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Speaker 1: Good morning.

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Speaker 2: I'm Brian Curtis and I'm Doug Prisner. Here are the

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Speaker 2: stories we're following today.

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Speaker 3: Well, a new medical emergency for the British monarchy. Let's

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Speaker 3: get to Dan Schwartzman in New York with more.

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Speaker 1: Dan Hey.

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Speaker 4: Brian Buckingham Palace says that King Charles is being treated

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Speaker 4: for an unspecified form of cancer and will be stepping

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Speaker 4: back from public duties. The cancer was discovered late in

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Speaker 4: January while the seventy five year old was in the

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Speaker 4: hospital being treated for an enlarged prostate. The pass only

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Speaker 4: has said that the cancer is not related to that

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Speaker 4: prostate condition. President Biden has expressed his concern and says

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Speaker 4: he will reach out to the king, whom he met

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Speaker 4: back in July. Charles has only been king since September

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Speaker 4: after the death of his mother, Queen Elizabeth. Northern California

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Speaker 4: is trying to dig out from the storms. Southern California

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Speaker 4: is still under emergency warnings. Bloomberg's Had Baxter reports from

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Speaker 4: San Francisco.

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Speaker 5: Four days of the atmospheric river weather conditions were the

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Speaker 5: worst coming over the weekend. Some Bay Area peaks got

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Speaker 5: one hundred mile per hour winds, not that high for

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Speaker 5: most of US, and the power outages were widespread. At

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Speaker 5: one point, as much as half of Silicon Valley customers

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Speaker 5: lost power at our home eighteen hours without power of

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Speaker 5: things of ease now hopefully, although tragically two people did

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Speaker 5: die from falling trees. The focus now has gone to

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Speaker 5: southern California, where there is flooding and power outages, as

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Speaker 5: well as landslides in the Hollywood Hills and Santa Monica Mountains.

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Speaker 5: There are still evacuation orders in place and several rescues

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Speaker 5: have had to happen in San Francisco. I'm at Baxter Bloomberg.

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Speaker 6: Radio thanks Ed.

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Speaker 4: Secretary of State Anthony blinkoln has kicked off his fifth

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Speaker 4: visit to the Middle East since Samasa's attack of Israel

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Speaker 4: back in October, and he started it with a meeting

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Speaker 4: with Saudi Arabia's Crown Prince Mohammed bin Salman. Blincoln will

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Speaker 4: visit Egypt cutter in Israel also on this latest trip. Meanwhile,

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Speaker 4: ceasefire talks continue, with the US cutter in Egypt drawing

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Speaker 4: up a proposal that would see a stop in hostilities

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Speaker 4: for several weeks, the phased release of remaining hostages Both

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Speaker 4: House Republican leaders and GOP presidential frontrunner Donald Trump have

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Speaker 4: rejected a bipartisan Senate deal to impose new border restrictions

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Speaker 4: while tying in billions of dollars of aid to Ukraine.

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Speaker 4: Speaker Mike Johnson has called the deal quote dead on

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Speaker 4: arrival and a wasted time. Both Senate leaders Chuck Schumer

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Speaker 4: and Mitch McConnell back the bill, which allows the Department

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Speaker 4: of Homeland Security to start turning away asylum seekers whenever

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Speaker 4: encounters reached four thousand daily for a week. The bill

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Speaker 4: would also tough in qualifications to seek asylum in the country.

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Speaker 4: Johnson and other Republicans are pushing for much stricter immigration

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Speaker 4: policies in exchange unlocked tens of billions of.

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Speaker 6: Dollars of aid to Ukraine.

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Speaker 4: The Wall Street Journal reports that Republican presidential candidate Nikki

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Speaker 4: Haley has requested Secret Service protection after receiving threats. Haley's

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Speaker 4: campaign has not detailed what threats led to the request.

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Speaker 4: The Secretary of Homeland Security has the authority to grant

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Speaker 4: a protective detail after consulting with a Congressional advisory committee.

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Speaker 4: Haley has previously talked about a swatting episode that occurred

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Speaker 4: back in December that sent law enforcement to her South

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Speaker 4: Carolina home.

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Speaker 6: The former governor, though was not home at the time.

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Speaker 4: Global News twenty four hours a day and whenever you

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Speaker 4: want it with Bloomberg News.

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Speaker 6: Now. I'm Dan Schwartzman, and this is Bloomberg Brian.

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Speaker 3: Dan, thanks very much. Six minutes past the hour. It's

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Speaker 3: time now for the top business stories of the hour.

