Transcripts For BLOOMBERG Bloomberg 20240704

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 Peoples Congress 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 to overshoot 150. In this time its easier because the fed rate cuts will happen. Yvonne our senior japan economist for Bloomberg Economics joining us out of tokyo this morning. San francisco fed president mary daly says the central bank is in their ready position to adjust rates when needed. She also told bloombergs wall street week that consumer straight is keeping policymakers alert for sustained price pressures. Consumers have just stayed in the game. They continue to spend, they continue to want to participate in the economy. That has spurred ongoing growth, and that has kept inflation a little bit higher for longer than we wouldve thought. But overall, the news is good. Yes, we absolutely see the challenges that families face when they have to pay higher borrowing costs. But we also know that what they really want us to do is bring inflation down. I have a very big district, nine states. You could travel anywhere in the indicted states. Whats your number one problem, inflation. Thats what people are focused on and thats what our job is. David our people for people in financial media, the number one issue is rate cuts. We work for the american people, not for markets. David in your economic projections, you have three for the year. Thats a projection, not a promise. Some people think you should have more, some think you should have less. Wire we talking about rate cuts . The economy seems to be doing fine with the rate cuts you put in place. We put a projection out about what we need to do . Whats the expectation . Inflation comes down gradually, the labor market on the economy slow but dont tip over. It would be appropriate as inflation comes down to bring the nominal rate of interest down to make sure we are not holding on even tighter. We want to avoid the following. We want to avoid holding onto 2 , putting policy tight, then cause an unnecessary downturn that you give people lower inflation but you cost them their jobs. Thats a balancing act that means we have to be calibrating. I want to be clear. You dont see many fed officials talking about rate cuts. You see us talking about restoring price stability, bringing inflation down, looking up the full balance, being patient and methodical. I do think that message is clear, its not always what people want to hear, but it is a clear message we have and on. David there is a perception that maybe the fed is slow on Getting Started on the rate hikes. How do you avoid that problem on the way down . You said you dont want to hold to 2 and run the risk of recession, but how do you know youre on time with the cutting . We want to make sure we calibrate. We are balancing two objectives. If we let go of the reins, inflation gets stuck in that takes that scarring affect and they have it for the rest of the decade or five years against inflation expectations. All those things we dont want to happen. Its a painful tax on those who can afford to bear it. The other option is, we hold onto long, then the economy tips over, which it hasnt done yet and we want to avoid that. That is a delicate balancing act and thats why you hear me and others say we are data dependent, we are not data point dependent, we are looking up the full complement and we are agile. We are sitting in what i call the ready position. Reare ready to make moves and adjust as the the data demands us to do. The economy and policy are in a good place to do that. Mary daly speaking with wall street week host david westin. Some top geopolitical stories we are following. President biden says he is still hopeful for a temporary pause in fighting between israel and hamas, but its unlikely to start by monday as he originally stated. The white house is by and spoke with the leaders while working with the u. S. To moderate cease fire talks. The emerging agreement calls for a sixweek pause to allow for the release of hostages and prisoners, and to get a into gaza. Dozens of palestinians have been killed and injured in as shooting of convoy near northern gaza. The Associated Press sites hospital official saying israeli troops opened fire on the crowds. Israel has denied its forces depart in the shooting but says the incident is under review. President biden threatens to setback efforts to negotiate a ceasefire. Yvonne china sacher mentis Economic Growth for decades but is now experiencing a slowdown, one with for the rest of the world. Bloomberg originals as been taking a look. Chinas Economic Growth was like nothing the world had experienced before. For most of the past two decades, the countrys growth has been unstoppable. This is an economy that became the worlds factory floor by driving up tons and tons of expansion in becoming this giant manufacturing powerhouse. But then that boom story came to a halt. Stock market lost 6 trillion in value over the last year. There is the property crisis, all of the fallout. You see rises in an unemployment, particularly in the youth. The challenge for the rest of the world means that this slowdown is now cutting back on spending. Everybody from multinational countries to ordinary people have been swept up in the boom story. Thats now coming to an end. That means Louis Vuitton sells fewer handbags, apple sells fewer iphones and ports in europe dries up. In short, its bad for the Global Economy. The question is, how bad. Haslinda subscribers can watch our full documentary on the terminal or on bloomberg. Com. Still to come, we speak with online job speaking platform seek as the firm most to integrate its systems using ai. Ages ceo joins us next. This is bloomberg. Haslinda welcome back. Hong kongs latest budget release included a range of measures aimed at aimed at boosting the sluggish economy, including reinvigorating the property as well as tourism sectors. Yvonne also this city is competing for talent with rivals, especially where you are in singapore. Lets bring in peter, he is the asia ceo l online job seeking platform. You live in singapore, you are here right now, what is this look like to you . How does this war for talent play out . A lot of people in the media loves to talk about singapore versus hong kong. We see it slightly differently than the way businesses see it. In the old days it used to be real. When people came to asia from overseas, they would choose one location. They would say, should i choose hong kong, should i choose singapore. What we are finding his business is much more sophisticated if you have Large Manufacturing needs or the bay area, you will choose hong kong if you want access to the Indonesian Market you might choose singapore. So now we see people make much more