Bloomberg Markets: Asia 04/12/2024

It is almost 11 a.m.in Singapore in Shanghai. Welcome to Bloomberg Markets Asia.I'm Haslinda Amin. Here are the top stories.Treasuries edge higher while stocks and futures are flat as traders brace for USearnings season. Gold surging to fresh records, PresidentBiden declares the US commitment to defending Japan and the Philippines isironclad amid concern about China's actions in disputed waters.Also ahead, stories of million dollar salaries and 50% pay hikes for India'sfinance professionals. As banks hunt top talent amid a boomingeconomy and were set for the scene for.

India's elections beginning next weekwith insights from a leading pollster. Let's get you to markets.Asia not quite riding that momentum in the US.MSCI fled as traders recalibrate expectations of Fed rate cuts.US CPI, by the way, attach softer. The announcement is still running quitehot. They're adding to worries about USinflation. Meantime, Korea, Singapore standing patpretty much expected. Take a look where we are in terms of theMSCI Asia index flat there and the dollar index currently flat at 1 to 51.In terms of CSI, it is lower yuan, yet.

Another strong fixed offshore yuan hasbeen rising versus the USD pretty much four out of five trading days.The strengthening is due, of course by the PBOC fixing Japan.In terms of the Nikkei, it is getting a lift boosted by a surging real estatesector by banks. Higher are among the issues that arebeing brought up to us in terms of yen intervention.Yen steady after Britain 152 going all the way to 153 if you recall yencurrently trading. Let me take a look where we are at thispoint in time. Well, the inet one 5317 waiting forintervention there.

Well, major officials from both the U.S.and Europe making it clear that they're not in a hurry to cut rates.Boston Fed President Susan Collins says it may take more time than previouslythought to gain the confidence to begin easing policy.Meanwhile, European Central Bank chief Christine Lagarde refrained fromspeculating much beyond a prospective move in June.We will continue to follow data dependent and meeting by meetingapproach to determining the appropriate level of and duration of restriction.And we are not pre committing to a particular rate path.The recent data have not materially.

Changed my outlook, but they dohighlight uncertainties related to timing and the need for patience,recognizing that disinflation may continue to be uneven.And this also implies that less easing of policy this year than previouslythought may be warranted. Well, for more on central banks, we'rejoined by Thomas Toal, head of Epic iShares investment strategy at BlackRockin Hong Kong. Tom, I mean, so much for 2024 being theyear for disinflation, looks like disinflation is dead.The narrative suddenly has changed, hasn't it?Yeah, well, suddenly and not so.

Suddenly.I mean, yes, you know where we are in terms of inflation numbers, growth, andparticularly on the expectation for rate cuts, has shifted dramatically.I mean, if you think about January, if you're an asset allocator and you'reyou're kind of predicating your entire asset allocation on the fact that we'regoing to get multiple rate cuts in the US, inflation is going to come down andhow that impacts your portfolio, you know, that's shifted so dramaticallynow. It's you know, there's a lot ofconfusion about what to do in this environment.You kind of shift away from your.

Original asset allocation or do you kindof stick with it here? Well, the thing is, we've gone fromseven to 3 to 2. Now.Some suggesting perhaps a rate hike may be in store.I mean, is that even a possibility? Yeah, Don't say that.I don't. I don't think it's a possibility.But, you know, certainly if inflation continues to to pick up and is sticky,you know, you could have a possibility where you get to two rate cuts and then,you know, into next year we get a rate hike.I think, you know, there's obviously a.

Lot of confusion at the moment.But, you know, what we've been saying all along is if inflation is sticky, thepath to 2% is very, very difficult. And now you kind of have this divergencebetween central banks where, you know, there's a lot of central banks in Asiathat are looking to cut rates outside of Korea and Taiwan and Japan and then theeuro, the ECB likely going to cut before the Fed now, which is which is which isa new shift. So, you know, I think the the countryallocation, asset allocation is very important at this point because it's notall going to be driven by the Fed as it was the last couple of years.Is there a sense we might be headed.

Towards an synchronised central bankmonetary policy? It certainly seems that way.I mean, you know, we've had the Bank of Korea, Taiwan raised interest rates ECBstanding pat RBA. Looks like they have there is apossibility of a rate hike there. So yeah I mean that the inflationdynamics across the globe are very, very different.And so, you know, I think sort of central banks will obviously havediffering differing policy moving forward.You know, I think global growth is still slowing to some extent, not as much asprobably anticipated at the start of the.

