WEBVTT - Global Eco Data and Ford's ‘Battery Independence’

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<v Speaker 1>This is Bloomberg Daybreak Asia, but it is Tuesday February

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<v Speaker 1>fourteenth in Hong Kong, Monday February in New York and

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<v Speaker 1>coming up today. US equities push higher as traders look

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<v Speaker 1>next to key consumer price data the US as it

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<v Speaker 1>plans to sell more crude from its strategic petroleum reserve.

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<v Speaker 1>Ford will invest three and a half billion dollars in

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<v Speaker 1>the US battery plant with support from a Chinese partner,

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<v Speaker 1>Efforts to set up a meeting between Top four and

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<v Speaker 1>ministers of US and China this week. Pentagon says the

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<v Speaker 1>three objects shot down over the week imposed air safety concerns.

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<v Speaker 1>Turkey Syria death toll approaches forty thousand. I'med Baxter with

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<v Speaker 1>Global News. His name Marst time in Paris close to

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<v Speaker 1>coming to an end and swarts, but I'll have that

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<v Speaker 1>story more coming up in Bloomberg Sports. That's all straight

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<v Speaker 1>ahead on Bloomberg Daybreak Asia on Bloomberg eleven three on

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<v Speaker 1>New York, Bloomberg Washington, d C, bloo Bird one six one, Boston,

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<v Speaker 1>Bloomberg nine six, San Francisco, Sirius x M one nineteen

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<v Speaker 1>and around the world on Bloomberg Radio dot Com and

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<v Speaker 1>via the Bloomberg Business Act. Good morning, I'm de Prisoner

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<v Speaker 1>and I'm Brian Curtis. Here are the stories we're following today.

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<v Speaker 1>We'll get u S CPI data for January tomorrow at

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<v Speaker 1>eight thirty in the morning Wall Street Time. Let's get

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<v Speaker 1>the story from Bloomberg's Michael McKee. Starting with the good

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<v Speaker 1>news headline, Inflation is forecast to have fallen again in January,

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<v Speaker 1>but that's because of base effects, the fact that it

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<v Speaker 1>was higher last year at this time. The bad news

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<v Speaker 1>is on a month to month basis, January price is

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<v Speaker 1>likely rose at a faster pace. Some things like gasoline

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<v Speaker 1>and used cars rose in price, but the government is

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<v Speaker 1>also rejiggering its seasonal adjustments of the way it puts

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<v Speaker 1>on various sectors that will give the CPI a statistical boost.

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<v Speaker 1>Bottom line, markets in the Fed will likely look through

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<v Speaker 1>the report anticipating some reversion this if Fed doesn't meet

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<v Speaker 1>again until March twenty two. Michael McKee, Bloomberg Daybreak asient, well,

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<v Speaker 1>it is clear that markets are reassessing how high US

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<v Speaker 1>interest rates will rise this year. Today we heard from

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<v Speaker 1>Fed Governor Michelle Bowman, and she is expecting more hikes.

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<v Speaker 1>She thinks it's likely necessary to bring inflation down to

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<v Speaker 1>the FEDS two percent target. We are still far from

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<v Speaker 1>achieving price stability, and I expect that it will be

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<v Speaker 1>necessary to further tighten monetary policy to bring down inflation

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<v Speaker 1>down towards our goal. Doing so will likely lead to

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<v Speaker 1>subdued growth in economic activity and some softening in labor

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<v Speaker 1>market conditions. Now Bowman went on to say the cost

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<v Speaker 1>of persistent inflation is greater than the risk from higher

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<v Speaker 1>interest rates. Back in December, FED officials forecast at a

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<v Speaker 1>peak in the Fed funds rate of it around five

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<v Speaker 1>point one percent this year. Those estimates will be updated

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<v Speaker 1>next month. The Biden administration plans to sell more crude

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<v Speaker 1>oil from the Strategic Petroleum Reserve. Bloomberg's and Kate's reports

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<v Speaker 1>the non emergency sale amount to twenty six million barrels

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<v Speaker 1>of crude, with the deliveries estimated to happen between April

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<v Speaker 1>and June. It as part of the congressionly mandated sale

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<v Speaker 1>lawmakers approved in twenty For the current fiscal year, the

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<v Speaker 1>Energy Department has sought to stop some of the requirements

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<v Speaker 1>so it can refill the emergency reserve, which currently has

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<v Speaker 1>three d seventy one million barrels and will drop to

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<v Speaker 1>three D forty five million after this latest release. The

