Transcripts For BLOOMBERG Bloomberg 20240703

Shery you are watching daybreak asia live from new york, sydney, and hong kong. Annabelle asia is major market opens. Haidi a big week with centralbank decisions in focus and the dollar is slightly weaker in monday trade. Michelle bullock is taking charge of the rba. Fresh tests ahead for Country Garden with deadlines for bonds. Shery u. S. Futures with a little upside after stocks fell in new york on friday. S p 500 had a weekly loss and nasdaq 100 fell 2 . We are watching many things including triple witching options expirations and anxiety over the fact we do not know how long the auto sector strike will continue and data showing new york and you fracturing unexpectedly expanded with treasury yields gaining across the board with two year yields holding at the highest level in 16 years and Oil Prices Continue extending gains over 90 a barrel after three weeks of gains already it is the supply outlook and reports we got last week including from opecplus that we might see a deficit for the rest of the year and data showing Inflation Expectations surprisingly falling to the lowest level in two years or so, this is university of michigan data and we had Consumer Sentiment rising a little bit actually a little bit of a fall with higher prices not helping Consumer Sentiment and we are seeing Inflation Expectations finally rolling over and falling last month annabelle. Annabelle the question when it comes to Commodity Prices with rising oil is how much it starts building into price pressures later this year but today for the opening with equities a weaker start across the region with sydney futures pointing to a drop of half a percent and kiwi stocks in the red and japan is shut today for a holiday but still keeping a close watch on what is happening with the japanese yen because we are trading around a low against the greenback now and really not much to top it from pushing past the 150 before we approach that boj meeting later this week and more on that in a moment but focusing on china futures of course because weakness continuing to come through the outlook theory different facing the pboc but still the property sector continuing to build on geopolitical issues and a host of other reasons why if you change now the Foreign Investors are continuing to lead the market so this chart here takes a look at connect flows out of china or into china and essentially what we are tracking here is the amount that investors are leading the market so if you look at how much money has been put in over the course of the year with the expectation around reopening it was 32 billion market and how much is being taken out is around 50 at this stage and we can see here this chart taking us back to august and only a handful of days where we have actually seen inflows into this market haidi. Haidi monetary decisions later this week might set the tone for the remainder of the year with the world adjusting to the u. S. Keeping rates high and the fed will kick things off wednesday and powell has acknowledged the backdrop is more favorable than a year ago but has made it clear policymakers are ready to raise rates further if needed and investors will be watching the next policy steps in brazil and paraguay which began easing samples in august and thursday the Monetary Policy train with the boj center stage friday. Our next guest sees no easing on the horizon that could take the pressure off asian currencies joining us now is the chief economist, great to have you with us. Annabelle mentioned oil prices are 30 off the lows and other account commodities being affected by climate and labor market unrest. How much does that complicate the picture for policymakers . It does. The dollar is stronger and their own currencies are we and commodities are all over the place. But the fact that we have gotten supply reductions in oil, i expect policymakers are generally thinking if we have to do something it will be to tighten so the rba for instance on hold but still sounding like if they do anything shortterm it would be to hike rates. Haidi what about the pboc . What is the rest of the world looking for out of china . We have had policies support piecemeal and we will see if the Property Market has truly stabilized but it seems like structurally there is a lot more pain ahead for the economy that for so long has been the edge it of global growth. For me if we can get stability in the economy in a more stable fashion i think it will be a very strong album outcome. Some say you could get a renewed upswing than i do not think that is the case. There are a structural changes that will keep chinese growth much weaker but last weeks data shows the easing steps have been delivered and probably more than 200 individual measures have not been the traditional cutting Interest Rates and spending more fiscal money, its been a different style of easing. There is evidence we are seeing that the economy is starting to stabilize. That would help rebalance the currency story because it has been hurt by the weaker china and stronger u. S. Side and on the china side we are starting to see stabilization. Haidi as an economist would you be doing Something Else . I think the first position is what you can realistically achieve. A school of thought says a lot of it can be resolved by policy but i do not think that is right. The population is shrinking. Gdp per capital is nearly 20,000. It is a middle income economy. The combination of those we think will result in structurally Slower Growth so policy can make a difference at the margin, if china starts to try to grow quickly a could do it for a couple months but then i suspect it would fall back to the slower baseline. Shery we have been hearing more about the potential chappatta can by nation of china japanification of china. There is that story but even the u. S. In the last 100 years as the rate of Economic Growth has slowed i guess we do not have to raise the specter of japan but for the boj i suspect the outstanding policy statement at the moment is this commitment from then to deliver for the easing if required. It seems increasingly redundant and i do not ask do not know if anyone expects meaningful risk of further easing in japan but the question is if or when they start tightening policy and i suspect it is not this year. Shery will they take the weakness of the yen into account . I think so. They will view it as something helping inflation but not necessarily a permanent influence. There has been a global inflation pulse helping inflation in japan rise but it is not necessarily a permanent influence. I think they really want to see the economy is operating on a different pulse and there is more domestically generated inflation in japan. Haidi when it comes to australia with Michelle Bullock at the helm, it is a challenging time and you get the feeling fell on his sword and the hard work has been done. I was focus on the policy task instead of the individual. The rba and whoevers leaving it is doing their best trying to deal the mandate, a big part of which is keeping inflation between 2 and 3 and trying to deliver policy to get if they are when it is not there and the economy has slowed and domestic demand has slowed and we have a New South Wales budget tomorrow we are we will likely see a of spending and reply otori station around spending re prior to fertilization spending. Shery no one expects hikes at the meeting but what will we expect from november or december . Im focused on that meeting expectation the neutral Interest Rate is below current levels. I think eventually we will get fed easing but overall the fed will probably find the longer it goes on with Interest Rates higher and growth is slowing it is not slowing sharp lee and that evidence from the current michael will be them gradually bring the estimate of neutral up and that will validate what is in the market and the way the dollar has been trading. Haidi still ahead, the boj meeting in tokyo with the former assistant governor at the bank of japan will be on with us but before that industrial accident action against u. S. Auto workers in day three with both sides far from resolution. We get the latest next. This is bloomberg. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. That first time you take a step back and see everything youve accomplished. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy with godaddy. I am doing this. With a partner that puts you first. Start for free at godaddy. Com sell shery u. S. Autoworkers continue striking against ford, gm, and still lantus is the uaw union pushes for a dramatic reset of working conditions and wages. Lets get more from our auto to partner reporter in new york. How far part of the sides . Very far apart. Over the weekend, still lantus increased the offer to 821 raise. Gm with a 20 raise, the union is requesting a 36 raise so there is a wide gulf between them at this point haidi haidi . Does that mean we do not have an end in sight for how long this could last . One analyst thought this could last through the end of october. It is hard to know at this juncture. The companies are making some movement. The union not as much. There seems to be a fair amount of disagreement. Uaw yesterday said it was making progress with ford. Today it said it negotiated with gm. Shery how do we tap how do we calculate the cost for both sides . One analysis is if there was a fullblown strike of all the workers we would see 9. 