Approaching midmorning across the asiapacific. Session highs on the benchmark itself. We are looking at emerging markets index, the adage when china starts to go one way, that is where most things go. We are going the opposite way as far as the china story. At least the last 18 months or so, quite a rally that is forming. Weve seen this movie before. It feels a little bit more different when you juxtapose the amount of measures and announcements and pronouncements and promises that have been laid out the past two weeks or so. Whether the data at some point sort of moves with the rhetoric, yet to be seen because as we were pointing out the pmi numbers are underscoring the need for why we are seeing more of this out of beijing. Romaine the thing is we got the beige book, reinforcing what goes on in every Industry Group apart from essentially going out and traveling a little bit. Otherwise, a dismal sort of showing. Chinese people cutting back on everything but travel and restaurants, they went on to say, the chinese beige book, that except for the two that i mentioned weve got weakening revenue and Profit Margins compared even with june. It does not bode well and i guess the pmi manufacturing side did reinforce all of this. What do we make of this . Ultimately we are waiting for stimulus. Are we going to get it . At about 3 00 beijing time, an announcement is coming outs and what are they going to say . What is on the wish list . We want concrete measures. Weve heard the talk, we want the walk. David arguably i would say weve gotten more tangible announcements. Its been about two weeks since we started to see the drip feed of support measures and since the politburo meeting to change the narrative. Property is a different conversation because thats a longterm story but yes, we are getting more rhetoric, it is multidepartment, which we will get to ingest a minute. With our colleague john. 3 00 p. M. Is the big one today. We understand officials are set to give us a briefing on boosting consumption measures on top of already what was outlined on today. As it pertains to the light industry. That is one part to the reflation conversation that takes us straight into japan. The big drop that we had following the boj announcement on friday, the worst day for japanese bonds in about three years. We are continuing to see that today and then were also getting the boj coming in with an unscheduled bond buying operation one hour back. Rishaad yeah, i mean, the thing is, youve made a great sense of it but you saw the yen which told the story of head scratching going on. What does this mean . 5 was a reference point, that is how it is being taken. The market is being tested constantly on this as well. Lets not forget the rally in the u. S. That is something which has been unbelievable. S p 500, 5 off record highs. You know, where do we go . Its a fear of missing out rally and you do not get out. To go towards china and we saw a great week for equities. Does that pertain to further games, that is the question as well. Its almost like Mission Accomplished with cmi cpi according to one commentator and lets go for it. David there seem to be more viable alternatives now to the s p, not that that changes the mind of some people of course. China is a big part of that. China is in a different part of its cycle. We have reasons to actually act on the information. Japan is giving a little bit more, up 2 on the nikkei 225. What messes with the math is fixed income was talked about as your haven this year following how bad 2022 was for fixed income. Might the boj have certainly messed with the narrative . In some ways, anchoring a blooming bull market. We will get to that a moment. This is the state of markets, up in equity markets, flat in u. S. Futures, dollar is mixed. It still the japan story. The five year, we are up about 17, 17. Up three basis points to 17 basis points above zero on the fiveyear. Back above zero on the two year yield. In japan. First time i believe going back a couple of months. We will get you the statistic in just a moment. Lets get the latest on the china story with pmi numbers coming through. Slightly better on manufacturing, weaker on services. John leo is with us, greater executive editor in beijing. What can we glean from the latest set of numbers . John well, these are backwards looking numbers, david. They tell us the economy continues to be weak. We are in contraction territory when it comes to manufacturing. Albeit slightly better than expected and again we see Consumption Services doing a little worse than what was expected. So that paints a picture of why the government needs to do more and also explains why the market right now is focused on what policies the government is going to announce. So looking forward, much more than looking backwards at what the data showed has happened in july. Rishaad whats on the wish list . I was asking david a while ago, what do people want out of the administration . There are certain constraints, serious constraints physically speaking, Monetary Policy is a key. What happens as well . John the number one concern continues to be real estate. We had the housing minister come out last week to say there was going to be more done. We have an article in the Chinese Media this morning saying more policies will be taken to support real estate in the biggest cities. Weve been waiting for that, waiting for the government to finally allow some loosening in beijing, the tier one cities. That looks like it is closer. I think thats giving the market a lot of confidence at this point. Rishaad always a pleasure, john, Greater ChinaSenior Executive editor in beijing. Paul is cofounder of and bmg group. Great to see you. Whats going on . What is troubling you . Paul i think this whole china and american thing is a great contrast. A great set up. Because from what we can see, weve got the fed running around and theyve basically got i dont know if its a bazooka or giant hammer, but they are trying to solve it with kind of brute force and probably quite a lot of ignorance. In china, weve got a calibrated approach. The pboc are wielding a scalpel very