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Speaker 3: China is said to be tightening trading restrictions on domestic

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Speaker 3: institutional investors and some offshore units. Bloomberg Yvon Mann has

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Speaker 3: more on this story from Hong Kong.

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Speaker 7: We hear Chinese officials have imposed caps on some brokerages

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Speaker 7: cross border total return swaps with clients. This is a

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Speaker 7: channel that can be used by Chinese investors to short

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Speaker 7: Hong Kong stocks. At the same time, Chinese brokers who

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Speaker 7: use a channel to buy mainland shares for their offshore

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Speaker 7: units were told not to reduce their positions. Also, we

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Speaker 7: hear some hedge funds have been banned from placing cell

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Speaker 7: orders completely, and still others have been barred from cutting

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Speaker 7: stock positions in leverage funds. Economists say this could provide

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Speaker 7: some short term relief, but may be counter productive as

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Speaker 7: investors worry about their ability to exit the market in

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Speaker 7: Hong Kong. I'm von Mann Bloomberg Radio.

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Speaker 2: Well here in the States, we mentioned a moment ago

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Speaker 2: how strong the economic news of the day was US

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Speaker 2: services expanding by the most in four months during the

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Speaker 2: month of January. Now that follows last Friday's surprisingly strong

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Speaker 2: jobs report. Both of these data points kind of spoil

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Speaker 2: the notion of a federate cut in March. We heard

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Speaker 2: today from the head of the Chicago FED, Austin Goulesby.

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Speaker 2: He was saying, it's important to consider all aspects of

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Speaker 2: the data.

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Speaker 8: We just got to be mindful in seeing these big

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Speaker 8: strong jobs numbers and big GDP numbers that they do

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Speaker 8: not have to mean overheating in the traditional sense, if

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Speaker 8: the supply side is moving around.

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Speaker 2: That is Austin gouls me the head of the Chicago FED.

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Speaker 2: He went on to say that he will not commit

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Speaker 2: to any specific decision on rate policy before the Fed's

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Speaker 2: March meeting.

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Speaker 3: Bright Well, US and Chinese officials are set to meet

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Speaker 3: in Beijing for another round of talks on economic issues.

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Speaker 1: That's coming up this week.

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Speaker 3: We hear a five person delegation from the US Treasury,

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Speaker 3: we'll meet with Chinese counterparts. The discussions mark another round

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Speaker 3: of the Economic Working Group that was established last year.

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Speaker 3: The talks will cover topics including the macroeconomic outlook the

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Speaker 3: two countries, investment screening regimes, and coordination on debt and

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Speaker 3: climate change. Let's get to our guest now in the

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Speaker 3: studios with US Live. It's Eric jew a Bloombery economists

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Speaker 3: covering China and Hong Kong. Eric, thanks very much for

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Speaker 3: sneaking into our studios here with us this morning. So look,

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Speaker 3: I mean, we all know that the stock market is

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Speaker 3: not the best barometer for judging what's happening with the

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Speaker 3: Chinese economy, but it is still a useful indicator. Small

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Speaker 3: cap stocks hit very hard. The CSI one thousand index

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Speaker 3: is down twenty seven percent for the year. Now that's

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Speaker 3: an extraordinary number. The benchmark is only down three percent,

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Speaker 3: and we all know that the benchmark.

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Speaker 1: Itself has been down.

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Speaker 3: But we're thinking that perhaps if you don't have support

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Speaker 3: from the so called national team, then you hit even harder,

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Speaker 3: like we see with that.

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Speaker 1: Twenty seven percent figure. And what does that tell us

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Speaker 1: about the economy?

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Speaker 9: Yeah, I think I think you're partly right that saw

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Speaker 9: market not the you know, the best parameter you know

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Speaker 9: to to to see what's going on in China. But

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Speaker 9: I think at least it's a good parameter of what's

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Speaker 9: a sentiment, especially I'm shore China. I think there used

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Speaker 9: to be a joke saying the only two things which

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Speaker 9: is still telling the truths in China is stom market

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Speaker 9: and the football China soccer team. So yeah, so you see,

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Speaker 9: so yeah, I mean it's it's a it's kind of

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Speaker 9: a real time you know, monitor of the sentiment in China,

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Speaker 9: and I think that the tumble is very much telling

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Speaker 9: the truth that actually invest at least the investor investors

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Speaker 9: are increasing being disappointed on how the government irresponding to

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Speaker 9: the economy, to the you know confidence and yeah, the

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Speaker 9: national team is probably giving some hands, but we don't