5 billion dollars in the first 10 days but we do not have that. 13,000 workers are striking at three plants, one for each company but it makes up 3 of the u. S. Gdp so any long stoppage will impact the economy. Haidi what are we hearing from President Biden . He is coming out strongly in favor of the union. He says the company should share record profits with them and that is owed the union because they did a lot of concessions for gm and chrysler when they went bankrupt in 2009. Joe biden needs the labor vote in michigan where a lot of these workers are. He took the state in 2020 but only leads by one percentage point in pulling against trump. Shery when we are shifting fast to electric vehicles, where would the breakthrough come from . What is next . The collectively the companies have spent more than 100 billion dollars on electric vehicle programs. A lot is invested into evs and that is why they say they cannot afford the union contract. They could ratchet up the strike from the union perspective. They have taken down one plant at each company. They could go to the big pickup truck plants next, the source of major product profits for each of them. Haidi keith norton in detroit with the latest and we will stay on the strikes. The gm ceo says the offer to the union was strong and the shutdowns could have been avoided. I am extremely disappointed and frustrated that we are at a strike. Gm has an exceptionally strong offer on the table. It is historic and the largest increase from a wages perspective in our history along with worldclass Health Care Benefits and other prevention provisions like job security so when you look at the strike through the agreement we have on the table, we do not need to be here. They have one plant down. It will impact three very important products. The Chevrolet Colorado and gmc canyon are both in Strong Demand and the chevrolet cargo van that does exceptionally well so this has an impact and we will see where they go next. We are ready for this. As we have dealt for covid and the Semi Conductor shortage and other shortages, our team knows how to manage these situations and are staying agile and we will do what is right for the company but this strike did not need to happen. You made a substantial increase offer and the uaw does not want it. You agreed they do need and deserve increased wages. But this is more than that . In terms of your need to move into electric vehicles and they believe moving to those will cut the workforce by as much as 40 . This is a once in a century transformation we are moving from internal combustion vehicles to electric vehicles and gm has so many evs in the process of launching and this is important to securing our futures and we need to get the vehicles out and they are wonderful vehicles and we have waiting lists and orders in place so it is important we need that demand and from a gm perspective for job security, we have jobs for all our people as we make this transformation. Two years ago we started planning for this and one reason why we invested in doing our own power units, a component, we designed them internally and we are allocating that production to the plants that build internal combustion engines now so we have worked carefully to have a job for everyone so we can transform together. Get a round up of all the stories you need to get your day going. Terminal subscribers go to dayb. Customize your settings so you only get the news that you care about. This is bloomberg. Haidi breaking news. Kkr has bought a 20 stake in singtels data center unit. The fund managed by kkr will have the option to raise the state to 25 by 2027 and the fund will commit up to 1. 1 billion for a 20 stake initially in the singtels data center business. Subject to certain conditions including Regulatory Approval and filing this is a transaction not expected to have any impact when it comes to the numbers for singtel for the year ending march 2024 as Telecom Assets are in focus particularly in markets outside the u. S. Including in italy as a well where we hear kkr has bought a 20 stake with an option to increase it up to 25 . Michelle bullock takes over in australia as the First Central Bank governor and they are embarking on the biggest overhaul in decades. Is the rba likely to look different under Michelle Bullock . Near term there will not be a lot of changes but in 2024 we will see a Different Reserve Bank that implements the recommendation of it and be dependent review which suggested to Monetary Policy boards so we will have two separate boards, Monetary Policy and governance so we have 18 members on the board from the two boards included so we will see a lot more people be appointed on the board, the Deputy Governor is yet to be appointed so that will happen soon, we will have fewer Interest Rate meetings, more press conferences and hopefully better messaging in communications. Shery what are her Top Priorities in office . The revamp . She was recently asked what her Top Priorities were and she mentioned that her biggest ones are the fight against inflation, which she described as being still too high and Interest Rates are at 4. 1 percent and economists are predicting another 25 basis point hike this year but it looks like we are near the peak and her second priority is the revamp and implementing their reviews recommendations so also bringing about a change in culture and culturing the atmosphere where debate and respectful challenges [indiscernible] as well. The economy is tracking all right. Four Percentage Points of rate hikes since last may and it looks like the economy is absorbing them well. There were initially fears australia might slip into recession because of these hikes and that is largely because of how indebted australians are, we are amongst the most indebted in the world with close to 200 debt to gdp ratio and that, it does look like people are taking it in their stride, consumption has fallen off a cliff but it is not dire on the job market continues to be strong and unemployment is low so it looks like we will avoid recession and Economic Growth will continue through next year as well. Shery our economics reporter joining us from sydney. Here are the top corporate stories. Ubs cut one dozen jobs in the u. S. Investment job bank last year as part of the integration with Credit Suisse. The cohead of Consumer Products and retail was impacted. The firm is expected to cut hundreds of jobs in asia and could cut more than half of the overall workforce of Credit Suisse. Bond yields arranged by Credit Suisse and bank of america and connected to debt swaps are under scrutiny after the Global Center issued new labeling guidelines. At the heart of the issue are blue bonds using debt swaps to further marine conservation. South korea has asked apple to report on electromagnetic waves being invented from the iphone 12 models after french emitted from the iphone 12 models after french regulators found that devices release more electromagnetic radiation than permitted. They say the issue is not a safety concern at apple. Up next, senior u. S. And chinese officials discuss a possible meeting of the president s later in the year as tensions continue simmering between the two sides after a series of highlevel meetings. Details of the talks in malta are next. This is bloomberg. Its an amazing thing when you show generosity of spirit to someone. And you want people to be saved and to have a better life, then you dont stop. The idea that we have saved five Million Peoples lives, its overwhelming. Its everything. Annabelle this is daybreak asia i am annabelle with a check on markets with 30 minutes for the opens for seoul and sydney, tokyo shut for Public Holiday. Ahead of that we are taking a look at how futures are coming online and broadly we are looking set for weaker trading throughout the session, sydneys futures looking to a drop of 6 10 of a percent and kiwi stocks already online in the red here that follows the lead in from the wall street session on friday where we saw stocks ending on a downbeat note but also ahead of what is going to be a very pivotal week for centralbank action over the coming days and focus really very much on the fed leading that with most economists predicting it to stay on hold. The equity moves, and taking a look at whats happening in the currency space. Japan is shut for Public Holiday but keeping an eye on the japanese yen trading around a muted low against the greenback. At the boj, and bank in focus. We have seen a lot of agitation that perhaps policymakers would look to signal a possible shift out of negative rates. Policymakers now pushing back on that but little to say why we wont see 150 towards the end of this week ahead of that meeting. Otherwise the big focus on the offshore yuan as well as getting the session underway, given we dont have a lot of data today and more focused looking to be on the yuan fixed. We have seen policymakers in china pushing back on that currency weakness with those stronger fixings coming through. If we do see that again today it could be a positive factor for its larger trading partners. Korea, taiwan. We will see how those currencies trade throughout the session but also there is more commodity linked ones like the ossian kiwi dollar. Shery a possible november meeting between president s biting and xi jinping was on the agenda when senior u. S. And chinese officials met over the weekend in malta. Lets bring in our chief north asia correspondent Stephen Engle in hong kong. This was a meeting between Jake Sullivan and wong lee. How significant was the meeting . Stephen they had not met in person since may so significant. They have a lot of issues to discuss whether it is the war in ukraine as well as taiwan and also that potential meeting in San Francisco in november. Both sides i believe are working behind the scenes to lay the groundwork for and that means having channels of communication open between the legs of the National Security advisor Jake Sullivan as well as the foreign minister and shop top chinese diplomat wong lee. They did meet over the weekend and talks wrapped up yesterday. No