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<v Speaker 1>White House decided to tap crude from the oil reserve

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<v Speaker 1>and an effort to lower prices. After Russia's invasion of

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<v Speaker 1>Ukraine last year in Washington and Kate's Bloomberg daybreak Asia,

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<v Speaker 1>European Union officials have raised their forecast for economic growth

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<v Speaker 1>in the euro Area this year. The combination of a

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<v Speaker 1>mild winter and high levels of gas storage have helped

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<v Speaker 1>to ease and energy crisis, and the EU Commission said

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<v Speaker 1>a recession would be narrowly avoided. Even so, EU Economy

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<v Speaker 1>Commissioner Paolo Gentiloni struck a more cautious tone. Risks to

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<v Speaker 1>this forecast appears to be balanced. While pastries related to

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<v Speaker 1>pandemic and gas shortages have ebbed significantly, Uncertainty remains very high,

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<v Speaker 1>also in relation to the war and to the geopolitical tension. Now.

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<v Speaker 1>EU forecast show that all member states will achieve growth

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<v Speaker 1>this year, the only exception being Sweden, It's expected to

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<v Speaker 1>contract by around eight tenths of one percent. Ford is

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<v Speaker 1>charging ahead with plans to build a US battery plant

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<v Speaker 1>with a Chinese partner. More from Bloomberg's Denise Pellegrini. Ford

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<v Speaker 1>is investing three and a half billion dollars in this

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<v Speaker 1>EV plant near Kalamazoo, Michigan, and in a controversial move,

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<v Speaker 1>it is contracting China's contemporary Amperex technology to help it

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<v Speaker 1>set up and staff the facility. The US automaker will

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<v Speaker 1>be operating it under a wholly owned subsidiary, and Ford

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<v Speaker 1>is aiming to create jobs and take advantage of tax

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<v Speaker 1>breaks for the location. The announcements a bit marred, though,

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<v Speaker 1>by some political events. Earlier, Virginia Governor Glen young and

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<v Speaker 1>pulled his state from consideration for the factory. Youncan called

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<v Speaker 1>it all a trojan horse for the Chinese Communist Party.

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<v Speaker 1>Denise Peligrini, Bloomberg Day, Bracasia. Like you mentioned the survey

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<v Speaker 1>by the New York Federal Reserve. It showed that one

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<v Speaker 1>year inflation expectations were little change last month. Anything that

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<v Speaker 1>points to possible disinflation in wages is being seen as

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<v Speaker 1>positive for risk assets. Doesn't mean we won't see an

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<v Speaker 1>uptick tomorrow, but still positive for the market. Well, you're

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<v Speaker 1>absolutely right about that, but I think in the bigger

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<v Speaker 1>picture here, the Fed seems intent on maybe creating a

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<v Speaker 1>bit of an insurance policy. That seemed to be the

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<v Speaker 1>message from Bowman today. And if you look at what

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<v Speaker 1>Marco Kolanovitch is saying over JP Morgan, the noted strategist

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<v Speaker 1>is turning defensive. He is recommending fading this year's rally

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<v Speaker 1>and equities. I was looking on the system today. You know,

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<v Speaker 1>the S and P up eight percent nearly since the

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<v Speaker 1>beginning of the year, but Kalanovitch says there is really

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<v Speaker 1>a risk of recession, and that is not christ into

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<v Speaker 1>the equity market. I don't have a lot of sympathy

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<v Speaker 1>with you know, we rose so much in in January

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<v Speaker 1>and it was up six and a quarter percent or whatever.

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<v Speaker 1>Because the S and P fell seven percent in December.

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<v Speaker 1>It's really just sideways over the past couple of months.

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<v Speaker 1>I get all the arguments, I see that and everything,

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<v Speaker 1>but I think a lot a lot of people in

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<v Speaker 1>the market are just sort of in chop mode, waiting

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<v Speaker 1>to see what happens. A quick comment here on on

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<v Speaker 1>Kazu Kazuo Ada coming today. It looks like any thoughts

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<v Speaker 1>on whether or not that's a hawkish or a devish move.

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<v Speaker 1>I think it's going to be neutral at least for

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<v Speaker 1>the medium term here. I don't think the b o

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<v Speaker 1>J wants to create any more volatility than we've seen

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<v Speaker 1>in the currency market right now. I had noted that

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<v Speaker 1>we're on the week side of one thirty two against

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<v Speaker 1>the green back. I don't get it, because if you

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<v Speaker 1>Adeline's hawkish, why is the end weakening like this? It's interesting.

