capacity needed as far as ships are concerned, 30 more containers, 30 more resources. That has a profound impact on the ability to serve market. Airfreight only represent about 1 to 1. 5 of total volume. Ocean freight is much larger. Inventory is being depleted over time and that will mean there will be higher demand for airfreight. Annabelle when it comes to higher demand for airfreight, you would be a key player in that. It does this is estate some expansion perhaps. Given the recent weakness that we know we had in the industry last year, are you using that as an opportunity to buy any secondhand cargo jets in the market . Michael we have been quite active when it comes to buying aircraft as well. Over the past four years we have taken delivery of eight new widebody freighters. We have taken on six 777s. Weve brought up to 10 747400s off lease. The wide body aircraft, theres about 650 freighters in the world. We have more than 10 of that capacity ourselves. Were aiming to grow that fleet. Out of those 650 global freighters about 125 are coming up to time and age. That goes back to my question that annabelle when it comes to other opportunities are you looking at anything, growing through m a . Michael we have over the years looked at two areas of growth. One is organic growth, expanding our fleet. We have quite we have acquired companies as well. We are looking to expand our global footprint and services. With the very strong backing of our investors. We think we are very well positioned to capitalize. Haidi what one of the strategies be to put be potentially to take more control over jvs . Michael we are looking at jvs as well as other forms of collaboration models. We have a couple in place with dhl express and Polar Air Cargo which has been in place since 2008 and they were both successful in expanding service capability. We have a joint venture together with bain Capital Credit where we acquire aircraft and lease those out. There are several opportunities and ways for us to expand. Annabelle that was michael steen, ceo at atlas and. Atlus air. Watching boeing supplies in asia after the u. S. National Transportation Safety board says it wil hold a hearing in august in its investigation into boeings door plug blowout. They are facing not just legal issues but a crisis in confidence as airways turn away from buying their jets. Major american carriers have flagged aircraft because of boeings slowed output. Cathay pacific is that the postits first annual net income since 2019 when it reports earnings later wednesday. That is as a pickup in travel demand and elevated ticket prices help the bottom line. Air passenger traffic has risen steadily since china fully reopened borders a year ago. Still, demand has not kept pace with the airlines increase in flight capacity. Intel shares are falling in extended trading after bloomberg reported the pentagon has pulled out of a plan to spend as much as 2. 5 billion dollars on a chip grant for the company. Sources say the move forces the Commerce Department to make up for the shortfall. It also threatens to limit the amount intel has been expecting to get in federal funding. You can watch us live and see our past interviews on tv. You can also dive into any of the securities or bloomberg functions we talk about, plus become part of the conversation by sending us instant messages during our shows. This is for bloomberg subscribers only. Check it out at tv. Haidi the latest corporate stories, simon cooper are front runners to replace bill winters is leaving the bank as part of a reshuffle. Simon cooper has lent the corporate commercial and Institutional Banking division for eight years. According to a statement he is exiting to pursue other interests. Sources have said the bank plans to strip out a series of regional reporting lines in the division which could lead to several executives losing their jobs. Shares of coinbase slipping after hours after the Crypto Exchange unveiled plans to offer 1 billion in convertible senior notes to repay existing debt. It will be sold through a private offering to institutional investors. For those to be converted into cash, coinbase shares, or a combination. Annabelle the eli lilly ceo says the company is working on expanding the supply of its weight loss drug as the global obesity rate increases. He spoke with Caroline Hyde at the Economic Club of new york about their plans. We have only launched in three markets right now in full form. Were working on expanding supply. In 2022 when we launched in the u. S. , between lily and novo combined we probably made enough for about 12 Million People on the planet. And two weeks ago the w. H. O. Said there were one billion people with obesity. So we are a little short of their goal. We set about building new facilities. They are buying companies and we are partnering with other companies to expand. But the interesting thing is these are proteins. They are a very specific kind of medicine that is complicated. And we have put it in an injectable system. We cannot purify, we cannot ensure it is pure at the end of the process. We have to make sure the whole process is. So it is an ultraclean condition, then we put it in an injection device. That kind of system in the whole world, 80 of the capacity is already controlled by lily and novo. There are not built sites to go buy or rent to make more. We have to make them ourselves. So we are doing that. We currently have six manufacturing facilities under production or being stood up. We had 14 before, so that is a 15 increase. We will probably have a few more by the end of the year. We are going as hard as we can. Time is the constraint. Those buildings take three or four years from announcement to come online. Right now in the u. S. There is frustration because there are shortages of these but we have not even introduced them and most of europe or the world. So, more to do. One project we are working on could change that which is an oral solid. It is not a protein, it is a chemistry, and it is not in that injectable device which is so difficult to make, it is a pressed tablet. The world is awash in those capacities. Should the drug be successful we should be able to tap into quite a bit more supply. Which will be good for the u. S. But even better for places like brazil, mexico, or china. Haidi eli lilly ceo dave ricks there. Take a look at how we are setting up when it comes to futures trading. U. S. Futures are looking like this as markets have digested that mixed cpi report. A little softer when it comes to trading for s p futures. Taiwan seeing a more upside of. 3 . Watching a bit of pressure when it comes to china stocks despite this rally sending a number of benchmarks past 20 from the lows. Its an encouraging signal that the badly battered market may be headed towards a more sustainable uptrend after what has been a series of false dawns over detail of what the broader support looks like from policymakers. But there have been signs of more constructive positioning. That is just about it for daybreak asia. Markets coverage continues. 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 half an hour away from the open of trade in hong kong. You are watching the china show. Our top stories, asian stocks