definitive answer on whether president xi jinping and biden will meet in San Francisco on the sidelines of the aipac meeting. They are talking and meeting facetoface and in all places malta in the mediterranean. It comes as wong is on his way to moscow as well. He will have talks in moscow with his counterpart, that is something Jake Sullivan expressed to him, concern obviously given beijings support of moscow amid the war in ukraine. This at a time when other World Leaders are heading to new york for the United Nations general assembly. Obviously a meeting that both long he and xi jinping will escape. This is an important Halfway Point between that may meeting and a potential president xi and biden meeting at aipac and San Francisco. Not a lot was achieved. They both reiterated their stances on taiwan. Obviously the United States reiterated its concern about beijings support of moscow. Amid that war in ukraine but again they are talking and that is always a good thing. Haidi meanwhile back in china the premier met with a visiting malaysia Prime Minister. Did we get anything from that meeting . Stephen it was hard to say. This is on the sidelines of the china asean summit in southwestern china. At the Prime Minister of malaysia is there and no doubt li qiang the premier of china tried to sell him more on the belt and road initiative. As we come up on the initiative of that as well coming up in the autumn when they will have that big conference in beijing on the belt and road initiative. Of course, it has had some fits and starts and allegations of diplomacy by the west. Again according to the chinese readout the premier sold and said basically to abraham that malaysia is a good partner for the belt and road and also says there are other areas of cooperation including in the Digital Economy as well as energy and automobiles. So not a lot really that came out of that readout from either side. Haidi chief north asia correspondent there with the latest. Sure German Foreign minister says the European Union must reduce its reliance on china. She told us about how the regions strategy has changed amid the global fallout from the war in ukraine. We have learned our lessons from our russian dependencies. Again, i believe if you can be self reflective, saying ok this was obviously not the right way to go. We had such a high dependence on russian gas and oil but especially gas and obviously in the past former governments took decisions which were not right. Speaking about the gas pipeline, it is a purely economic thing. Nothing to do with geopolitics. I was in a position back then and i was also at the peninsula where there was a source of this pipeline coming through, too many people there. I could not only feel it from our partners in poland and the baltics but this is obviously a geopolitical dimension. Before election i was always arguing we have to not only trust on words but we have to see the action and now when we came in government we said a collision treaty that we have to rephrase our dependencies and we also before the russian war that we will do a new china strategy. And after the full invasion, wheat not only wrote the strategy but we prepared for the things we should change in the future. What about chinese retaliation . Yes. First of all understanding that if you are bound to closely it can endanger yourself. Especially if you are having such a high dependency of a regime like in russia which is undertaking peace and order. Therefore cutting down dependency from russia but also know with regard to china. Derisking is our understanding of the strategy. Note decoupling because you cannot decouple in an internet collect in an interconnected world and a connected world is a way to peace. But we should be able to defend ourselves. Not being naive. So being a partner in climate issues, being a competitor obviously with china with new technology but also seeing that we are systematic rivals and we have to protect our own vulnerability. And this is where the Commission President comes into strengthen our Critical Infrastructure in europe but also looking at Outbound Investment streams. Shery German Foreign minister theyre speaking to us, chinese Property Developer Country Garden is facing two key that tests on monday. One release a dollar bond and another to a yuan note. Lets get more from the Shanghai Bureau chief. Walk you the latest on this developer. Charlie Country Garden as mentioned is dealing with a snowballing financial crisis. The Company Creditors are going to vote on a proposal to delay a you on note by three years and the deadline is today. They have delayed it twice and today will be the third time. At the same time they are also facing the deadline to pay interest coupons on dollar bonds. The company is sitting on a massive pile of debts totaling more than one trillion yuan and a lot are due in the next six months. We dont know how creditors will respond to the proposal yuan note, if it defaults it will be more ugly than probably evergrande which has already defaulted. Country garden has four times as many projects as evergrande so a default will definitely send shockwaves through the whole industry. Haidi speaking of evergrande things are getting interesting there. Are there criminal implications involved . Charlie yes. That is just another twist in the saga involving evergrande. What we heard his police put out a statement over the weekend saying they have detained several employees of evergrande wealth which is a unit of the developer. We dont know how many people were detained or the reasons behind it. What we know is one of the detainees has the surname of the family head of the unit. The family is facing a liquidity crunch. Back on august 31 evergrande said they had problems repaying Investment Products, materializing this month. Back in 2021 evergrande unit, we know they have defaulted on 40 billion yuan worth of Investment Products triggering a nationwide protest. The company has said it 70,000 people have bought into the products and many are employees. Shery evergrande has been at the center of this property crisis. What is going on in the real estate sector right now as we have talked about Country Garden, we continue to see these challenges with evergrande. What is next . Charlie the government recently have taken a series of measures to prop up the market including lowering the purchase threshold in some cities. There is some evidence that investor interest is picking up a little bit, project sales are improving. However we dont know how sustainable this ongoing rally will be. All eyes are on the next two months of sales. A traditionally good season for property sales. Having said that, chinas Property Industry is facing some serious structural issues including a falling demographic birthrate is shrinking, and also facing a lot of uncertainties about household income. On the other hand, supply is huge. According to a recent Goldman Sachs report there is like 27 trillion worth of inventories and it will take five years to clear the excess stockpile. Haidi bloombergs charlie there, coming up next week at a preview of bojs policy meeting this week as investors tried to read these signals from governor away to the former assistant governor is joining us next. This is bloomberg. I wouldnt have my business if it wasnt for my website. Once i decided to go with godaddy, the process was seamless. I was able to create my website on my own. To have it be exactly what i want it to be. Be able to integrate my appointment app. Godaddy was able to provide everything that i needed. The whole image of who i am and what empire is is presented through my godaddy website. Collects three major Central Banks are in focus starting with the fed on wednesday. Policymakers are expected to keep rates on hold while keeping further tightening on the table still. The boe is seen raising rates by a quarter Percentage Rate point the next day in the bank of japan on friday. Investors watching policy signals from the bank of japan governor. Shery we are watching the comments from the governor last week because traders see that as a potential and to negative rates. If certain conditions were met. Within a day we actually saw pricing in the bond markets indicating expectations of a hike by january. Our next guest thinks the boj will keep policy on hold this week but he is watching comments around the inflation very closely. The former assistant governor at the bank of japan and now executive economist of research and technologies joining us, great to have you. If we are not expecting a change which sort of comments are we expecting around price pressures in the country . Thank you for having me. Actually the governor just 10 days ago was head he would not rule out the possibility that he would raise Interest Rates at the end of the week. At the same time a very big if. With the boj still paying attention to the risk and next spring, because the dynamics between the price and wage growth they are assessing their approach before Going Forward. The next meeting will be very important so continued price pressures and also encouraging profitability and also business leaders, i think those will be very important Going Forward for investors here. And to judge whether the boj will really go ahead with a major shift in policies by the end of this year or early next year. Im looking for any indication of policy information change or communication change from the government, from the boj and the governor of the bank after this. Haidi one of the risks for the japanese yen depending on the communication . Kazuo i think the boj will be extremely careful looking at any unnecessary momentum for the weaker yen because the government is not comfortable with the current level of the end. They are careful to create