Index take a look at where japan is. Up almost 2 . Perhaps the data clearing the way for gains in the stock market. At home it is about china. The pmi better than expected but contracting for five months in a row. Activity disrupted by the Lunar New Year holiday. Manufacturing stabilizing at 51. 4. It is about the npc right now. Expectations are so high. Will we see the bazooka that people are expecting . Will we see a policy pivot . What about the gdp target . Yvonne that is probably the single most important thing to watch according to our Bloomberg Economics analyst. Whether the growth target will be maintained at 5 and if that is the case, how will they deliver it . They will have to unleash more policy to reach those targets. Around 5 is what we are watching in terms of language. That is still a consensus. Is this going to spur a turnaround and continue the rally that we see in chinese equities . The npc tends to lift chinese equities. But it is a high bar. And the room for disappointment is great. Bear in mind there is data out of china that has been disappointing. Housing not improving that much despite the measures put in place. The bar is high and disappointment could be coming. Yvonne and then we have u. S. Inflation numbers. That is what is dictating the bond smart the bond markets. No surprise that we saw prices rise the most in a year given how hot the cpi print was a week ago. But it did meet expectations easing the fears, higher for longer when it comes to rates. No rush, no rush to cut rates. Is it a back half story . Repricing seems to reflect that. We would like to see more of that repricing. Right now it is repricing three cuts but it could be two. Haslinda and we heard from mary daly who said if the data justifies a rate cut the fed is prepared to move but right now the data is not suggesting any move just yet. Yvonne it does not seem so. Obviously we saw the jobless claims numbers showing a little weakness for the labor market. Look at global macro movers. Slow going. We are not seeing the volatility that we saw in the u. S. Hitting those records when it comes to u. S. Equities. And video helped that nvidia helped that again. China tempered down expectations that we could be seeing an exit from the boj. Other officials like Board Members saying it looks like we are getting closer to an exit policy. There is still some confusion but it is lifting stocks. Mixed across equities. We talked about hong kong. We are still on track when it comes to stocks for a six straight week of gains. Haslinda it is about cpi. Just breaking. Consumer price index coming in higher than anticipated. 2. 75 . The estimate was 2. 6 . Both in terms of year on year and month on month higher than anticipated. Bear in mind, it has kept rates unchanged at 6 . It wants to keep the currency stable. Yvonne focusing on South East Asia it is the ringgit and the rupiah. We did hear from the minister of the government saying the central bank might be ready to defend the currency so we are on intervention watch for the ringgit. The line at 480. We are at 473. Lets bring in jill. It was still a beat. Nonmanufacturing and manufacturing and private and public. We have to start with the factory pmi. Im looking past that number. I guess i get that it is the fifth straight month of contraction. But it is so noisy i would say forget about that one for now. We will see what the rest of the Economic Data looks like. The nonmanufacturing gauge, that was interesting that it was a bit higher than anticipated. Maybe accounting for some of the tourism spending that we saw over the lunar holiday but i would also caution look at that data when it was out a couple of weeks ago and it was also noisy because we did see a big uptick in tourism and travel around china during the holiday and an overall uptick in spending. On a person by person bases in china we are still seeing depressed levels indicating that people are traveling more but they are being more frugal. Yvonne markets are breezing through it. All they focus on is npc next week. What could satisfy markets next week . Im not sure what could ultimately make them happy. I do think at this point there is some broad consensus that likely beijing will set the target at around 5 for this year. More ambitious than last year given the higher base of comparison. To really shake things up you would need to see some kind of massive change on policy out of this npc which im not sure we are going to get. Ab you are looking at some signs that they are allocating more fiscal maybe youre looking at some signs they are allocating more fiscal. Yvonne our China Economy editor. Lets bring in Xavier Francois baraton. We have been seeing a great month for equities but i want to focus on china. It has been a good february. Are you seeing more than just momentum now in this market . Xavier we are definitely encouraged by some of the latest data particularly in the uptick. Consumer confidence. And the slew of measures that the pboc and the Chinese Government have been announcing these past few weeks. Cutting ratios 50 basis points. The cut in crime rates by 25 the cut in prime rates by 25. There is a sense of urgency. We have the npc coming next week. While we manage expectations and would agree that we should not expect any form of major bazooka stimulus, still piecemeal, but we will see the confirmation of the progress agenda, progress mindset. Target not so far from 5 and some additional measures with regards to the stock markets, stabilizing again and again the Property Market and home prices. And finally we think it is crucial for us, the Consumer Confidence and spending. The chinese Lunar New Year holidays were encouraging in terms of travel but less so in terms of expenses and capital but nonetheless heading in the right direction. And justified from the perspective a better positioning on chinese stocks. Yvonne is it the policy or do you need policy and earnings . Xavier eventually you definitely need earnings and a shift in the trajectory. Usually stock markets will react six months ahead of the actual hard data revisions and i think that is