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<v Speaker 1>We had yes percole on on our area yesterday. He said,

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<v Speaker 1>who waits a scientist? He's absolutely objective, not dogmatic, not

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<v Speaker 1>out for a quick win, and he will be even handed.

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<v Speaker 1>We'll see. Now it's time for Global News. China today

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<v Speaker 1>is saying the United States needs to look at itself

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<v Speaker 1>in the mirror with regard to the shooting down of

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<v Speaker 1>foreign objects. Head back to will sort that out for us.

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<v Speaker 1>He has Global News on the nine sixty News with

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<v Speaker 1>San Francisco ed. Yeah, Brian, you're right, let's go through it.

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<v Speaker 1>The statement coming from the Foreign Ministry says that ten

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<v Speaker 1>US objects have passed over China recently and that it

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<v Speaker 1>is nothing rare for US balloons to illegally enter into

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<v Speaker 1>other countries airspace. It says the US needs to reflect

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<v Speaker 1>upon itself and change its policies. The US has denied

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<v Speaker 1>those charges. Meanwhile, US Defense Secretary Lloyd Austin says recovery

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<v Speaker 1>operations are in full swing to gain information on the

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<v Speaker 1>three objects that were shot down over the weekend. The

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<v Speaker 1>three objects taken down this weekend are very different from

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<v Speaker 1>what we were talking about last week, and says one

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<v Speaker 1>appears to be a small metallic balloon with small payload attached.

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<v Speaker 1>So at this point, US fighters have shot down four

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<v Speaker 1>objects in the last nine days. What's different now, Will Bloomberg.

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<v Speaker 1>Nick Wadhams from our National Security Team says the US

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<v Speaker 1>has changed radar signals, widening the aperture, and so what

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<v Speaker 1>you saw the three shootdowns, two in the US and

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<v Speaker 1>one in Canada over the last few days were things

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<v Speaker 1>that were deemed to be a threat to civil aviation

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<v Speaker 1>or drifting a little too close to military site. And

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<v Speaker 1>now Bloomberg is reporting that there is a move a

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<v Speaker 1>foot to get U S Secretary of State Anthony Blankeln

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<v Speaker 1>and China Foreign Minister Wang Yu to meet later this week.

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<v Speaker 1>What we're seeing is there is an effort by both

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<v Speaker 1>countries to if not get things back on track. Whatever

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<v Speaker 1>that meant amid amid these increased tension to at least

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<v Speaker 1>stop things from getting any worse. They're both gonna be

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<v Speaker 1>there in Munich, and I think what you're seeing is

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<v Speaker 1>a little bit of tentative outreach. Yeah, so this meeting,

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<v Speaker 1>if it does happen, would be on the sidelines of

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<v Speaker 1>the Munich Security Summit. Meanwhile, some back channels between the

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<v Speaker 1>two kind trees are still open. The US embassy in

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<v Speaker 1>Beijing is still functioning, we're told, and NATO General Secretary

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<v Speaker 1>Jan Stenberg says both China and Russia have been using

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<v Speaker 1>increased satellite and balloon surveillance of Europe as well. The

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<v Speaker 1>news he says, with tongue in cheek that all of

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<v Speaker 1>all of us have been waiting for. From White House

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<v Speaker 1>spokeswoman Karin Jean Pierre, there is no again, no indication

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<v Speaker 1>of aliens or extraterrestrial activity with these recent takedowns, so

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<v Speaker 1>either relief or disappointment. Hong Kong's Lands Department has added

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<v Speaker 1>national security clauses to all land sale and short term

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<v Speaker 1>lease tender documents, moving powers of government disqualify bids and

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<v Speaker 1>suspend short term leases due to national security reasons and

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<v Speaker 1>the death toll in the Turkey and Syria quakes nearing

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<v Speaker 1>forty thousand over thirty one thousand in Turkeys six thousand

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<v Speaker 1>Syria as far exceeds that of the quakes near is Stanbul,

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<v Speaker 1>where eighteen thousand people eared. Officials in Turkey are considering

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<v Speaker 1>extending the closure of Istanbul stock market. Past Wednesday Global

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<v Speaker 1>News powered by more than twenty seven journalists and analysts

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<v Speaker 1>and over one d twenty countries. In San Francisco, I'm

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<v Speaker 1>at Baxter and this is Bloomberg. This is Bloomberg day

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<v Speaker 1>Break Asia Brian Curtis and Richard Salad here in Hong Kong.