any further momentum for a weaker yen. I think the boj, of course the governor will be very careful with communication about the Yen Exchange Rate Going Forward. Haidi how fragile is reflationary sentiment given the sluggish growth we have seen on wages and some of the disappointing data when it comes to Household Spending . Kazuo yes. Actually, prices are rising, inflation is at a 40 year high rising at a pace even faster than with the boj predicted earlier this year. Actually because of that Household Expenditure even after the economy after covid19 is over, still consumers are relatively cautious about spending more. At the rate of consumption is still below the covid19 level, precovid19 levels. I think thats one area that the boj is concerned about. How to create more vigorous domestic demand to overcome any uncertainty from the Global Economy is the key issue the domestic recovery and therefore inflation. Haidi you talk about uncertainties with the Global Economy, how much of that impact is going to be the divergence with what the fed does but also how much of that comes from the growing uncertainty over china from the demand side for economies like japans . Kazuo both elements are very important in terms of uncertainty with japans economy. First of all the United States is the largest economy, we are still in a good growth relationship in terms of economy so the u. S. That would certainly affect export environments and profitability of major corporations of japan. On the other hand, if the u. S. Economy continues to expand rapidly that could create an environment where the yen could be weakening faster so in either case i think there is uncertainty about the environment around japans Economic Policy and Monetary Policy. And china as you mentioned is also another major element of uncertainty. They actually export to japan 20 of japans exports go to china. And also any problem in china, we still have our own geopolitical tensions so Going Forward in china it would be a very important element for the boj to judge. Shery if we are not expecting any change to come from the boj until next year in the spring of the implications for the bond market because for the longest time we talked about how distorted it has been and what would be the implications for the global bond markets once the boj moves . Kazuo thats the question. First of all we talk about yen, a dramatic stance with bond yields in japan and ultimately even though the boj decides to abandon income control, my thought is next spring and targeting the Interest Rate, still be on that how much the boj can raise Interest Rates really depends on the inflationary development Going Forward 2024 and 2025. In my judgment it is what is known as a new longterm rate in japan so even though the rates have raised significantly still it can be very low so it all depends on the situation going after. And the implication from the bond market globally, i dont think that will be a big shift in the Global Environment in terms of bond pricing. I think the impact is much more important in terms of global market. Haidi executive economist for research and technologies and a former boj assistant governor, great to chat with you on boj week. You can catch him every week every monday at 8 40 in tokyo, that is 7 40 p. M. Sunday evening in new york. This is bloomberg. Al Financial Health and youre trying to do that through multiple systems, that makes it very, very cumbersome. Its not just tech, its not just people. Its how they Work Together to provide that experience to the customer. As a finance organization that is what you want to do. Oh, booking. Com somewhere, anywhere. I just want to lie motionless in a chair booking. Com, booking. Yeah allday Energy Starts with clean hydration. Lmnt. More electrolytes. Zero sugar. You feel the difference when you get it right. Stay salty. Shery welcome back here some of the top geopolitical stories we are watching. South korea has condemned military cooperation between north korea and russia. The president says the alliance violates International Sanctions and he plans to raise the issue at the u. N. This week. Russian president Vladimir Putin let met last week with north korean leader, the kremlin insists no military agreements were signed during his visit. Brazil has called on rich nations to pay for the worlds transition to sustainable energy. Its Energy Minister says developing countries cannot finance and Energy Transition like europe and the u. S. Brazil has been calling undeveloped nations to follow through on the climate financing pledges which currently fall short of the trillions of dollars needed. Haidi lets take a look at how we are setting up with asian markets. Coming online in five minutes or so we are looking pretty muted given we do not have a terribly strong lead on wall street on friday with the tech led declines. We also saw a gauge of u. S. Listed chinese stocks as well which does not bode well for the hong kong and Greater China open. We have japanese markets closed for a Public Holiday. All of this as we embark on a central bank heavy week everything from the fed to the boj to the boe all weighing in. Sidney futures off by about half a percent, kiwi stocks are modestly on the downside. We are looking at s p futures a little more optimistic. Watching dollaryen as we head into that bank of japan decision in the end of the week, with that policy divergence between the u. S. And japan looks like i then will be key. We are sitting behind that 148 handle. Broadly speaking it is looking like a really risk off session as we get into the start of trading. We had derivatives contracts tied to stocks index options and futures expiring on friday so we did see that roll of existing positions in the commencements new positions as well as that benchmark rebalancing. There is a lot in the freight when it comes to what investors are contending with. The market opens in sydney and soul are next, this is bloomberg. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. The power goes out and we still have wifi its possible. To do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. 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Head to golo. Com now to join the over 2 Million People who have found the right way to lose weight and get healthier with golo. If sports fans built a streaming service. Cant believe the football season is over. Yeah. But with my stuff, we can rewatch all the games weve recorded. The minnesota comeback jjs finale. Butt punt oh, is that what the my stuff feature was invented for . Saving buttrelated content . Cause i thought it was for keeping your favorite tv shows and movies all in one place. Im sorry, mr. Sanchez. Live tv and sports. And more but mostly sports. Thats fubo shery this is daybreak asia we are counting down to asias major market opens in an actionpacked week in terms of centralbank decisions. Do have policy decisions from the likes of the fed, the boj and boe to name a few. Annabelle you cant blame investors for feeling a little cautious going into the start of this week given we had so many things at play as well, the rba governor starting today, we also have labor and unrest and organization with the unions. You talk about the impact on natural gas, the impact on the auto sector. Lets get to annabelle for a look at how all of this is coming together with the start of trading. Annabelle a lot of things for investors to way as we approach the opens for japan, japan a shot today but south korea and australia coming online. No trading in tokyo or start of trading for cash treasuries. At the start we can expect something fairly downbeat throughout the session because of the clothes from session and the kospi, will wait for life pricing on this one. We did have wall street and in the week on a downbeat note. In that general level of uncertainty. It is this 36 hour window where the Central Bank Bonanza kicking off with the fed on wednesday, no expect changes in terms of the key rate but we have some policymakers guiding to stay on hold and economists as well expecting that. A host of other Central Banks and focus and in asia it is the philippines, indonesia and ending the week on friday with the bank of japan. Question marks as to whether it will signal any exit away from negative rates but the fed and the cues that policymakers will be taking from their could really set the direction and the tone for markets throughout the end of the year. That is the live pricing we are starting to see now for the kospi and the caused act, the tech heavy index. We did see big tech leading losses in the u. S. Session friday. The korean won there a key watch as well. We are seeing a little weakness coming through in the currency but still it has been one of the bigger gainers over the past few sessions given that strongerthanexpected yuan fixing china. Take a look at what is happening in australia at the start of trade because it is that centralbank focus but here on a new governor taking the helm at the rba. This is Michelle Bullock. She is seen as a continuity person from phil lowe but she is a point of difference from phil lowe really being counted on to show up the rv his credibility because this hit a low point during lowes tenure when his Forward Guidance that Interest Rates were unlikely to rise before 2024, and that clearly proved incorrect. Shall is someone being described as an effective communicator in the skill set to be tested. We do have the asx 200 fairly flat as we come online still watching brent crude and you are seeing further gains here at the outset. Very modest ones still coming off three straight weeks of moves higher. It is still that mark markets assessing those production cuts from saudi arabia and russia. Shery our next guest thinks u. S. Equities are heading into a bull market with the earnings recession now behind us. It discuss the implications for asian markets with Mark Matthews head of Asian Research at julius baer. Great to have you with us. You think this is actually a full market that we are already seeing, is that why you are overweight on u. S. Equities and what are the implications of the fed potentially staying higher for longer . Mark we are overweight u. S. Equities because they have a much higher return on equity than equities and most other places in the world and i am not american but i will say that americans work harder. It is not because they want to but they only get eight paid holidays per year. Canada where i am from we get 29 paid holidays per year etc. Then youve got the fact that the Technology Sector is a third of the index and kicks off these massive cash flows and is highly scalable. That cash on their Balance Sheets makes them earnings accretive and a higher rate environment because they are now getting 5 in that cash. Apple has 60 in the cash on its Balance Sheet but as to the bull market which started in june that is when the s p rose 20 from its low in october last year, yes we do think it continues. The earnings, the consensus thanks flat or round flat in the third quarter. But if you exclude energy were earnings are forecast to be down 40 then for s p x energy it will probably be up 3. 