gently. The markets being markets, they understand what is happening when the giant bazooka comes in. They dont necessarily understand devastating consequences afterwards. But they do not understand the drip, drip kind of approach from the pboc. A little bit at times from the pboc. Let us to an interesting place in markets were got . Its assuming 100 chance of soft landing and growth, which we think is actually still the least likely outcome. We are starting to see assumptions that china growth has stalled whereas we think actually in the medium to longer term we will get policy measures. They will just get fed in gradually because they can. China is not in a panic situation in the same way that the states was a few months ago. David would you be leaning into the equity market in china . Paul absolutely. When you look at it, obviously real estate is the thousand pound gorilla in the room but domestic consumption remains the area that we expect the pboc and policymakers in china to focus on. So we do have been continuing to lean into chinese smaller companies. We see this as a massive buying opportunity in smaller companies. And across the border in japan. Starting to look for buying and bond at these levels but in the states the buying opportunity looks like it is in treasuries and the selling opportunity looks like risk assets because the massive stimulus forced into u. S. Markets in march that everyone seems to have forgotten about is now running on fumes. And the market does not seem to be aware of that. Capital markets respond to capital and we had a huge inflow. Capital market commentators seem to be finding other reasons to keep the rally going. Rishaad so paul, ok, we had a good week. A buyers strike for chinese equities and where in the arbitration phase. It was going to have to change, something concrete now in order to get people who have money on the sidelines, waiting to come into the country to invest. Paul if we work on our thesis that chinese policymakers are not panicking and they are just tinkering with a scalpel, then actually, what we are going to see in terms of the market in the economy is really just gradual improvement. I dont think theres going to be some eureka moment for chinese markets. The question is whether there is a eureka moment for buyers because at some point, over time, as it becomes clear that there is a recovery underway, it is slow, very gradual. At some point sentiment will shift and thats when you want to be ahead of it. There is no sign that that is tomorrow. So its a buying opportunity that is probably going to be with us for a while. This is not necessarily the bottom but its a great time to be dipping your toes. Just keep adding more on any kind of lower loans, yeah. David and a lot of people to shift gears, a lot of people told Us Fixed Income is sort of the place to be. Have you seen where inflation is heading, peak inflation is overly behind us. Central banks are cutting rates. The big one on the weekend. Im wondering with all of that, with the stars aligning, with the boj coming in, the boj has unanchored the global bond market rally. Paul i think for a day or two it has and that is a fantastic buying opportunity. If you look at the boj for the last few years, whatever they have said boj helps the fed in that they do walk the walk. Hilarious incidents over the last few years where they split the markets but it turns out nothing is changed. They carry on yield curve control. So to me, this is just creating a buying opportunity in jgb but also helping to drive down the price of treasuries. So the long end of the Treasury Curve which is a referendum on what longterm growth is going to be in the states, longterm treasurys will look like a phenomenal buying opportunity at these levels. We have seen monetary and fiscal policy in japan and the states this year, sort of gradually sort of moving toward slightly more accommodative position or closer to the end of the contract should area position. And yet risk assets have flown off the back of that and bond yields, longterm, or where they were at the start of the year. If so this is a much better buying opportunity in treasuries than equities. Rishaad weve got europe here, you say do not trust the fed and trust the pboc but youve always had something against jay powell, lets not get into that. So Christine Lagarde and the ecb, are they running the car off the road . Paul absolutely. You can trust the ecb even less than the fed. What we are going to see over the next months is gradual decoupling or divergence in centralbank policy. I think emerging markets generally will be interesting because they have an opportunity to put distance between themselves and the fed. In china, we are seeing it. Their disappointment is that markets are not seeing it as quickly as they would like but i think, you know, ecb is really sort of, you know, it is changed to the same track that the fed is on, ultimately heading off a cliff. So the real problem for europe is that every time the fed creates a huge mess and it has done this consistently over the last 15 years or so if not longer. In march we saw the fed injected massive amounts of liquidity into the markets to help solve the banking crisis they created. Ecb does not have the same room for maneuvering, the same arsenal at its disposal. It does not know how to use it, so ecb is a more worrying situation. David have a good week ahead. Paul campbell, cofounder had an bmg group there. Positivity of course as we kick off the trading week. Bull market on friday. Were extending that for more percent this monday on the hstech index. Up nearly 30 from the bottom in may. A couple of levels to watch as you i guess arguably some would say this is not really a bull market. 