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<v Speaker 1>Our guest is Toma Puluk, head of Multi Asset Solutions

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<v Speaker 1>in the Asia Pacific at t ro Price. Toma, thanks

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<v Speaker 1>very much for joining us here. Market participmates, Toma are

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<v Speaker 1>seeing the same data as the Fed. They don't get

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<v Speaker 1>anything special. How do we reconcile the don't fight the

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<v Speaker 1>Fed adage with the respect the price action adage? Looky

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<v Speaker 1>all right there? That I to agree with what was

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<v Speaker 1>said before about the disconnect between what is pristine and

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<v Speaker 1>what the FED and economists are saying. Um, I guess

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<v Speaker 1>the economists camp is most saying that the recission is

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<v Speaker 1>coming and the risk is great, doesn'tif. But when you

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<v Speaker 1>look at what the market is pricing, they are more

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<v Speaker 1>pricing a soft landing. So we need to reconcide that.

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<v Speaker 1>We'd agree that there's risk to the markets right now

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<v Speaker 1>given the evaluation is higher than what the yield environment

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<v Speaker 1>is suggesting, and things can be revised lower. So our

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<v Speaker 1>stands for now is to stay conservative defensive, but we

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<v Speaker 1>are looking to add to equity as the disconnect closes.

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<v Speaker 1>I want to pick up on something that actually Brian

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<v Speaker 1>was just talking about with the DOUG And you know,

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<v Speaker 1>we saw the SMP go up what seven eight percent

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<v Speaker 1>in January UM and indeed we saw also the hang

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<v Speaker 1>sang up by uh I think about nine percent in January.

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<v Speaker 1>In fact in December the big losses for other parts

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<v Speaker 1>of the market. Where do we go from here? And

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<v Speaker 1>you know the thing is that is does any type

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<v Speaker 1>of landing have to be priced in? Can't we just

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<v Speaker 1>price in actually a little bit of a slowdown? Yeah? Yeah,

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<v Speaker 1>you're right? Is that the it's the amount of economic

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<v Speaker 1>slowdown that needs to be uh gouged and it's quite

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<v Speaker 1>hard right now. So that's why the market and I

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<v Speaker 1>guess ourselves. We are more on the watch and UM

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<v Speaker 1>and wait for some data, especially the job market is key.

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<v Speaker 1>You talked before about the wage inflation. Is that the

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<v Speaker 1>key data. Now inflation is as peaked. Inflation is slowing,

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<v Speaker 1>but it's hard to see that inflation will be going

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<v Speaker 1>back to two percent anytime soon. So there will be

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<v Speaker 1>a sticky inflation environment which is dependent on how wages

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<v Speaker 1>will will remain there, so that feed through what markets

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<v Speaker 1>will be UM will be pricing in and for US

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<v Speaker 1>it's UM. It's hard to justify evaluation as such a

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<v Speaker 1>high level given how yields have moved over the past year.

0:12:56.920 --> 0:13:00.760
<v Speaker 1>So for a six months horizon, with his some risk

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<v Speaker 1>to the downside on the equity market, So you're out

0:13:03.880 --> 0:13:06.320
<v Speaker 1>here in Asia with us UM. Let's talk a little

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<v Speaker 1>bit about Casuo Ueda if he becomes the next governor

0:13:10.320 --> 0:13:14.200
<v Speaker 1>of the Bank of Japan. We mentioned many of the

0:13:14.240 --> 0:13:17.800
<v Speaker 1>economists that know him and studied under him say, you know,

0:13:17.880 --> 0:13:20.960
<v Speaker 1>he's a very objective guy. He's not coming in with

0:13:21.040 --> 0:13:25.160
<v Speaker 1>a preset path. Do you believe that? Look at our

0:13:25.280 --> 0:13:29.360
<v Speaker 1>view and that was in fact true for other candidates,

0:13:29.400 --> 0:13:32.160
<v Speaker 1>is that the b O J we're not really changed

0:13:32.280 --> 0:13:36.920
<v Speaker 1>dramatically the course of its policy over the coming year.

