Checking with equities on the cpi print really playing out in some senses. Its a bit of a core reaction to it by equities, but tech dragging the Hong Kong Market down, in particular. That is the yuan at the bottom of the screen. Trading the onshore yuan. Theres a look at chinese or should i say, Hong Kong Markets and tech as well. Yvonne its not just the yen against the dollar, we are watching most of these majors, especially when it comes to the euro. The end this weakest than stew thousand eight against the common currency. We are eyeing 145 for dollaryen right now. Joining us now is our effects and rates strategist, michael wilson, with more. We are getting close to those intervention levels now. Are we really focusing on this now . Are we likely to see anything . Michael good morning. Just above this 145 level, i would think not. I think we have to Venture North of 146, 146, 148. It would have to be done in quick fashion to get the ministry of finance hot and bothered. The way that the price action has panned out, yes, we have risen the last four days, but you look at it in weekly terms, its a little bit choppy, and weve arrived here just as the u. S. Data is suiting the fed. They are probably set for a pause next week, but i think that its going to be in all the move. If its an all they move up from 145, i would suggest that todays effort, you have it well above there now. If we do grind up through 145 to 146 we find that the backdrop is still there. That japanese data speaks to a weaker yen. The ppi i think tsongas there is nothing aggressive or barriers arent taken now in a big way, i think the ministry of finance would be very selective in its jawboning. David just a counterintuitive question. If rates are headed higher, why is the yen notches we could against the dollar but weaker against the board . Michael its been crowded by the issuance in the state. We had every state, u. S. Cpi print last night. But then we have yields finishing higher across the curve because of that big 30 year auction. Once we get past all of that and get into a normal week, if you could call it that next week, you would see where the equilibrium level might be. And if u. S. Yields hold their gains after all of these auctions have passed, that would speak to a stronger dollar yen. The jgb yield is just under 16 points before the japanese. If that was to go up and stay up, even just another 5, 10 tix, there was no intervention by the bank of japan in net market, that would be an interesting signal. I think that would be more unlikely, i think they would be more prone to do something, as soon as they dont do anything that market will take that as a signal, dollaryen might reverse lower, which may well suit them. But it will increase volatility now. David michael wilson, that seems to be one of the potential pain traits if and when i think is the more operative word, a sizable move down and dollaryen. Michael wilson, fx reporter with the state of currency markets. Lets fit it back from ethics and head to the equity markets. Its painful out there, speaking of pain, with the exception would be more painful, with the exception of alibaba. Just about the only stock not were chilly, the only stock on this specific index thats on its way up 2. 5 . The rest, we are poised here for a second weekly drop. Unwinding this long tech trade in china has picked up steam this week. Yvonne its interesting alibaba is Still Holding up against all that. The fact that theyve been revenue and they been nonprofit. 14 and it came to topline growth. Really, its the comeback Inflection Point for this company is still the key question. 2. 5 is the upside right now. It marks a step towards this revival of a National Icon thats grappling with the volatile economy and the lingering effects of the crackdown. Lets bring in our china equity strategist of bloomberg intelligence, marvin shen. Your take on these results and can they be sustained . Marvin alibaba delivered a sullen beat both on top and bottom line. Earnings was amplified by ongoing costcutting measures that have been ongoing throughout the tech industry. What we are more focused on is the impressive Topline Revenue beat, and this something we will be focusing on for the rest of their earnings season for signs of consumer recovery. Rishaad you look at any good news for the chinese consumers, there has been very little of it here as well, its return to growth is quite striking, is this something that other Ecommerce Companies can take solace in . Marvin weve been highlighting that tech will likely be the bright spot for this result season, largely due to the costcutting measures that have been implemented throughout the rest in previous quarter, and the readthrough from alibaba is positive, but we do want to highlight that the earnings season is still expected to be quite disappointing overall earnings expected to contract 5 to 6 versus last year, and this is largely a reflection of ppi deflation eating into the industrial and upstream sector profits. David what do you think guidance will look like from companies, to your point, very early into your season. It does reflect the weakness of the previous quarter. Improving with all the stimulus thats been introduced these last three weeks, that dont show up in the numbers itself. What do you expect from guidance . What are you stealing yourself for . Marvin i think it will be about the forwardlooking guidance and a lot of the expectations on china have been reset. Earnings expectations are at their lowest point at the lowest point over the last year, even worse than covid zero. So, the bar is low and we think positive guidance Going Forward would have a positive potential positive impact. Rishaad marvin, it was a pleasure. Our