Year.But yeah, I think, you know, central banks are going to be driven by by theirown country dynamics rather than what the Fed are actually doing at thispoint. Tom, hang tight.I'm going to bring in my colleague, 20 Pandey here, who joins me in Singapore.What do you know? We talk about how, you know, the bankstood pat, MERS stood pat. Pretty expected given that everybody'swaiting on the Fed. That's right.Especially after us inflation came out much stronger than expected and the ratepricing for the Fed has also pulled.

Back.I don't think any central bank in Asia would go out there and say we are readyto cut interest rates when inflation uncertainty still remains the buzzword.In fact, when I was in Singapore in January and I met with a bunch ofinvestors at the time, there was a lot of optimism and people were talkingabout how we are going to see interest rate cuts in 2024 and the economy isgoing to turn around second half of 2024.Was there was a lot of positivity around there and this time when I'm meetingwith people. Uncertainty is what everybody is talkingabout.

In fact, when it comes to the BOCgovernor, he did say just today that it's hard to pre-judge the possibilityof rate cuts even in the second half. Yes, that is true.It is very hard to predict what inflation is doing.I think central bankers themselves are very much surprised, astounded at thestickiness of prices and also the resilience of their respectiveeconomies. We are seeing that in Australia as well.Economic growth has slowed, but inflation remains sticky.It still remains concerning and does raise a question over whether centralbanks have done enough to bring.

Inflation down.And Tom, given such a scenario where there's so much uncertainty, where wetalking about the possibility of on synchronised central bank policy, whereare the opportunities? Where do you put your money?Well, as I said, in terms of the single country risk, I mean the obvious onesfor the long term are still Japan and India.You know, in the short term we moved slightly more neutral on Indian equitiesgiven some of the valuations and obviously upcoming elections, etc..But, you know, over the long term, you know, India's a great growth engine ofof Asia, Japan, slightly different.

Dynamics, but, you know, a lot of pushback on Japan given the kind of the consensus tag that it has at the moment.You know, from what we're seeing, we still see foreign investors underweightJapan, and that's even before the actual domestic investor gets involved.You know, huge amounts of money, 7 trillion USD sitting in cash anddeposits there waiting, waiting to be deployed as the inflation picture picksup. So, you know, Japan, I think also a gooddiverse device diversifier in the fact that, you know, they really wantinflation. Everyone else doesn't want inflation.So you Japan and India on the single.

Country and then obviously there's stilla lot of yield you can get in the fixed income markets to target maturity typetype of bonds and on the sectors you know rotating again, maybe taking alittle bit of rotation away from from tech and into some of the slightly moresafe haven consumer staples, etc., as we as we move into not only a higherinflationary regime, but also some risks around us election into the second halfof the year. And Thomas, we cannot let you go withouttalking about China. What are you what are your expectations?What's happening there? And also in terms of investment flows,what's happening with Chinese equities?.

Yeah, I mean, sentiment is is stillreally poor towards Chinese equities at the moment.I think on the on the positives, we have started to see some inflows back intoChinese equities, both through stock connect and also through through ETFs.You know, I think where foreign investors are now,it's not that they're incrementally positive on the growth of China,particularly on the macro level and also the fact that earnings growth has beenso poor there. But I think investors don't want to betoo underweight in case we start to see a bit of a pick up in earnings,inflation and the macro level.

So I think, you know, where we are nowis in terms of my views on China, very similar to the start of the year, verymuch a trading environment. Investors are looking for liquidoffshore type of exposures to raise underweight slightly.But I don't think the the sort of the 6 to 9 month view is is is incrementallypositive at the moment. The issue right now for China and a lotof the other markets as well. And in terms of currencies, is U.S.exceptionalism, Tom, I mean, how much longer will the USD stay strong?And what do you make of the currencies around the region?Yeah, I mean, it certainly looks like.

The US dollar strength is going to bewith us for a little bit longer until we until we get some more data aroundinflation coming down in the US and what other central banks are going to do.I mean, you know, if the ECB are going to move first, then obviously that'sgoing to create a little bit more tailwind for for the for the US dollar.I do still expect both the BOJ and JPY will appreciate this year.A lot of a lot of testing of the metal of MLF as opposed as to when they willactually intervene. But I think that, you know, the move onJPY recently has been driven more by the pickup in yields in US ten year ratherthan anything specifically in Japan.