0:13:37.480 --> 0:13:40.439
<v Speaker 1>We believe that the changes that they already made to

0:13:40.840 --> 0:13:45.280
<v Speaker 1>the yield of control will continue and can be potentially

0:13:45.320 --> 0:13:49.439
<v Speaker 1>removed or expanded in the next of the following meeting,

0:13:50.080 --> 0:13:53.120
<v Speaker 1>and that would be true under with a sn What

0:13:53.200 --> 0:13:56.840
<v Speaker 1>we are question about is that there are talks that

0:13:56.920 --> 0:14:01.080
<v Speaker 1>then we moved to the removal of the negative interest

0:14:01.160 --> 0:14:04.520
<v Speaker 1>rate policy. This is not our base case and that

0:14:04.559 --> 0:14:08.359
<v Speaker 1>will wait quite a while. It's at best the twenty

0:14:08.400 --> 0:14:11.480
<v Speaker 1>four story or even longer. So removal of the year

0:14:11.559 --> 0:14:15.520
<v Speaker 1>of control has already been talked about and discussed by

0:14:15.840 --> 0:14:19.040
<v Speaker 1>BOG members, and we don't think there would be any

0:14:19.160 --> 0:14:23.000
<v Speaker 1>dramatic changes under with well, they're going to be changed.

0:14:23.080 --> 0:14:25.440
<v Speaker 1>I mean, whatever little bits and bobs that they do

0:14:25.640 --> 0:14:28.480
<v Speaker 1>have a great impact, as we saw in December. So

0:14:28.720 --> 0:14:31.840
<v Speaker 1>you know, if they do even just tweak things, and

0:14:31.920 --> 0:14:33.880
<v Speaker 1>I'm sure that you wouldn't disagree that they would do

0:14:33.960 --> 0:14:38.240
<v Speaker 1>that TOMA, it becomes the one way bad look at

0:14:38.280 --> 0:14:42.000
<v Speaker 1>the what the markets. So in December was the first

0:14:42.000 --> 0:14:45.080
<v Speaker 1>action and that's where the market move. I think after

0:14:45.280 --> 0:14:47.840
<v Speaker 1>if they if they expand or not, it's it's not

0:14:48.000 --> 0:14:52.000
<v Speaker 1>as big as the first step outside the yelcove control.

0:14:52.400 --> 0:14:54.600
<v Speaker 1>So that's why I don't expect the move to be

0:14:55.120 --> 0:15:00.200
<v Speaker 1>that large even if they do something. Of course, there

0:15:00.240 --> 0:15:03.560
<v Speaker 1>is still some if you look at the OS pricing

0:15:03.640 --> 0:15:06.720
<v Speaker 1>of of years, there is still some way to go higher,

0:15:07.080 --> 0:15:11.520
<v Speaker 1>but not as dramatic as the first um increment that

0:15:11.640 --> 0:15:14.280
<v Speaker 1>was done in December, so it's not one way street.

0:15:15.280 --> 0:15:18.120
<v Speaker 1>What I think many people would not understand is ditching

0:15:18.240 --> 0:15:21.800
<v Speaker 1>or widening yield curve control. It would likely mean a

0:15:21.880 --> 0:15:27.440
<v Speaker 1>strengthening of the end. But since we've been talking about CASUODA,

0:15:27.560 --> 0:15:30.240
<v Speaker 1>we've seen weakness now in the end, so why is

0:15:30.240 --> 0:15:32.440
<v Speaker 1>that happening? So I think it's more the the U

0:15:32.520 --> 0:15:36.360
<v Speaker 1>s dollars. The US dollar has had a very steep

0:15:36.800 --> 0:15:40.240
<v Speaker 1>slow downs in the peak in the fourth quarter, so

0:15:40.880 --> 0:15:44.760
<v Speaker 1>given the X the upside surprising the economic data is

0:15:44.760 --> 0:15:47.680
<v Speaker 1>that we got in the first month of the year,

0:15:48.040 --> 0:15:50.360
<v Speaker 1>the US dollar gotta strength and a bit and to

0:15:50.440 --> 0:15:54.280
<v Speaker 1>reflect that, there is also an expectation that financial conditions

0:15:54.360 --> 0:15:57.600
<v Speaker 1>eased too much, so financial conditions will be tightening and

0:15:57.680 --> 0:15:59.920
<v Speaker 1>that supports the US dollar. So I guess that's more

0:16:00.040 --> 0:16:02.640
<v Speaker 1>temporary thing of related to the us LA. But our

0:16:02.720 --> 0:16:04.840
<v Speaker 1>view is at the Japanese end. I agree with what

0:16:04.920 --> 0:16:07.760
<v Speaker 1>you said, shoot strengthen, but he will not be as

0:16:07.800 --> 0:16:11.920
<v Speaker 1>trade line as I said. This is Bloomberg Daybreak Asia,

0:16:11.960 --> 0:16:14.520
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