Speaker 1: This is Bloomberg Daybreak Asia, but it is Tuesday February
Speaker 1: fourteenth in Hong Kong, Monday February in New York and
Speaker 1: coming up today. US equities push higher as traders look
Speaker 1: next to key consumer price data the US as it
Speaker 1: plans to sell more crude from its strategic petroleum reserve.
Speaker 1: Ford will invest three and a half billion dollars in
Speaker 1: the US battery plant with support from a Chinese partner,
Speaker 1: Efforts to set up a meeting between Top four and
Speaker 1: ministers of US and China this week. Pentagon says the
Speaker 1: three objects shot down over the week imposed air safety concerns.
Speaker 1: Turkey Syria death toll approaches forty thousand. I'med Baxter with
Speaker 1: Global News. His name Marst time in Paris close to
Speaker 1: coming to an end and swarts, but I'll have that
Speaker 1: story more coming up in Bloomberg Sports. That's all straight
Speaker 1: ahead on Bloomberg Daybreak Asia on Bloomberg eleven three on
Speaker 1: New York, Bloomberg Washington, d C, bloo Bird one six one, Boston,
Speaker 1: Bloomberg nine six, San Francisco, Sirius x M one nineteen
Speaker 1: and around the world on Bloomberg Radio dot Com and
Speaker 1: via the Bloomberg Business Act. Good morning, I'm de Prisoner
Speaker 1: and I'm Brian Curtis. Here are the stories we're following today.
Speaker 1: We'll get u S CPI data for January tomorrow at
Speaker 1: eight thirty in the morning Wall Street Time. Let's get
Speaker 1: the story from Bloomberg's Michael McKee. Starting with the good
Speaker 1: news headline, Inflation is forecast to have fallen again in January,
Speaker 1: but that's because of base effects, the fact that it
Speaker 1: was higher last year at this time. The bad news
Speaker 1: is on a month to month basis, January price is
Speaker 1: likely rose at a faster pace. Some things like gasoline
Speaker 1: and used cars rose in price, but the government is
Speaker 1: also rejiggering its seasonal adjustments of the way it puts
Speaker 1: on various sectors that will give the CPI a statistical boost.
Speaker 1: Bottom line, markets in the Fed will likely look through
Speaker 1: the report anticipating some reversion this if Fed doesn't meet
Speaker 1: again until March twenty two. Michael McKee, Bloomberg Daybreak asient, well,
Speaker 1: it is clear that markets are reassessing how high US
Speaker 1: interest rates will rise this year. Today we heard from
Speaker 1: Fed Governor Michelle Bowman, and she is expecting more hikes.
Speaker 1: She thinks it's likely necessary to bring inflation down to
Speaker 1: the FEDS two percent target. We are still far from
Speaker 1: achieving price stability, and I expect that it will be
Speaker 1: necessary to further tighten monetary policy to bring down inflation
Speaker 1: down towards our goal. Doing so will likely lead to
Speaker 1: subdued growth in economic activity and some softening in labor
Speaker 1: market conditions. Now Bowman went on to say the cost
Speaker 1: of persistent inflation is greater than the risk from higher
Speaker 1: interest rates. Back in December, FED officials forecast at a
Speaker 1: peak in the Fed funds rate of it around five
Speaker 1: point one percent this year. Those estimates will be updated
Speaker 1: next month. The Biden administration plans to sell more crude
Speaker 1: oil from the Strategic Petroleum Reserve. Bloomberg's and Kate's reports
Speaker 1: the non emergency sale amount to twenty six million barrels
Speaker 1: of crude, with the deliveries estimated to happen between April
Speaker 1: and June. It as part of the congressionly mandated sale
Speaker 1: lawmakers approved in twenty For the current fiscal year, the
Speaker 1: Energy Department has sought to stop some of the requirements
Speaker 1: so it can refill the emergency reserve, which currently has
Speaker 1: three d seventy one million barrels and will drop to
Speaker 1: three D forty five million after this latest release. The
Speaker 1: White House decided to tap crude from the oil reserve
Speaker 1: and an effort to lower prices. After Russia's invasion of
Speaker 1: Ukraine last year in Washington and Kate's Bloomberg daybreak Asia,
Speaker 1: European Union officials have raised their forecast for economic growth
Speaker 1: in the euro Area this year. The combination of a
Speaker 1: mild winter and high levels of gas storage have helped
Speaker 1: to ease and energy crisis, and the EU Commission said
Speaker 1: a recession would be narrowly avoided. Even so, EU Economy
Speaker 1: Commissioner Paolo Gentiloni struck a more cautious tone. Risks to
Speaker 1: this forecast appears to be balanced. While pastries related to
Speaker 1: pandemic and gas shortages have ebbed significantly, Uncertainty remains very high,
Speaker 1: also in relation to the war and to the geopolitical tension. Now.