JPY futures positioning very, verystretched on the short side from foreign investors.So I think if the MLF did move, we would see some some pretty sharp appreciation.But, you know, for the moment, it seems like, you know, that 150 level is kindof where we're going to be for a little while.When do you see MLF moving? Well, everyone's now talking about 155,which, you know, you can put as much stock into that as you want becauseeveryone was talking about 150 and then 152 and it didn't happen.I mean, the demo have come out probably 20 times in the last few weeks talkingabout verbal intervention.

I think they're a little bit wary ofmoving at this level given the JPY has been driven more by U.S.ten year rather than anything domestically.But certainly, you know, this level is much weaker than they would they wouldlike on on the JPY. And when they significantly moved inOctober 2022, there was obviously a very sharp appreciation.But then with us ten years moving higher, we were kind of back to the samelevels of of high one forties as we were before the intervention.So I think they're I think they are very wary about when they actually move, butI think it will probably be coming.

Relatively soon.Thomas, I want to ask you about China-Australia relationships.The relationship has improved recently with final tariff on wines lifting aswell. Are you looking at any China exposed?Stocks in Australia would like Australian listed stocks that areexposed to China as as a place to invest.Not really Australia specific. I mean, in terms of the China theme,looking for China exposure outside of China.You know, most investors have been looking more more towards Europe.And as I said earlier, you know, when.

Investors are actually looking at theChina story, I think at the moment it's not so much stock sector specific.It's more about how underweight are we in the portfolio, what are the risks tothe upside? And if we want to put some more Chinaexposure to work, where are the liquid exposures that we can use in the ETFworld? And I think that's more in offshore as awhole at the moment as opposed to taking specific stock or sector bets.One economics reporter is 20 Pandi there.Thomas Toll from Black Rock is sticking around.Now.

Still ahead this hour, with almost abillion people registered to vote, India's six week long general electionis set to begin next week. Public opinion and stakeholder researchagencies see voter. Well, joining us for a preview shortly.Plus, how India's top traders are cashing in on the booming economy asbanks battle for talent. Keep it here with us.This is Bloomberg. I'm. Oh, come on.We're waiting. China trade data today, of course.Meantime, we have the Hang Seng as well.

As CSI 300 index under pressure.In fact, the Hang Seng is down about one and a half percent.It is slipping, heading for weekly close below that 17,000 threshold, which wouldsend a negative signal pretty much across local stocks.It would be yet another example of Hong Kong lagging behind other major equitymarkets in terms of the Shanghai Composite is flat at this point in time,30, 35 and the CSI 300 in negative territory, down 2/10 of 1%.Yes, we're awaiting that trade data. We're also awaiting that China GDP datadue out next week. And that data doesn't bring anyinjection of positivity.

Well, investor sentiment will fall evenmore. Let's get to Thomas A ahead of APECshares investment strategy, BlackRock. He is still with us.Tom, of course, we've been waiting for, you know, stimulus out of China andthat's not coming in a big way, the kind of big way that we're anticipating.Yeah. I mean, it kind of seems to be likewe're in a little bit of a bad news is good news and good news is bad newssituation with regards to what the PBOC will do, I mean, I think where we arenow, their expectation of 5% GDP growth this yearI think is is is still attainable.

But I think there still needs to be somesome tweaking in terms of in terms of policy.But when we when we start to get better trade data and better inflation data,etc., actually the market tends to drop because that kind of lowers expectationthat that will get some kind of liquidity into the system from from thePBOC. I mean, the the state funds have beenbuying equities and ETFs, but clearly that's not that's not quite enough toto, to move things further. Affects traders in particular, Tom.They're not convinced. I mean, it it's been taking a lot ofstrong fixes to actually support the.

Yuan.Without that fix, Tom, I mean, where would the yuan be?I have absolutely no idea. I suspect it would be somewhere aroundeight. But, you know, who knows?I mean, that's that's that's the thing with with fixed currencies, obviously,how, you know, what are the reserves that you have to actually stick to thatto that level. But you know, the market is clearlyfighting to to further depreciate the CNY.And again, until something materially changes.I mean, that's that's the trend we're in.

At the moment.Plus, you have, you know, stronger, stronger U.S.dollar, which which doesn't which doesn't help particularly.That's right. I mean, and in terms of the USD and theUS economy, we have earnings season starting to kick off as we speak.I'm just wondering what your expectations are.Well, I think not as not as optimistic as the market is.I mean, if you look at the EPS expectations for for this quarter andthis year, very, very optimistic. You know, now that we've we're startingto price in.