what is happening. This has yet to be confirmed with the actual revisions. But there are a lot of positive aspects that are still out there like savings, the consumer has plenty. External demand has been weak as well as internal demand. But the chinese economy has also been investing in the green economy, the green technology. And it is a tail wind quite clearly. Haslinda a technical bull run in china should be easy because of the low base. It is what happens after that . Why should investors be piling into china when there are other options like india, and even indonesia . Xavier you are right and i would not we are overweight india and overweight japan for various reasons. And i take and i think taking a step back for investors it means you have to diversify. Especially these days. Stock market fits stock markets are showing some exuberance. We are approaching a soft landing and it is not going to be an easy one. Stock markets are on autopilot. We are entering a zone of turbulence. Stock markets have been depressed about china for more than a year and valuations are attractive. That means for us that the chinese authorities will be announcing some additional measures albeit piecemeal. They will show that there is a sense of urgency of making sure there is not some form of deflationary sentiment. Yvonne you talk about liking japan. It is up 17 on the year. With expectations of an exit from the boj, the yen may be heading higher. Xavier we remain overweight on japan and we have been for over a year. And the reason, it shifted from earnings and cycle to more structural patterns that we see and it is clearly a rerating of japanese stocks that we are considering here. With the exit of the zero policy by the boj which may happen in q2 though governor ueda was cautious about that we think it is definitely a mid2024 event. We also see greater focus on equity, and it is not something we have seen and japan for probably 23 decades. For us, there is more to come and it justifies being overweight. Yvonne equities have been the standout year to date. And even outpacing what we see and bond performance. Everyone was saying that bonds are back. When can bonds reassert themselves again . Xavier bonds remain totally relevant for investors. At the moment, investors have probably still a bit too much cash that they are hesitating to invest in the stock market that looks pretty strong and pretty robust. They should invest this cash into bonds. When you look at the u. S. 10 year, for instance, after the more volatile cpi data, we have seen the revision of the fed cut expectations to three times this year. Yvonne is there a chance they might not hike at all this year . Xavier our scenario is a true soft landing. The market is pricing something more than that. A little bit of a golden pass where productivity would help mitigate these still very strong wages we see and that are holding up the Services Inflation in particular. Haslinda what are the chances the fed may cut just twice rather than three times . Xavier well, there are multiple scenarios but i think the fact that this time it is very data dependent. Not a linear series of cuts we have usually been seeing when facing a short the celebration of the economy a short seller deceleration of the economy. Services inflation is more resident. There has been plenty of funny affects in january with the seasonality. I think we need to think that it could be probably less than three cuts. In the near term, if the job markets remain robust but maybe more so if we see an economic and earnings slowdown. Haslinda noise in china and in the u. S. As well. Xavier francois baraton, global cio at hsbc global asset management. China gear is out for a busy week as the National PeoplesCongress Prepares to meet. We will look at what is on the agenda next. Keep it here with us. This is bloomberg. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh haslinda chinas top leaders has pledged to meet economic targets as the politburo met ahead of next weeks National Peoples congress. Stephen engle looks at the many challenges faced by leaders gathering in beijing. The National Peoples congress is chinas annual session of parliament convened usually every spring in the great hall of the people next to Tiananmen Square in central beijing. The npc sets the political agenda for the year ahead when the nearly free thousand delegates from around the country get your marching orders on day one in the form of a lengthy work report from the premier. While regarded as the highest organ of state power, the npc nevertheless operates under the direction of the coming is party of china. The npc by design legislates and executes the directives of the party. The roughly two week affair is colloquially known as the two sessions. The npc is preceded by a gathering of the chinese peoples political consultant of conference. An advisory body supposedly representing views from the Broader Society and business community. Even though Party Membership is not required to be in this, it is nevertheless directly supervised by the communist party. Yvonne that was Stephen Engle with an alphabet soup of meetings happening next week. As we look ahead to the npc the focus will be on xi jinping and his tight control over the time economy as he begins to serve the third term making him a bigger target as chinas slowdown hits Household Wealth and protests rise. Lets get to our china government editor joining us on the story. Xi has centralized all powers but with all the power in the world he cannot make everybody happy. With the economic slowdown people are feeling pain. We are seeing a rise in protests, across china was sleep economic in nature. Yvonne he has consolidated a lot of power. At what point does it impact the president . As far as we know he is not threatened immediately and he has built a lot of loyalists around him. The Party Structure is in tact but he would be wise to Pay Attention to the general discontent on the street as more people are having their paychecks cut and expressing discontent with local governments that cannot afford to pay them as much as