525 year on year that will be the first positive earnings reading and three quarters. Next year we are looking for Earnings Growth for the s p of about eight to 10 so with that backdrop i think market scandal higher. Shery getting back to your point about u. S. Labor conditions, i guess there a reason why we continue to see this u. S. Auto workers strike. Given the risks in the u. S. Economy whether it is this potential of the labor negotiations to drag or potentially even Government Shutdown as soon as next month, are you concerned at all that it might dent Consumer Sentiment further . Mark i am not. I am very sympathetic to those autoworkers but i would note the uaw and the three Car Companies already started talking on saturday. The standoff did not last for very long and in terms of dealer inventories, i think the average is, gee now i cannot remember but it is easily over 30 days. No i take that back, it is more like two months. Must this drags on for two months i dont think youre going to see a disruption in consumption so if you look at the quits rate according to the jolts labor reading it has actually been decelerating which means theres less people leaving the workforce intuitively, therefore less more supply of people should mean that the labor force remainss were not going to get a big wage spiral. At the same time i dont think were going to get higher unemployment. It is in a nice place right now. Haidi that is interesting. Do you think the peak window of opportunity for labor and Union Organization and negotiation has peaked because we have seen spots of it whether it be automakers or the ongoing in lng workers striking at chevron, is that not a significant element when you take a look at upside inflation risks . Mark i think it is in the sense that baby boomers are retiring and you have got this entire cohort of people in their 20s who mysteriously have stopped working. There is a structural dynamic to whats going on and on top of that we have the election next year. Michigan is a swing state. Right now it is airing on the side of the democrats but you never know. I think that the federal government will be sympathetic to try and help those workers get some increases in their workers and Car Companies have pledged to increase wages by 20 . That is about half as much is what the workers want over the next four years but still it is something. It is better than nothing. Haidi you talk about a structural dynamic. Ive got to ask your views about china at the moment. We have seen this 200 plus tidbits of policy support, it may stabilize the property sector. What do you make of the structural challenges Going Forward . Mark i look at a very simply and that the government feels there is a big mess. They have to clean it up and if they dont do it now its just going to be out there waiting to be done. They are attacking all these various problems in the economy and the property one happens to be the biggest one because it is a third of gdp and no country should property be a third of gdp so they are right to want to address it. But it does mean a very painful process of rebalancing and i dont know how many years that takes but it could take several more years and meanwhile property prices will continue to go down. They are three times gdp. That is too high. I think if property prices go down people feel less wealthy, they consume and invest less and it will become selffulfilling so hard to see light at the end of the tunnel but the only good thing i can say is it kind of had to be done. They cannot run their economy like this forever with all of these inefficiencies that have been built into it over time. I think we will look back five years from now and be glad they did it but right now it is very painful. Haidi i am glad you say five years is the window of pain we will see in the mediumterm but i guess that means you probably dont think valuations in china are appealing at this point. I know you are overweight in ust like anything in asia . Do you feel its a different story this time in japan, do you believe in india or partially taking the home for faster growth while china is sorting its issues out . Mark just to address the first part of your question, valuations and china are incredibly appealing. But unfortunately it is probably a value trap so we do like japan and india. Both of those markets interestingly are breaking out technically. Japan has the yen in its favor down 50 making it extremely competitive. Big buybacks going on across the big caps which should continue because cash is half of the assets on companies Balance Sheets, incredibly lazy Balance Sheets for the last 20 years because they do not do any investment or buybacks or increased dividends and now they are. And india, i think the story is everything is working out very well there. Now the banks have written off all of their bad loans so they have started to lend, there is a cycle, the corporate sector needs to borrow, people are becoming wealthier as the Technology Sector becomes bigger and they have put in a big physical infrastructure. A lot of people dont realize this, the highways are good, the airports are good. It was not that way before so they are in a perfect position to benefit from the rejiggering of Global Supply chains. A lot of manufacturing is moving into india now, that has big repercussions for their current account which i believe will go into surplus and im believe should mean there currency does not weaken structurally the weight has in the past. Shery head of Asia Research at julius baers with his calls on asian markets. We are just a few minutes into the trading session in korea and australia lets see whats moving with annabelle. Annabelle thank you. As you said 10 minutes into the session japan is shut today for Public Holiday, we are taking a look at that index of asia excluding the stocks in tokyo. It has been subdued trading so far throughout the session, just a couple themes starting to develop. Firstly we had seen Energy Stocks moving higher at the start, we will get to more of those in a second but materials are now starting to take more center stage. It still modest gains up, that didnt build on gains that came through on fridays session so it does seem at least some investors from the materials sector are still looking at a lot of these growth signals in china more positively. Lets change on and take a look at the Energy Stocks in particular because we did just have brent crude coming on and we still still seeing modest gains here but brent crude building into gains for a Third Straight week. Oil is Still Holding around a 10 month high as the market continues to digest those apple cuts from russia and saudi arabia. The question becomes whether you have higher Commodity Prices whether that feeds into the inflation outlook ahead of key centralbank decisions this week but if you take a look in the bond space, bond markets are still skeptical about oil rally. It is going to have major implications for inflation because perhaps there is an appreciation that saudi arabia and russia can unwind the current ad hoc productions. Haidi still ahead Credit Suisse with their outlook on chinas property specter sector as Country Garden faces two more debt test today. In the u. S. Workers rejected pay rise proposal, we will get reaction from a republican president ial candidate mike pence, this is bloomberg. Haidi auto workers in the u. S. Are continuing to strike against ford, General Motors and others as the uaw union seeks a dramatic reset of wage scales and working conditions. Our Global Business editor currently joining us, it appears there is a huge gulf between them as we start off the week. Lets step back, what the uaw has asked for is a 36 pay raise any 32 hour workweek that is unheard of in American Manufacturing and over the weekend still lantus came back to them with a 21 pay increase. We have seen gm come with 20 we can infer from comments from uaw president sean fain who said that was a no go for still lantus. Still lantus said it was disappointed and said it thought that was a compelling offer so where we are staying right now standing right now we are at an impasse. These are negotiations that could be worth billions of dollars and we will wait to see where they go. Shery do we have any idea at this point how long the strike might last and if it continues and drags what comes next . Karen this is hard to predict, they