Speaker 1: EU forecast show that all member states will achieve growth
Speaker 1: this year, the only exception being Sweden, It's expected to
Speaker 1: contract by around eight tenths of one percent. Ford is
Speaker 1: charging ahead with plans to build a US battery plant
Speaker 1: with a Chinese partner. More from Bloomberg's Denise Pellegrini. Ford
Speaker 1: is investing three and a half billion dollars in this
Speaker 1: EV plant near Kalamazoo, Michigan, and in a controversial move,
Speaker 1: it is contracting China's contemporary Amperex technology to help it
Speaker 1: set up and staff the facility. The US automaker will
Speaker 1: be operating it under a wholly owned subsidiary, and Ford
Speaker 1: is aiming to create jobs and take advantage of tax
Speaker 1: breaks for the location. The announcements a bit marred, though,
Speaker 1: by some political events. Earlier, Virginia Governor Glen young and
Speaker 1: pulled his state from consideration for the factory. Youncan called
Speaker 1: it all a trojan horse for the Chinese Communist Party.
Speaker 1: Denise Peligrini, Bloomberg Day, Bracasia. Like you mentioned the survey
Speaker 1: by the New York Federal Reserve. It showed that one
Speaker 1: year inflation expectations were little change last month. Anything that
Speaker 1: points to possible disinflation in wages is being seen as
Speaker 1: positive for risk assets. Doesn't mean we won't see an
Speaker 1: uptick tomorrow, but still positive for the market. Well, you're
Speaker 1: absolutely right about that, but I think in the bigger
Speaker 1: picture here, the Fed seems intent on maybe creating a
Speaker 1: bit of an insurance policy. That seemed to be the
Speaker 1: message from Bowman today. And if you look at what
Speaker 1: Marco Kolanovitch is saying over JP Morgan, the noted strategist
Speaker 1: is turning defensive. He is recommending fading this year's rally
Speaker 1: and equities. I was looking on the system today. You know,
Speaker 1: the S and P up eight percent nearly since the
Speaker 1: beginning of the year, but Kalanovitch says there is really
Speaker 1: a risk of recession, and that is not christ into
Speaker 1: the equity market. I don't have a lot of sympathy
Speaker 1: with you know, we rose so much in in January
Speaker 1: and it was up six and a quarter percent or whatever.
Speaker 1: Because the S and P fell seven percent in December.
Speaker 1: It's really just sideways over the past couple of months.
Speaker 1: I get all the arguments, I see that and everything,
Speaker 1: but I think a lot a lot of people in
Speaker 1: the market are just sort of in chop mode, waiting
Speaker 1: to see what happens. A quick comment here on on
Speaker 1: Kazu Kazuo Ada coming today. It looks like any thoughts
Speaker 1: on whether or not that's a hawkish or a devish move.
Speaker 1: I think it's going to be neutral at least for
Speaker 1: the medium term here. I don't think the b o
Speaker 1: J wants to create any more volatility than we've seen
Speaker 1: in the currency market right now. I had noted that
Speaker 1: we're on the week side of one thirty two against
Speaker 1: the green back. I don't get it, because if you
Speaker 1: Adeline's hawkish, why is the end weakening like this? It's interesting.
Speaker 1: We had yes percole on on our area yesterday. He said,
Speaker 1: who waits a scientist? He's absolutely objective, not dogmatic, not
Speaker 1: out for a quick win, and he will be even handed.
Speaker 1: We'll see. Now it's time for Global News. China today
Speaker 1: is saying the United States needs to look at itself
Speaker 1: in the mirror with regard to the shooting down of
Speaker 1: foreign objects. Head back to will sort that out for us.
Speaker 1: He has Global News on the nine sixty News with
Speaker 1: San Francisco ed. Yeah, Brian, you're right, let's go through it.