before. Haslinda is it all about communication . A lack of direction . A lack of a roadmap of how to get to the targets that he has set forward for china . G champagne has said he want xi has said he wants china to be on a more stable path and he has called this a highquality development. But so far it is a load of words. Generally it means that china wants to climb up the chain to develop more sustainable and high technology. People are not feeling the immediate benefits from that. And with a lack of direction and feeling that xi is personally steering the economy in this direction, more people are blaming him directly. We have seen online that there have been more people commenting directly on his failure to immediately revive the chinese economy. Yvonne thank you so much, alan wong, our china government editor joining us in our hong kong studios. Next week we are introducing a note a new program. The t. R. Y. Noshow. Your definitive source for news and analysis. We will bring you all the market moves and indepth discussions with key players. It is a two hour show. The china show premieres at 9 00 monday in hong kong. This is bloomberg. Haslinda it looks like asian markets are looking for catalysts. Muted and cautious even though wall street ended up at a new high. Perhaps trepidation the nikkei two to five having a gangbusters session. It is already the bestperforming market. Up about 17 year to date and expectations are that it can go higher from here. Yvonne it just keeps going. There is a lot of anticipation when it comes to the npc and whether we could actually see this continued rally in china. Taking a breather today. Youre watching the ev sector. There are reports that the u. S. Will be investigating security risks in chinas cars considering curbs. We are also watching some of these green stocks as well. Vowing to build new energy facilities. Haslinda still to come, the bank of japan governor moves to temper expectations. Details on this warning expectation. This is bloomberg. When i was your age, we never had anything like this. What . Wifi . Wifi that works all over the house, even the basement. The basement. So i can finally throw that party. And invite shannon barnes. Dream do come true. Xfinity gives you reliable wifi with walltowall coverage on all your devices, even when everyone is online. Maybe well even get married one day. I wonder what i will be doing . Probably still living here with mom and dad. Fast reliable speeds right where you need them. Thats walltowall wifi on the xfinity 10g network. 11 29 a. M. In tokyo. Japanese markets heading to the lunch break period looks like theres an appetite japanese as we kick off the month of march. We are close to 2 for your nikkei 225. Continuing to see those record highs and new fresh eyes being reached. Topix is doing well. We are seeing 1 gains. Dollaryen, we have come up a little bit this week on the back of some of the comments we have heard. Jgb yields are taking one basis point higher. Tapia expectations, the subtle banks price target is not yet in sight. Thats tempering speculation since 2007 is just around the corner. As the three scenarios for the bojs expected pivot. Take us through those possible possibilities. Thank you. What i wanted to say in my report was, the jury is still out for the bojs pivot. Though the markets are appearing in april or march. My baseline scenario, the first scenario is that shell live to vick which is my longheld they sign. As an economist i will say, the bank of japan underscores the importance of the negotiation. But, as an economist, when the boj can check the positive effects, the positive push from those negotiations, they have to wait until july for the price and wages macro data. Also, the recent Global Economy conditions addressed by gdp conditions is making it more necessary for the bank of japan. On top of that, the boj has a very painful institutional memory for its unconventional policy they were criticizing it was too hasty and given for the first part of easing, they took about six months to finally exit after the governor appointed the potential of the exit. On the second scenario is not april, rather i would say, the marchs second likely, because what i got from the message in the januarys meeting is the boj somehow had the negative interest rates, probably they interviewed from their interview and researchers are convinced that in the shortterm, there is a rigid core cpi gain supported. Macro data cast doubts on that. I know its a market consensus and its possible, but given that there is an april tokyo cpi data released just a few hours before the bojs policy decision. So i think they want to avoid undershooting risks for that reading. Also, if they move early, they could do march, and if they want to do cautiously, they can do july. Yvonne you are on the cautious cam, how do you describe the economy . As you mentioned, inflation is still looking on the hotter side. How should we interpret the economy now . I think its fair to say that the gdp numbers for japan and especially did the the domestic demand is falling for the third consecutive quarter in gdp. Also, the january national cpi sounds like it has overshot the economist expectations due to the weird handling of the statistical source by the packages. They kind of stopped surveying the prices since the onset of the pandemic but they recorded from this year, meaning a fouryear growth is suddenly tallied in this cpi figures. Besides that, the january cpi kassem doubt with the seasonally adjusted basis i think was falling. Theres a job data released today. The unemployment rates ticked down, but still it says their prepandemic time labor market was tighter. It doesnt budge a lot to the bank of japan. Haslinda what does it mean, where does it go . Every ongoing meeting, the boj meeting will be market meeting. If they move in march, its a surprise that will make the yen appreciate, but there will be more dovish surprises from the boj that leads to more further depreciation. At the same time, the similar mechanism will happen, like what happened last year, although dollaryen tried