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Speaker 9: see that's a long term solution. It's probably helping to

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Speaker 9: you know, stabilize a bit in short term, but they're

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Speaker 9: not going to last long, right. We have seen last

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Speaker 9: week so after Premier League Chance said something about stabili

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Speaker 9: in the market, we see a few days of stabilization,

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Speaker 9: but too quickly, you know, renew the tumble again. So

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Speaker 9: I think they such measures the national team, it's not

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Speaker 9: really addressing the fundamental underlying issue why it's calling in

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Speaker 9: the low sentiment in China, and unless a government they're

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Speaker 9: really you know, doing something to addressing those issues, I

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Speaker 9: don't think we're going to see a sustainable rebound in

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Speaker 9: the stock market.

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Speaker 2: It's very interesting you make that point. I was looking

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Speaker 2: at a piece citing Goldman Sachs data. Actually the firm

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Speaker 2: estimates the amount of stock buying that we have seen

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Speaker 2: on the part of the national team at about seventy

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Speaker 2: billion YU one. That would work out to be maybe

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Speaker 2: just under ten billion US over the last month. But

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Speaker 2: Goldman is going on to say that we're only about

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Speaker 2: a third of the way there, that you need a

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Speaker 2: total of about two hundred billion you want in buying

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Speaker 2: just to stabilize the market. I mean, and I'm wondering

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Speaker 2: about the message that that type of aggressive buying would send.

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Speaker 9: Yeah, as I said, I don't think that's a long

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Speaker 9: term solution. Right. You can buy by today, you can

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Speaker 9: buy a tomorrow, you can buy next week, but you

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Speaker 9: cannot buy forever.

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Speaker 6: Right.

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Speaker 3: So yeah, let me counter that though with you know,

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Speaker 3: your own team at Bloomberg Economics says that economic activity

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Speaker 3: is actually accelerating a little bit in January. It's a

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Speaker 3: rebound in production and construction. And you're citing high frequency

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Speaker 3: indicator indexes and that it's not quite at the pre

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Speaker 3: pandemic levels, but it is rising. And you say that

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Speaker 3: the Bloomberg now cast points to GDP expanding five point

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Speaker 3: five percent year on year annualized in the first quarter.

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Speaker 1: Now that's up from five point two percent growth.

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Speaker 3: But is it just too short a time for that

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Speaker 3: to actually filter through the sentiment?

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Speaker 9: Yeah, and also bear in mind, so we need to

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Speaker 9: read this data with question because it could be that

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Speaker 9: you know, factory that just Russian before trying to new

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Speaker 9: your holiday in early February, so they just guessing is

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Speaker 9: done before the holiday. So we do expect you you're

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Speaker 9: going to see more weakness in February, and that's natural

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Speaker 9: because a long disruptions from the holidays. So I think

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Speaker 9: a better gauge is that we have to combine the

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Speaker 9: first two months. You know, probably we get more hard

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Speaker 9: data in much that will give us a better picture.

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Speaker 9: But for now, yeah, some pick up in general, but

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Speaker 9: I think it's too early to be careful.

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Speaker 2: We had a guest on the program yesterday saying, when

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Speaker 2: I asked a question about trying to turn around sentiment,

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Speaker 2: the answer was very blunt. I mean, deregulate the economy.

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Speaker 6: Is there?

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Speaker 2: Do you think on the part of government officials an

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Speaker 2: experiment happening, a thought experiment on ways to to change

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Speaker 2: regulation as a way of fundamentally shifting sentiment.

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Speaker 9: Well, I think that's the expectation by the markets or

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Speaker 9: by some investors, But we are not sure if that's

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Speaker 9: what the government is thinking, because the government is thinking

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Speaker 9: you if you recall President She last week talk about

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Speaker 9: the high quality growth and stuff, So what's in his definition?

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Speaker 9: What's the high quality growth? Probably he's more focusing on

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Speaker 9: national security or you know, toughening some regulation even in

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Speaker 9: those financial sectors, trying to make it more equal among society.

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Speaker 9: So I think our excitation is probably different from what

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Speaker 9: she or what's the top officials a vision for China.

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Speaker 9: So that's that's the key. I think the key uncertain

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Speaker 9: right now at the moment.

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Speaker 1: Is President She channeling his inner mouth?

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Speaker 9: I don't know, but obviously he has a big ambition

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Speaker 9: right trying to be if not the most.

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Speaker 3: I mean I asked that, because it's it's really the

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Speaker 3: essence of that is is ideological trumping practical.