bloombergs intelligence china equity strategist. U. S. Allies may follow washingtons lead on limiting investment in some Chinese Technology companies. Weve got an analysis underway. This is bloomberg. Did you know you can get someone to shop for you . With stitch fix, it couldnt be easier. I share my style, size and budget. And they shop just for me. My shopper sends me stuff i feel good in. I keep what works, and send back the rest. Stitch fix. Rishaad markets are negative sentiment driving some of these equity markets benchmarks to the downside. Really its coming from the other companies that are responsible. But lets look at these geopolitical tensions. Which are certainly playing a part in all this. The u. S. Deputy treasury secretary says that President Bidens executive order restricting u. S. Investments in china will ultimately protect National Security. At the same time allowing the legitimate financial flows to continue. The administration is asking for Industry Input to get the balance right. The first step in implementation is that we are talking stakeholders about our go goal, which the president outlined in his executive order, which is to make sure we are in a position where we can protect our National Security by limiting the ability of u. S. Firms to make investments that further chinas military industrialized complex to get access to semiconductors that are most cutting edge. Quantum technology, and also to certain types of artificial intelligence. What we are trying to do is to make sure we are building a regime that allows us to put in place financial restrictions that match a number of the export controls weve already put in place. In order to make sure weve got this right, what weve done is the Treasury Department has a number of questions and definitions that weve released in order to get input from industry but also other stakeholders so as we designed the implement eta guidance for the president s executive order, we do it in a way that allows us to protect our National Security but also allows for legitimate financial flows to continue. This l this is relatively narrow in scope. Its described as a hyphens for a small yard. But i wonder if the fence could get higher or the yard could get bigger in the future. Could we see this expanding Going Forward . Our goal at the moment is to make sure that we divined the statute designed these statutes that keep with the president s executive order. Which to your point speaks to making sure that we have had a narrow set of National Security priorities that we are protecting we also want to make sure we do this with our allies and partners Going Forward because we say we share the same analysis for National Security risk. Thats why we are insured by the g7 statement. Ultimately our goal will be to make sure we designed these things to be as narrow as possible, but scope to protecting our National Security. What youve seen already as the United States put in place a number of export controls and many of these areas. The goal of this executive order is to make sure we are limiting the ability of financial flows and the knowhow that often goes alongside those financial flows to give countries of concern the ability to get around the things out that are trying to prevent them from getting access to like the most advanced semiconductors. Yvonne deputy secretary speaking with bloombergs kailey leinz there. Lets bring in the director at Rhodium Group to talk us through. Youve been looking at this and parsing through the language of this executive order, what stood out to you . Well, several things. One, the proposed rulemaking document is full of questions. Some 80 questions on scope, on definition, on unintended consequences and i think that the reflex a reflection of how hard it is to strike a balance and a new Regulatory Regime like this. The open ended questions also act as a deterrent to companies, investors that may have thought that they had more of a window to circumvent the coming rules, even though this reglet tory regime is in a mason stage. Theres a lot of anticircumvention language that circumvents the document. Theres also questions about how these definitions will apply, especially when we are looking out longer applications when you combine u. S. Persons definitions, foreign covered persons definitions, and covered transactions, which can include transactions outside of china. Yvonne so, there is still that confusion about which Chinese Company this would apply to. What do you think of the main sectors that are being targeted right now, and who comes out of this relatively spared . Reva for the specters, its the three big ones that have been the focus in the rumors for some time. Semiconductors and microelectronics, there is a little bit of an expansion there in certain areas of the semiconductor controls. Thats notable. And you have quantum technologies, that wind is pretty straightforward. And then artificial intelligence. That one is the most open ended out of all the sections. It is full of noncommittal language, full of questions on how exactly to scope this. There is an attempt to try to apply ai systems, applications to military intelligence, surveillance cyber type capabilities to scope this down to more of a dual use yard, so to speak, but its hard. These technologies are inherently dual use, and its going to be very difficult, especially when definitions hinge on whether they are primarily used for potential military application are exclusively used. Which is also an open question in the document. Rishaad i think theres a small yards approach, at this have to be married to the general theme of what they are calling derisking here. This is going to be something really hard to balance. How do you