Speaker 1: The statement coming from the Foreign Ministry says that ten
Speaker 1: US objects have passed over China recently and that it
Speaker 1: is nothing rare for US balloons to illegally enter into
Speaker 1: other countries airspace. It says the US needs to reflect
Speaker 1: upon itself and change its policies. The US has denied
Speaker 1: those charges. Meanwhile, US Defense Secretary Lloyd Austin says recovery
Speaker 1: operations are in full swing to gain information on the
Speaker 1: three objects that were shot down over the weekend. The
Speaker 1: three objects taken down this weekend are very different from
Speaker 1: what we were talking about last week, and says one
Speaker 1: appears to be a small metallic balloon with small payload attached.
Speaker 1: So at this point, US fighters have shot down four
Speaker 1: objects in the last nine days. What's different now, Will Bloomberg.
Speaker 1: Nick Wadhams from our National Security Team says the US
Speaker 1: has changed radar signals, widening the aperture, and so what
Speaker 1: you saw the three shootdowns, two in the US and
Speaker 1: one in Canada over the last few days were things
Speaker 1: that were deemed to be a threat to civil aviation
Speaker 1: or drifting a little too close to military site. And
Speaker 1: now Bloomberg is reporting that there is a move a
Speaker 1: foot to get U S Secretary of State Anthony Blankeln
Speaker 1: and China Foreign Minister Wang Yu to meet later this week.
Speaker 1: What we're seeing is there is an effort by both
Speaker 1: countries to if not get things back on track. Whatever
Speaker 1: that meant amid amid these increased tension to at least
Speaker 1: stop things from getting any worse. They're both gonna be
Speaker 1: there in Munich, and I think what you're seeing is
Speaker 1: a little bit of tentative outreach. Yeah, so this meeting,
Speaker 1: if it does happen, would be on the sidelines of
Speaker 1: the Munich Security Summit. Meanwhile, some back channels between the
Speaker 1: two kind trees are still open. The US embassy in
Speaker 1: Beijing is still functioning, we're told, and NATO General Secretary
Speaker 1: Jan Stenberg says both China and Russia have been using
Speaker 1: increased satellite and balloon surveillance of Europe as well. The
Speaker 1: news he says, with tongue in cheek that all of
Speaker 1: all of us have been waiting for. From White House
Speaker 1: spokeswoman Karin Jean Pierre, there is no again, no indication
Speaker 1: of aliens or extraterrestrial activity with these recent takedowns, so
Speaker 1: either relief or disappointment. Hong Kong's Lands Department has added
Speaker 1: national security clauses to all land sale and short term
Speaker 1: lease tender documents, moving powers of government disqualify bids and
Speaker 1: suspend short term leases due to national security reasons and
Speaker 1: the death toll in the Turkey and Syria quakes nearing
Speaker 1: forty thousand over thirty one thousand in Turkeys six thousand
Speaker 1: Syria as far exceeds that of the quakes near is Stanbul,
Speaker 1: where eighteen thousand people eared. Officials in Turkey are considering
Speaker 1: extending the closure of Istanbul stock market. Past Wednesday Global
Speaker 1: News powered by more than twenty seven journalists and analysts
Speaker 1: and over one d twenty countries. In San Francisco, I'm
Speaker 1: at Baxter and this is Bloomberg. This is Bloomberg day
Speaker 1: Break Asia Brian Curtis and Richard Salad here in Hong Kong.
Speaker 1: Our guest is Toma Puluk, head of Multi Asset Solutions
Speaker 1: in the Asia Pacific at t ro Price. Toma, thanks
Speaker 1: very much for joining us here. Market participmates, Toma are
Speaker 1: seeing the same data as the Fed. They don't get
Speaker 1: anything special. How do we reconcile the don't fight the
Speaker 1: Fed adage with the respect the price action adage? Looky
Speaker 1: all right there? That I to agree with what was
Speaker 1: said before about the disconnect between what is pristine and
Speaker 1: what the FED and economists are saying. Um, I guess
Speaker 1: the economists camp is most saying that the recission is
Speaker 1: coming and the risk is great, doesn'tif. But when you
Speaker 1: look at what the market is pricing, they are more
Speaker 1: pricing a soft landing. So we need to reconcide that.
Speaker 1: We'd agree that there's risk to the markets right now
Speaker 1: given the evaluation is higher than what the yield environment
Speaker 1: is suggesting, and things can be revised lower. So our
Speaker 1: stands for now is to stay conservative defensive, but we
Speaker 1: are looking to add to equity as the disconnect closes.
Speaker 1: I want to pick up on something that actually Brian
Speaker 1: was just talking about with the DOUG And you know,
Speaker 1: we saw the SMP go up what seven eight percent
Speaker 1: in January UM and indeed we saw also the hang
Speaker 1: sang up by uh I think about nine percent in January.