20 from the bottom in some definition says, but nowhere near levels that we have to retest. It certainly testing those highs there. Is the highs of this year, beyond that highs of last year on the hstech index. Right now, session highs on the china index in hong kong, broadbased rally, 45 up, four down and one unchanged. Just ahead on shows, we are assessing the Central Bank Decision and impact on currencies and of course a lot of big rhetoric from last week and this is joey chu joining us in a couple of minutes to talk us through her qualms on a major markets. This is bloomberg. Good morning. The biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . David welcome back. Take the pmi numbers in our back and toss them out the windows for markets today. Its not about what was, its really more about what is being said and more lines coming through. This is the economic planner announcing plans to drive consumption, enhancing Financial Support on consumption. Recently boosting consumption credits. Investors are running with this. Consumer stocks are surging. Everything from automakers to fnb. Discretionary up two point 5 , again you do not normally see. Onshore, up 60 points. An hour into the session there. Rishaad hang seng with teams. With gains. You gotta backdrop with regards to the u. S. And the fed certainly there, a beat on inflation. Also chances of the u. S. Avoiding a recession, higher unemployment would be the cost of achieving a soft landing. Kathleen hays is with us now and those comments are coming from a leading fed hawk. Kathleen absolutely. President of the annapolis fed on cbs face the nation today, one of the leading sunday news shows in the u. S. He is up on inflation. Probably important that a hawk is saying inflation is moving in the right direction. He said it is his base case that we will be getting a slowing economy and avoiding recession. He does not think the fed can stop inflation without cost to labor market. He things unemployment will go to 4 but that would be a soft landing. He is concerned that inflation is far above target. He harkens to the big Inflation Report on friday, the pce deflator, part of the consumption spending report. He points out it is well above the 2 target no matter which measure, probably double that. The fed will hike rates if needed. Labor market in focus as jay powell said last week when the fed stopped the pause, got on the rate hiking path again. For more bigger ports, to jobs reports and Inflation Reports at least. In several Business Activity numbers before the september meeting. So the door is open to hikes. Investors think powell was dovish because he did not signal more hikes exactly. However he left the door open, that is what neil is doing two. Thats where we are but theres plenty of numbers to get in the jobs report on friday, expecting again of payroll of 200,000. A lot of estimates suggest jobs only have to rise 150,000 above to keep the Unemployment Rate where it is. 200,000 is considered on the hot side or the bed and other economists. David meanwhile although kathleen in latin america, thats a fairly important story that people might have missed. A jumbo rate cut on the weekend. Kathleen we did not play enough attention pain of attention to the rate hikes and now the costs inflation. Is back down on the headline, their target is 3 . Core is well over that. They see zero growth by the end of the year, so they are ready to move. Brazil is going to move on wednesday. They are at three and a quarter percent, 13 and a quarter i should say, just look how high all those rates are across latin america. Here is the concern. There has only been a 25 latin american bond market rally based pricing in all the cutting theyre going to have to do. The fed is not ready to cut, they may hike rates, whats that going to do . The other big thing is the bank of japan. Look where the 10 year jgb,. 6 now, up from well above the targeted. 5 after they did their tweak to icc, not a policy change, technical adjustment. Nevertheless what is going to happen to the end carry trade . Where you borrow in a low rate japanese securities and you then can take that and invest in higheryielding currencies. That is fueled a mexican peso rally, brazilian royale rally. As that unwinds on the jgb side, what is it going to mean for those rallies . Not just across latin america but globally. Big risk to em investors potentially. David Global Economics and policy editor there. As kathleen was speaking, this em rally is on fire right now. We will get you guys a summary of this rally that has a little bit of hot sauce if i am being honest. Plenty more ahead on that note, this is bloomberg. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com youve never heard an angry rhino. With a partner that always puts you first. Baby i hear one every night. Every night. Okay. Ill work on that. Save up to 500 on the new sleep number® smart bed. Plus, 60 month financing on most smart beds. Shop now only at sleep number®. David welcome back. It can be confusing because there is a ton of reports, rhetoric and official announcements included out of china today. The risk rally is continuing. On the developer front, securities journal reporting today, we are looking at possibly more easing measures in big cities, in big cities. That is according to the securities times to be specific. Country garden is rallying hard including beijing. The other story that is all of these measures being put in place to boost consumption. There is a briefing today and i will leave you with a look at the jgb market continuing to dislocate the spine of the boj coming i it is certainly possible that we will raise funds again at the september meeting. We have an open mind as to what the decisions will be in september and subsequent meetings. I want to stress that the decision today to tweak the y cc is not a step towards normalization. The aim is to enhance the sustainability of the monetary easing. We are comfortable cutting rates when we are comfortable cutting rates. That wont be this year i dont inc. Rishaad there you go. The rate policy outlook. A quick look at the japanese market as it heads to lunch break. Exporters are leading the advanced. There was adjustment of the yield curve control program perhaps relinquishing some of the restrictions of it. Anyway they are off for lunch and we have the yen there at 141. 53. The dollar is gaining. David if you place the bet really on actual and not the end. We were 140 yesterday and 149, 138 today. Dont get me started in a couple of h