have said it could go through the end of october but lets look at the risks. If the uaw succeeds that could boost prices for the automakers by billions of dollars potentially. And if they do not succeed than that could hamper their efforts to expand so we are looking at severe consequences for both sides of the important thing to note is this is happening in michigan and its happening as we go into a president ial election. President ial joe biden himself has thrown his support behind the uaw and called himself the most labor friendly president ever. Debbie dingell of michigan has said this president ial politics has no place in these negotiations but given that context that will be easier said than done. Shery karen delete joining us from sydney and lets hear from former Vice President and current republican president ial candidate mike pence blaming the strikes on the Biden Administration it saying that the white house ev push has put pressure on the auto industry. Mike pence what im hearing around the country is that autoworkers are very concerned about joe bidens Green New Deal, heavyhanded effort to use taxpayer dollars to drive these Automotive Companies into electric vehicle production. Youve got 145,000 workers out there, many of them have built a lifetime making gasoline powered cars. Suddenly they see joe biden and liberal democrats pushing down this electric vehicle agenda. Ec states like california saying at the end of the decade they are not even going to let you sell a gasoline powered vehicle in the state. I think that is also driving this. The backdrop of the failed policies of the biden plus the heavyhanded effort with their Green New Deal to use taxpayer dollars to drive these companies away from the traditional manufacturing that so many uaw workers made it in. I think that is what brought us to today. Lets talk a little bit more about what sean fain and his Union Members are saying. They are trying to pay play catch up a massive gap between worker pay and executive pay. He said we are tired of living off of scraps left by millionaire executives. When it comes to wages, you opposed raising the minimum wage in 2007 as a congressman at that time. I believe it was five dollars and . 15 and they wanted to raise it to seven dollars and . 25. As governor you plotted in effort that would have local municipalities demand higher wages from some companies. I know that is in line with your politics so i guess i would ask you hear how should they be catching up . If wages kept par with Profit Growth over the last two decades with these workers be in the same spot . Mike pence lets be clear i believe in free Market Economics and Free Enterprise is created in the most prosperous nation in the world. We have to preserve that. Minimum wage debates, they always come up back in my day in congress and even when i was governor. He looked around the state of indiana and labor shortages today, nobody is making minimum wage. The market place is paying at a higher number across the country there are very few exceptions. I think you put your finger on it. I think what is happening with the strike, and im glad it only affects 13,000 workers so far joe so far. Mike pence because of all these workers go on strike that will have an enormous impact on an economy that is already struggling and literally on the verge of a recession heard i think rather than going back to the same rhetoric closing the gap between executives and others, we just heard that from President Biden, is to recognize that under bidens economic policies wages have not been keeping up with inflation. And hardworking americans in the heartland know that. Haidi republican president ial hopeful there mike pence speaking with balance of power host there much more to come here, this is bloomberg. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Shery the worlds oil refiners are struggling to make an of diesel set to inflate prices of the fuel that powers much of the Global Industry and transport. Energy reporter joining us now at the latest. Stephen, is this to do with the crude production shortfall we are expecting later in the year and how detrimental is that to diesel supply . Stephen this is definitely more of a supply situation then is demand. Supply is being hit for a number of reasons there have been refineries over the last few months because of the hotter than normal summer weather, they have been having a run at lower rates. On top of that you have some refineries saying we dont want to produce diesel we want to produce gasoline which regulatory consumers use that for their vehicles. Because there is a much stronger rebound in demand there. Because of that diesel supply demand and storage has been pretty tight and there is a layer of saudi arabia and russia on top of that. Earlier this month saudi arabia and russia said they were going to continue their cut of one Million Barrels per day of crude oil through the end of the year. The crude that comes out of those two countries are diesel rich which means there are few alternatives for refineries to go to. Not all crude is equal and when you remove that crude from the market that makes it very difficult for refineries to produce diesel Going Forward. All of those things together are pointing to when demand rises for diesel later this year youre going to be in a much tighter situation. What is being reflected in prices. U. S. Diesel prices are a seasonal record high. Haidi what does this tell us about the Energy Transition, are there implications for the transition . Stephen you could argue that when the world is transitioning to evs there is less interest to invest in refineries. In fact, across much of the developed world you are already seeing some refiners roll back the facilities. In the United States, europe, even japan. And they are not upgrading their facilities either because why would you do that if youre going to be in the middle of an Energy Transition switching to think that dont need diesel, why invest in that . We are in this weird middle period when there is not enough, there are not enough to evs out there and there is still Strong Demand for diesel. So there is this mismatch between both the supply and the demand and that is going to continue not just for diesel that could be for gasoline and other refined products. For oil, as companies try to struggle with how do we invest our money, how do we make sure these oil products keep flowing to the market, and at the same time how do we prepare for a future where there is not as much demand . It is a difficult situation and it is going to cause these sorts of crunches in the future. Haidi more market volatility to come no doubt, Energy Reporter stephen there with the latest on the diesel situation. It take a look at futures in europe opening up for what its a massive week when it comes to centralbank decisions including in that region the bank of england. But of course looking at the fed, the bank of japan as well as others. It euro stocks and ftse futures looking tepid at this point about a 10th of 1 lower. He saw that stock rally facing the key Economic Growth outlook as a major hurdle. German stocks have really been underperforming in particular, lacking the broader performance around the euro area into the year end. As we have seen that backdrop in europe and china continuing to deteriorate, dax futures are down about a 10th of a percent there. Watching the euro as well given we have had a little bit of a breather. If you take a look at some of the last couple trading sessions in the dollar, but of course the dixie continuing to extend those gains. So much of this is going to come down to the fed. For asia too. Shery take a look at the other side of the trade when it comes to the u. S. Dollar, the japanese yen we continue to see it about 147 against the u. S. Dollar. At this after hitting that november low. The big decision this week is from the bank of japan, not necessarily any changes expected on policy but we will be watching commentary from the bank of japan governor on inflation. We are seeing weakness when it comes to the korean won, 1328 extending those declines we saw in the friday session. Although we did see a weekly gain, it is really to do with falls and equity pricing in the kospi in the cause stack as we continue to see overseas investors cutting their holdings. Ill key wheat not really doing much either. Coming up next, u. S. And chinese officials discuss a possible meeting of President Biden and xi jinping, details ahead. People are always asking me two words come to mind for me. One is responsibility, the other is purpose. Its just so inspiring to do research that impacts human lives. Stand up to cancer has been a critical partner in advancing research for cancer. Cancer Research Saves lives. So please help us fight in this battle against cancer. Shery breaking news out of singapore were getting the nonoil domestic exports year on year a contraction much bigger than expected from economists in the month of august of 20. 1 . Really almost at the same level of the previous month and even the previous month contraction has been revised slightly downward. This would mark the 11th year on year that we are seeing this contraction in singapore for this heavily exposed market to the Global Economy. No decks when it comes in the month on month numbers, also a contraction of 3. 8 . The expectation was for the number to turn positive, that do not happen. Electronic exports year on year, a contraction again. At double digits again of 21. 1 . We are talking of double digit contraction for electronic exports from singapore for the past 10 months already. It is not necessarily just about singapore. All the other trading partners have seen double digit declines in shipments including south korea, that is heavily exposed to equipment exports as well. But the numbers do not paint a pretty picture for singapore with a bigger contraction on nominal domestic exports year on year of 20. 