Speaker 1: In fact in December the big losses for other parts
Speaker 1: of the market. Where do we go from here? And
Speaker 1: you know the thing is that is does any type
Speaker 1: of landing have to be priced in? Can't we just
Speaker 1: price in actually a little bit of a slowdown? Yeah? Yeah,
Speaker 1: you're right? Is that the it's the amount of economic
Speaker 1: slowdown that needs to be uh gouged and it's quite
Speaker 1: hard right now. So that's why the market and I
Speaker 1: guess ourselves. We are more on the watch and UM
Speaker 1: and wait for some data, especially the job market is key.
Speaker 1: You talked before about the wage inflation. Is that the
Speaker 1: key data. Now inflation is as peaked. Inflation is slowing,
Speaker 1: but it's hard to see that inflation will be going
Speaker 1: back to two percent anytime soon. So there will be
Speaker 1: a sticky inflation environment which is dependent on how wages
Speaker 1: will will remain there, so that feed through what markets
Speaker 1: will be UM will be pricing in and for US
Speaker 1: it's UM. It's hard to justify evaluation as such a
Speaker 1: high level given how yields have moved over the past year.
Speaker 1: So for a six months horizon, with his some risk
Speaker 1: to the downside on the equity market, So you're out
Speaker 1: here in Asia with us UM. Let's talk a little
Speaker 1: bit about Casuo Ueda if he becomes the next governor
Speaker 1: of the Bank of Japan. We mentioned many of the
Speaker 1: economists that know him and studied under him say, you know,
Speaker 1: he's a very objective guy. He's not coming in with
Speaker 1: a preset path. Do you believe that? Look at our
Speaker 1: view and that was in fact true for other candidates,
Speaker 1: is that the b O J we're not really changed
Speaker 1: dramatically the course of its policy over the coming year.
Speaker 1: We believe that the changes that they already made to
Speaker 1: the yield of control will continue and can be potentially
Speaker 1: removed or expanded in the next of the following meeting,
Speaker 1: and that would be true under with a sn What
Speaker 1: we are question about is that there are talks that
Speaker 1: then we moved to the removal of the negative interest
Speaker 1: rate policy. This is not our base case and that
Speaker 1: will wait quite a while. It's at best the twenty
Speaker 1: four story or even longer. So removal of the year
Speaker 1: of control has already been talked about and discussed by
Speaker 1: BOG members, and we don't think there would be any
Speaker 1: dramatic changes under with well, they're going to be changed.
Speaker 1: I mean, whatever little bits and bobs that they do
Speaker 1: have a great impact, as we saw in December. So
Speaker 1: you know, if they do even just tweak things, and
Speaker 1: I'm sure that you wouldn't disagree that they would do
Speaker 1: that TOMA, it becomes the one way bad look at
Speaker 1: the what the markets. So in December was the first
Speaker 1: action and that's where the market move. I think after
Speaker 1: if they if they expand or not, it's it's not
Speaker 1: as big as the first step outside the yelcove control.
Speaker 1: So that's why I don't expect the move to be
Speaker 1: that large even if they do something. Of course, there
Speaker 1: is still some if you look at the OS pricing
Speaker 1: of of years, there is still some way to go higher,
Speaker 1: but not as dramatic as the first um increment that
Speaker 1: was done in December, so it's not one way street.
Speaker 1: What I think many people would not understand is ditching
Speaker 1: or widening yield curve control. It would likely mean a
Speaker 1: strengthening of the end. But since we've been talking about CASUODA,
Speaker 1: we've seen weakness now in the end, so why is
Speaker 1: that happening? So I think it's more the the U
Speaker 1: s dollars. The US dollar has had a very steep
Speaker 1: slow downs in the peak in the fourth quarter, so
Speaker 1: given the X the upside surprising the economic data is
Speaker 1: that we got in the first month of the year,
Speaker 1: the US dollar gotta strength and a bit and to
Speaker 1: reflect that, there is also an expectation that financial conditions
Speaker 1: eased too much, so financial conditions will be tightening and
Speaker 1: that supports the US dollar. So I guess that's more
Speaker 1: temporary thing of related to the us LA. But our
Speaker 1: view is at the Japanese end. I agree with what
Speaker 1: you said, shoot strengthen, but he will not be as
Speaker 1: trade line as I said. This is Bloomberg Daybreak Asia,
Speaker 1: your morning brief on the stories making news from Hong
Speaker 1: Kong to Singapore and Wall Street. Look for us on
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