considered, thoughtful choices. And its much less about i will choose this or this. Yvonne there has been a hiring slowdown. Youve reflected in your earnings a few weeks ago where you are starting to see that cut in guidance. What do you see in terms of asia . What should i expect . Globally, everywhere has come down quite a bit. Thats not unique to any market. It has been pretty global. What it represents is not necessarily an economic slowdown to recessionary levels, but a more normalization because coming out of covid, the supply chains and Everything Else were really tight and that created a large labor market demand that was more of a bubble. Now we are normalizing and thats happening in asia as well. From here we see market stabilizing and getting back to steady state growth, including hong kong. In particular, markets like indonesia we see very strong growth. Haslinda to set the matter is, it is a job market jungle. Hiring is taking longer. We have ai disrupting the whole thing. We have people wanting to work from home. How are Companies Looking at it . How are potential workers looking at it . Thats a big question, companies are getting much more sophisticated. They are realizing that to get the right talent, they have to put more technology at work and just getting in scanning a bunch of resumes might not be sufficient. Platforms are benefiting from the longterm trend as we develop ai and other tools across the entire region to help them find talent faster and better. Equally, jobseekers are wondering what are the best opportunities for them. They are quite picky these days, the high skilled ones are still in demand. Those high skilled ones want to find the best opportunities and they are turning to technology platforms, like ourselves, to find the right job faster for them. Haslinda for singapore, it is bracing for an aging society. How is that being reflected in the labor trends . We see this not just unique to singapore. Markets like japan, korea where we operate through job korea, and other similar markets. The aging factor is a real phenomenon. Two things are happening. One is, its creating tightness in hightech jobs because often times Older Workers arent retrained and dont have those skills. That is a very big challenge to the government in general in each of these economies. Secondly, innovative immigration policies, such as the talent scheme in hong kong, and some of the things singapore is doing plays an Important Role for top skilled talent. Lastly, things like wet the government of singapore is doing to put Older Workers to Productive Work in the Service Sector and other sectors, those are very important parts of the trend. We see it in south korea as well as singapore. Yvonne you mentioned indonesia, hong kong, we see some growth, what sectors are driving that right now, because it seems like banking is the one we are seeing. What about the rest . What we definitely see in hong kong where we speak to those two markets, hong kong, the Greater Bay Initiative in the manufacturing strength of the bay area is playing a big role in helping hong kong drive labor growth. Thats the first thing. Anything import, export. Anything based out of the bay area. The Greater Bay Initiative is driving an engine of growth for hong kong. Indonesia, quite frankly, is broadbased. It is probably the Fastest Growing economy in the entire region. In that market in that market and that country is firing up all cylinders. Yvonne where did we see them now slowdown when it comes to hiring . Quex you mentioned banking across the region, hightech, peer tech. Tech platforms you report on the layoffs globally and in the region, thats a real phenomenon. We see the tech sector higher less and less over the last two years. Haslinda if im trying to stay in the job market, how do i do this in the midst of the revolution in for a 14 year role looking to ensure a job in his her later years, which should they be doing . If you are looking for a job, you should come to jobs and take a look. Im sure we have anchor positions across the region just for you. Having said that, the challenge for Older Workers, in fact, many workers, irrespective of age is skills. The skills are changing rapidly. And increasingly, employers are looking to certify skills before you even start the job. In fact, during the interview process. The one piece of advice i give to any job seeker is, what is the role or types of roles you want and do you have the skills to get there, if you dont, go get them. Invest in yourself, whether its governmental schemes or private schemes, theres many opportunities to reskill. But skills, are becoming an ai world, where trust and verification is important. Trust, verification and skills is critical for the next five to 10 years. Yvonne how are you incorporating aia . Is a brand, we are not wellknown in asia, but we are the largest tech that forms in the region. We have been working hard to actually create a single platform. We were built through acquisition over many years. We spent about 200 million on a program that just completed. What is capable now as we have an ai powered platform for every hired to find the right talent in every job seeker to find the right role. We have over 200 year adding every day with a team of 200 engineers across the region. Yvonne it will be much faster to find a job. Thank you, our ages ceo joining us in hong kong. Weve got plenty more ahead. This is bloomberg. 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 i would say weve gotten of frothy levels. I wouldnt be surprised to see some correction and some consolidation. Im very low activity picked corn the highway because i think this is the discovery. Haslinda Galaxy Digital found founder. Bitcoin is still trading at the 6000 level. But, fallen off somewhat from the six t4 that we saw down 7 10 of 1 . They are playing catchup in the negative down about one point 5 . Blackrock ishares, bitcoin trusts saw a record 612 million of inflows on wednesday. They expect that to continue. We could see further upside for bitcoin and the others. Yvonne bitcoin vote now is back. Take a look at those inflows we saw at blackrock, bitcoin. Bitcoin trust for ishares. The biggest boeing session hall that weve seen. Breaking the record that we saw the previous day. The momentum is still there. It looks like we will see how things go when it comes to the price back at 206 to 1000. We start next week. Its a new china show. Two hours long. Long headline of guests. A countdown to mpc. Make sure to check it out. 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. I dont want you to move. Constant contact. Im gonna miss you so much. You realize well have internet waiting for us at the new place, right . 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