1 . Lets see how are setting up for the Broader Market trading day. Well, what are you seeing . Annabelle keeping an eye on what is happening in the energy space at the start of trade here because we are seeing brent crude continue to build on those gains so three straight weeks to the upside here again just modestly higher to get underway but it tells us the market is still really digesting those output cuts from russia. In saudi arabia. There are calls for oil to top 100 a barrel by the end of the year at this chart here taking a look at net long positions for brent and wti. Those jumped 40,000 contracts added by hedge funds over the past few days. We are at a 15 month high here. It is quite a big reversal that we saw. At the start of the year you saw that big plummet at the end of the First Quarter but hedge funds have certainly revised their outlook on where Energy Prices go from here. Amid those changing dynamics for the energy space, that is obviously weighing on the outlook for inflation and the question is whether that becomes an issue for price pressures toward the end of the year. Lets take a look at this chart because it is something that Garfield Reynolds has been speaking about on the mliv log and what he is watching in particular is wti. That is the line in blue, you can see that price climb. Versus what we are seeing in the twoyear break even. Essentially that is the gap between yields on regular treasuries and those that are protected or protected against inflation rather. You can see that is the line in orange and that has increased at a far more modest pace and is possibly due in part to the feds success so far bringing down parts of the inflation complex. Certainly this is a chart to continue watching, particularly as we approach the fed decision later this week. It is that question, will we start to see Energy Prices start to weigh on the inflation outlook. Garfield saying no the reason partly building into that as well is that russia, saudi arabia, those ad hoc output cuts could easily be reversed. This is a question or again driven more by supply not from the demand picture. Haidi lets take a look at china u. S. Ties. Possible november meeting between President Biden and xi jinping was on the agenda when senior u. S. And chinese officials met over the weekend in malta. For more lets bring our chief north asia correspondent in hong kong. How significant do you think this meeting was . Stephen significant in the fact that course Jake Sullivan and wong he had not met in person since may. It is significant in the sense that they are trying to at least establish better lines of communication and perhaps lay the groundwork for a meeting between biden and xi jinping who have not met in nearly a year since the g20 in indonesia last autumn. That could happen in San Francisco in november on the sidelines of the aipac meeting. That is what they are laying the groundwork for. Why was it held in malta . They have had an interesting place in history for these kinds of meetings. It is not as significant as the malta conference in the waning days of world war ii in 1945 or the malta summit in 1989 after the fall of the berlin wall with gorbachev and george bush senior but between warranty and Jake Sullivan kind of the highest level of diplomatic engagement right now between battling superpowers. The sources have told us from that meeting they were able to talk about difficult issues like taiwan, they were able to talk about russias war in ukraine. Did they move the needle at all . Probably not. However Jake Sullivan did press wong he on his upcoming visit which begins today to moscow. He is going to moscow to meet with his counterpart there. Obviously the u. S. Is concerned by beijings support of moscow amid the war in ukraine. It is also interesting because wong yee as the foreign minister will not be going to the u. N. General assembly in new york nor will xi jinping so while the u. N. General assembly is going on long is going to moscow. There a lot of geopolitics going on. They met for two days essentially over the weekend in malta. Again i guess the big prize of that meeting would be laying the groundwork for a biden xi jinping leaning at aipac in San Francisco. Shery any more clarity as to what is happening to the Defense Ministry . Stephen that is an interesting one because we do know at the same time that the previous foreign minister was relieved of his duties, there was also a launch of an investigation in beijing of military procurement. Perhaps a legal military procurement by the pla and this man here is the defense minister and he is a state counselor. Extremely senior. He has not been seen in public in more than a couple of weeks, the United States believes that he has been removed. Other media have reported that he is under investigation for corrupt alleged practices in military procurement but it is another interesting sign at a time when it xi jinping supposedly put loyalists around him at the last party congress. That at least two senior officials, his former foreign minister and are potentially his defense minister and state counselor have potentially been ousted. Shery Stephen Engle our chief north correspondent north asia correspondent there. Coming up next almost a dozen chinese banks risk breaking the redhot growth streak this year as they tap their lenders for monetary support. We have the details ahead. This is bloomberg. Its easy to get lost in investment research. Introducing j. P. Morgan personal advisors. Hey david. Connect with an advisor to create your personalized plan. Lets find the right investments for your goals okay, great. J. P. Morgan wealth management. Shery Bloomberg Intelligence says more than 10 chinese banks including icu ec are at risk of breaking their years long Revenue Growth streak. That is because margins could shrink more than the 18 basis points consensus expects, lets bring in our senior ranking and fintech analysts. We know the challenges that the broader chinese economy faces especially with the property sector continuing to see a crisis. How about the fact that Monetary Policy is also loose . What are the biggest drivers of this downside . Francis first of all there could be lower mortgage yields from existing mortgage books or back book. Just because beijing may want to stimulate consumption or mortgage payless interest for the mortgages. That could deter banks and major markets. And economists are also expecting a lower primary in coming months. In order to lower overall funding costs for the economy. All of those could be some offsetting factors for the margins in the second half and consensus is expecting secondhalf margins to be very similar to firsthalf. I disagree on this point i think the secondhalf margins could be coming lower than firsthalf numbers. Haidi what is the bad loan situation looking like . Francis what situation, sorry . Haidi nonperforming loans and special category loans . Francis well i think those will still be a learning focus for chinese banks in the rest of the year. But obviously now i think the Chinese Government really want to prop up and restrict the Property Market in many measures have been adopted to stimulate may be property sales but overall at the very least until this point in time in august we still see very bad contractor Sales Numbers from the top 100 Property Developers in the country. They may still need to give more positive measures to help the economy and help the Property Market. Haidi Bloomberg Intelligence senior banking and fintech analyst with us, lets take a closer look at chinas property problems. Despite ongoing policy support measures are guest sees continued stress. The cohead of Asiapacific Research joining us now from singapore. Sandra, as we face to more debt tests when it comes to Country Garden today were also watching the sector more broadly. We have had not insignificant support measures coming through, bits and pieces but still do you expect cumulatively that over the next couple months we could see at least some stabilization if not a huge improvement . Sandra yes, that is a really good question. As your previous speaker was saying the august sales are really bad for the china property sector. All of the developers which posed increases where the state linked developers so we are seeing this continual split between the weaker privately owned developers including Country Garden as you mentioned, and the strongest state linked developers. And easing measures have been going on for some time so really for several months we have had a series of policy loosening. Both at the local and central level. The latest round did not come in until the end of august. I think people will be looking very closely at the september data. In october to see how the pickup has taken place in the sector if at all. We expect markets will still remain pretty volatile because there seems to be a lot of shortterm momentum trading on the back of these policy adjustments as well. Haidi the strategy at this point seems to be extend and hope for the best. Are investors buying this . We see so much caution, exemplified by some of the risk cases we have seen. Sandra i think so. With final ocean i think that has forced investors to look carefully at the socalled state linked developers because not all of them are created equal. There are some which may have a stronger state linked to the central government. There may be somes that have weaker state links either to a local government or some government linked entities. So in their case that would be china life. That forces investors to do their homework carefully when it