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Speaker 9: Yeah, yeah, I think it's You're true, it's he's more

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Speaker 9: you're not talking about ideolgical. But for many in Chinese

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Speaker 9: I think they're increasingly frustrated because it's for ordinary people.

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Speaker 9: For some people, it's just looks like you're calling black

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Speaker 9: white right, and you're not really telling the truth. Let's

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Speaker 9: just be honest what's going on in the country. Let's

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Speaker 9: everybody from top government to the bottom, everybody just being honest.

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Speaker 9: What's the problem we're facing now, So you don't have

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Speaker 9: to we don't buy ideology of those stuff. It's it's

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Speaker 9: just calling black white right when we don't know.

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Speaker 2: So, Eric, you referenced the Lunar New Year holiday. Do

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Speaker 2: you have expectations about how well the Chinese consumers will

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Speaker 2: hold up during this period? I mean, are there pretty

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Speaker 2: high expectations that there's going to be a fair amount

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Speaker 2: of spending.

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Speaker 3: I think the issue on that too, if I can

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Speaker 3: just put something on the back of Doug's question, is

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Speaker 3: that you know, normally you see a little bit of

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Speaker 3: a slowdown during the Chinese New Year because the factory.

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Speaker 1: Shut down, people go home.

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Speaker 3: But I understand that Chinese leaders that they recently the

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Speaker 3: Ministry of Industry and Information Technology gathered provincial leaders and

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Speaker 3: so let's not shut down as many factories. Let's let's

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Speaker 3: get the factories running because we need this for the country.

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Speaker 1: Is this a sort of new line.

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Speaker 9: But it's hard to run those factory in China. New holiday, right,

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Speaker 9: and I think, I guess this year we're going to

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Speaker 9: see a very substantial travel across the country because it's

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Speaker 9: it's probably the first year, you know, people can totally

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Speaker 9: freely travel, you know, during a Chraining new period. Last

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Speaker 9: year it's open, reopened, but still many people got sick

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Speaker 9: because of the COVID. So I think this year we're

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Speaker 9: going to see a big traveling across country. But on

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Speaker 9: the consumption side, we don't expect a very strong number

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Speaker 9: this year, so as we have seen in past holidays. Yeah,

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Speaker 9: people are traveling, but they're not really spending so much money,

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Speaker 9: right so because the income got hit, their jobs got hit,

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Speaker 9: so everybody just you know, uh, just keeping the minimum spending.

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Speaker 9: But of course they want some home gathering, so want

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Speaker 9: to see their parents for for so many years, So

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Speaker 9: I think we're going to see lots of travel, so

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Speaker 9: probably they'll travel related to some tourism related business. Are

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Speaker 9: going to see some booster during the holiday. But I

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Speaker 9: think overall consumption good consumption, probably won't be so strong.

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Speaker 2: We talk a lot about kind of deflationary forces that

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Speaker 2: work in the economy. So at the retail level, I mean,

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Speaker 2: are people going to be dealing with much lower prices

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Speaker 2: as they consume?

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Speaker 9: I think I read something. You know, even the pop

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Speaker 9: prices haven't increased a lot this year around before the

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Speaker 9: China New Year, So that's another, you know, bad sign,

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Speaker 9: not a good sign of the deflation part. I think, yeah,

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Speaker 9: but it's it's it's it's just demand not there. It's

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Speaker 9: it's cheap. But even it's cheap, probably people don't have

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Speaker 9: that so much money to spend like before. I think

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Speaker 9: that's thesue.

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Speaker 3: Let's go back to the slightly more or optimistic read

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Speaker 3: that I mentioned from Bloomberg Economics. You say we'll have

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Speaker 3: to get really two full months in to be able

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Speaker 3: to gauge that. But let's say that things are actually

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Speaker 3: improving a little bit through here. What would be feeding that?

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Speaker 3: You know, what's driving the pickup? We mentioned production and construction,

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Speaker 3: but can that continue.

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Speaker 6: It's more the strengths.

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Speaker 9: I think in the past a couple of months we

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Speaker 9: have seen quite strong reading on the construction PMI, so

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Speaker 9: that's probably suggesting some physical stimulus was feeding into you know,

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Speaker 9: some construction part, but it's mostly still infrastructure investment. That's

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Speaker 9: a traditional way the government're trying to boost an ecoloony.

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Speaker 9: Of course the efficiency is probably decreasing, but it's still,

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Speaker 9: you know, I can have some impact on the economy,

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Speaker 9: at least I think in the first quarter, because they

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Speaker 9: they frontload some fiscal stimular in the end of last year.

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