actually do this . Reva thats an excellent point. Its a very tough balance to strike, and you can see areas of u. S. Controls were definition stretch in order to try to meet the two. In the october 7 semiconductor controls, they encompass highly commoditized memory chips. Why, because china was gaining capacity in the technology segment, and that is perceived by the u. S. Has a form of potential coerced leveraged that china is building. You could see several things coming through the semiconductor section of these rules as well. And so, then we have to look for potential scope creep. So the scope currently is relatively narrowly focused. But this is something thats going to be reviewed every year as companies are compelled to report in their transactions as congressional scrutiny is hiking across Technology Segments that extend beyond beyond just the ones here. Policymakers are going to have more information or work with and then you will likely see restrictions further defined from there. Very notable, that biotech that was identified by National Security advisor Jake Sullivan originally. It is not included for now. Theres a lot to unpack there. This concerns around chinese retaliation connected to the Broader Health care space but still, that is an Important Technology segment that i believe will come under regulatory scrutiny at some time. Rishaad lets just have a look at all this. You have to nail the language down. Are there any examples that other countries have used with regard to which could act as a reva sure, south korea, taiwan, there are some examples of companies that have applied some form of outbound restrictions but in a much narrower sense. The u. S. Is putting out a new playbook here. In casting rules that are that really contain a preemptive intent. The term preexport control has been used a few times to describe the intent of the Outbound Investment screening program. In the idea to inhibit the Indigenous Development of these Critical Technologies in ways that could enable military modernization in ways that could harm u. S. National security. So, it is difficult to get other partners on board with a preemptive posture. I think this is going to take a lot more discussion. The eu has identified a similar set of technologies to focus on, ai, quantum and advanced semiconductors. So theres lineman at the very top level, strategically, but when it comes to tactics, thats another matter entirely. David i guess when you speak to your corporate clients in china, is there a sense that they feel boxed in . How worried are they . Reva naturally, the uncertainty around this executive order has raised a lot of questions about in china, for china strategies. But not only because of the eo, but also because of chinas macro economical structural slowdown that is making the pie smaller, so to speak. There are a Data Security rules that are stringent that are making it very difficult for businesses to operate. So, there are a lot of questions around next moves beyond this. , including those Technology Segments that are not in scope currently, but could be down the line. But, again, throughout the language of these policy documents, there is a lot of anticircumvention language and a lot of openended and us. For example, open endedness. For example, there are caveats attached to it. Rishaad great having you on the program, join us again soon. Weve got a lot more coming up, including a look at markets as we see equities under pressure. The yen under pressure. This is bloomberg. upbeat music woah. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. Yvonne some of the stories were tracking for you today. Its now know that 53 people were killed in the wildfires that tore across the island on thursday in hawaii. Authorities say that number is likely to rise. Fastmoving flames destroyed hundreds of buildings, sending some people fleeing to the ocean to escape. The National Guard and army have stte joint have joined search and rescue efforts with the main fire 80 contain. The disaster came as a flash drought turned maui from flush to bone dry and just a matter of weeks. The biden a ministration is preparing for visits from taiwans top president ial candidates in the coming weeks. Taiwanese the taiwanese Vice President was the ruling partys president ial candidate will pass through new york this weekend on his way to paraguay for the president ial inauguration. He will also make a stop in San Francisco next week on his way back to taipei. Sources tell us that history will be low key and includes meetings with the Taiwanese Community in the u. S. Catch our exclusive interview with lai on tuesday, august 15 for how taipei is managing relations with the u. S. And china in the future of the islands democracy. David brief look at markets right now, trips of individual movers, alibaba is an earnings reaction up 1. 6. It still ok, but thats coming off high right now. China coming out with earnings. Quantum computers in the philippines were trading at about 1. 8 to the downside there. Theres a news today that will be distributing and selling byd electric cars there in the philippines. Very briefly, a look at markets right now, midmorning parts approaching the hour or we have a big decision. Session lows on the msci benchmark. Rishaad looking overall at the different Asset Classes here, looking over the impact of that 30 year treasury auction. It was a bit lackluster, to say the least. We are looking at that, looking at the yen as well. It is a Public Holiday in japan. The yens trading and we are approaching that psychological, perhaps even technological level of 145 against the dollar. We are also just looking at some of the other constituents year. Oil has steadied a little bit, just down i