comes to the state linked developers. I think its going to be difficult still, it is kind of kicking the can down the road which is good because Country Garden and then other Developers Need breathing space to see if these policy measures do work. But at the end of the day you still need investors and homebuyers to have confidence in the company and it is going to be very difficult for a brand which is viewed as distressed such as Country Garden to instill the confidence again in homebuyers. And also turn around their Property Portfolio because a lot of their land bankers in the lower tiered cities which are really struggling to recover compared to the first are cities in china. Shery no relief or china evergrande, chinese authorities detained some of their staff and now we are seeing criminal implications here. What are the implications for the broader property sector . Could we see more of these investigations into some of these Big Developers . Sandra i think in evergrandes case this one is probably an idiosyncratic event. I dont really have too much information about what was going on behind the scenes and the various misdemeanors that were alleged. I think that one is probably a Company Specific case. I think at times when companies do get into distress and cash is tight, you do tend to see some of these irregularities going on. Perhaps as Companies Get desperate and management gets desperate. Things can get very messy. I think for this evergrande case i would see it as relatively isolated to that company and i would not necessarily see a readthrough to other companies in the sector. Shery we started the conversation on the weakness that we are seeing in property sales especially in those august numbers. We saw those measures coming from policy may makers in the month of august so how fast can we expect them to be reflected in the data . Sandra there were some News Headlines just after the policies were announced saying there was a surge in sales in some areas. I dont know if that was an initial pop and then we will see that die down but if there was a surge in sales we would expect to see some of that coming through at least in the september data. When it comes out which will probably be reflected around the middle of october or so. So the individual companies will come out with sales figures and in the National Bureau of statistics will come out with the overall sector figures as well. But i think for us as analysts and investors we want to see more than one month of progress. We want to see more than a shortterm pop in the first weekend of sales. We will be looking for a more sustained track record after developers managed to achieve better sales and an improvement in home confidence. Shery we were just speaking to francis about this ongoing pressure that we are seeing in the Banking Sector. Of course also to do with whats happening in chinas property sector. What other areas of the chinese economy can we expect this to actually weigh on . Sandra there has been a lot of talk about contagion risks from the property sector of course its huge. Some people were saying it is contributing to about a third of gdp before the sector went into crisis. The obvious links are the Banking Sector as you say because they are being required to step up lending to some of the troubled companies. Local government financing vehicles because local governments are sometimes being asked to take over some of the distressed property projects. Although the funding conditions for those seem to be fairly benign at the moment amid the recent rate cut that could improve the funding outlook for local government financing vehicles. So those are the most obvious linkages and of course the second order effect on the small to medium enterprises. All of which continue to serve the property sector such as the contraction runs on the suppliers as well. Shery good to have you with us cohead of aipac research at credit sites we have more to come on daybreak asia, this is bloomberg. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Oh booking. Com, im going to somewhere, anywhere. A beach house, a treehouse, honestly i dont care find the perfect Vacation Rental for you booking. Com, booking. Yeah. Sweat isnt sweet. Its salty. Lmnt. More electrolytes. Zero sugar. You feel the difference when you get it right. Stay salty. Shery Chinese Media outlet Financial News is reporting the chinese the countrys economic Financial Fundamentals will keep improving as recent stimulus measures take effect. It lets bring in bloombergs executive editor for asian markets, of course is how the pop in the chinese yuan as well as we got better than expected data but how sustainable is this . Paul it is obviously a good question. And there is a kind of balance to be had here. I think when you hear those comments saying the economic fundamentals are Getting Better that should support yuan part of the reason the fundamentals are Getting Better is because there is policy easing going on. I think for the country as a whole there is a balance between a weaker currency actually being helpful and supportive for the economy but at the same time they want to avoid that risk of capital flight or too much money pouring out of the country altogether. For the moment we kind of seem has seemed to have met in equilibrium. The pboc seems fixed aggressively and taking other measures and including pushing a borrowing costs offshore to some the losses in the currency and it does seem to have found that modicum of stability. I kind of equilibrium. Haidi i cant remember the last time we focus so much on the daily fixing it has been quite some time but it has taken renewed importance. When it comes to broader asian currencies as well. Paul thats right one of the things that we have been looking at is the way that theyve been using the fixing not just against the dollar itself but against all the other currencies that are included within the basket. Of measuring the yuan strength and we have found that the pushback is spread out across the spectrum so there are efforts to really rain in what the authorities would describe it as speculative or oneway flows. But to avoid that kind of downward pressure on the currency had been pretty entrenched and firm as well. As you said, if they can create a little bit of appreciation pressure for the yuan and pushed up a little bit that should have benefits for china related currencies. The taiwan dollar, which also looks like it is at some sort of a turning point, the korean won may be and maybe even the yen as well which also is under pressure for similar and different reasons. The Interest Rate differential matters there as well. Not in such a difficult state in terms of the economy as china has been weathering its way through recently. Haidi plenty of centralbank decisions to watch out for this week what would be the most consequential ones for asian assets week . Paul great question. Is that the fed or the boj . I think for the western Central Banks, for the ecb, for the fed the big question is we know higher for longer we know its now higher for how much longer. So people will be looking to the dot plot to see if theres one more hike coming through the share from the fed, how quickly could they get to cutting rates next year, what to projections look like . That will matter when we get up the morning after the fed meeting but the boj is also now in play. People are interested to know if theres going to be any more followthrough on the bank of japan governors comments last through and as theyre starting to think about their exit from negative Interest Rates. If we do get more confirmation that that is coming onto the horizon, even if far off, if they have started to talk about starting to talk about it, than the market will latch onto that. And we could see the yen start to really get some sort of recovery from these very low levels we are seeing as of late. Haidi paul dobson there in singapore, certainly a big week ahead for investors. Take a look at some of the stocks we are watching ahead of markets opening in hong kong and mainland china. Developers and focus, Country Garden facing these two further tests a dollar bond note and others authorities have detained some of the staff of evergrande wealthy unit. The saga around the default a company seemingly entering a new phase. Shery take a look at how markets are trading early in the asia session, japan is on holiday but we are watching the japanese yen as it just hit that november low against the u. S. Dollar and is currently trading at that 147 76 level. That korean stock market in the negative right now, we are seeing Downside Pressure from information tech, Communication Services as well. Although the Energy Sector is trading in the green on the kospi, this as we get crude prices above 90 a barrel right now. It wti at 91. The asx 200 is completely in the red at the moment. We are talking about every sector in the red being led lower by tech and Consumer Discretionary energy is also down. Haidi coming up in the next hour we take a look at how effectives china stimulus measures are improving and boosting any recovery and citigroup joining us for that discussion. Plus moodys investors staying negative on chinas property sector the Economic Growth challenges dampening sales, that is it for daybreak asia. Markets coverage continues, this is bloomberg. Its an amazing thing when you show generosity of spirit to someone. And you want people to be saved and to have a better life, then you dont stop. We have been able to reach over 100 Million People impacted and affected, and at risk of hiv. The rocket fund takes all of the work that were doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. The idea that we have saved five Million Peoples lives, its overwhelming. Its everything