Fewer rate cuts, you know, you start tosee this the shift away from some of the smaller caps, which had been seeing somesome pretty significant inflows as a lot of investors started to think that thethe bullishness in the economy was going is going to widen out into some of thosesmaller those small caps that won't be in in Q1 earnings reports, but maybemoving into Q2 and Q3. You know, a lot of questions on what canderail the US exceptionalism. Exceptionalism, it is probably aroundearnings growth because, you know, right now valuations are quite, quite pricey.But, you know, earnings continue to come through then then those those thosethose ratios come down.

And it's the exact opposite in China.You know, things are looking very cheap. But if earnings continue to to fall,then then obviously the valuations look a little bit more expensive.But it's really about the max seven and whether valuations can be maintained forthe max seven. They've lifted, for instance, sentimentgenerally across the board for the US. I mean, can the likes of and Vidyamaintain the kind of numbers that we've seen so far?Yeah, I mean I don't really know. But you know, certainly if you look atsome of the EPS projections for those Max seven, they are extremely high.And so, you know, when we look at some.

Of the concentration risk in the USmarket and how investors are positioned, you know, the upside risk to to a beatversus the downside risk of a miss, I think probably for for, for my ownportfolio allocations, I'd be kind of not going to to overweight on some ofthose make seven stocks into into this earnings season but you know theycontinue to be so until that doesn't until that shifts, then the investorsare going to continue to play those names.Taking a look where we are right now, tell me it does feel like financialconditions need to tighten even more for the Fed to rein in inflation eventually.What will that mean for stocks?.

Surely they will be under pressure.Yeah, I mean, it depends obviously, you know, how how far they go with regardsto if there's no rate cuts where there's one or two or whatever it is.But, you know, I think the the misconception here is that if if the Fedare more hawkish than was previously anticipated, that, you know, some ofthese tech names and make seven will sell off significantly, it actually it'skind of the opposite because you know, these are these are the names that havehad all the profit and have all the cash to put to work.So they're they're kind of more safe haven type of exposures at the moment.Whereas if you look in the kind of the.

Real economy.Russell 2000 type of exposures, these are the ones that actually, you know,are having to borrow at these high interest rates and tend to suffer asinflation continues to pick up. They have much more difficulty inpassing costs onto end consumers. So, you know, if if this if thissituation continues with sticky inflation, earnings continue to be goodfor for some of the mega-cap sevens and then the trend well the trend willcontinue. But as I said, the the issue really isis around concentration risk and it doesn't take much for for investors toto look to take profit on some of those.

Names.Tom, just one final question before we let you go.I mean, what's keeping you up at night when you take a look at the market?What's keeping me up at night. I mean, certainly, you know, the withdaylight saving, it's it's a little bit easier to to stay up for some of thoseCPI data. So, you know, I think the one onWednesday, definitely it wasn't keeping me up, but it certainly it certainlymade it hard to to to go to sleep after that one, given the moves and the bigmoves and yields. So, you know, I think I think, you know,inflation is obviously one of them.

I think US election risk going into thesecond half of the year is definitely one of them.And then also, you know, geopolitical tensions around that and how you hedgefor those using things like commodities and gold I think are probably the threemain things at the moment. Amazing how fast gold has gone up.Record after record. Thomas Daw, BlackRock, we thank you somuch for your time today. Plenty more ahead.Keep it here with us. This is Glenn back and.

Some tech related stories we'refollowing. RTX co-founder Sam Batman Freed willappeal his conviction and 25 year prison term for committing a multibilliondollar fraud. The 32 year old filed a notice of appealin federal court two weeks after his sentencing.It's unclear on what grounds Bankman-fried intends to appeal.Apple shares climbed in New York after Bloomberg revealed the company ispreparing to overhaul its entire Mac lineup with a focus in-house chips.Sources say it's already nearing production of the next generation AM4processor.

The new chip will come in at least threemain varieties, and we're told Apple is looking to update every Mac model withthat technology. Let's take a look at how Apple suppliershere in Asia are reacting. On the back of that Apple news, you haveSamsung Electronics under pressure, down half a percent.TDK Taiwan Semiconductor though, in positive territory.In fact, TDK up by almost 2%. Then again we are having people say thatall Apple already nearing production of the next generation AM4 processor.We're also keeping an eye on Chinese chip stocks on the back of a Chineseminister urging the acceleration of.

Integration of AI and industry gainsacross the board. Plenty more ahead.This is Bloomberg. Welcome back.China market just having to launch CSI 300 index under pressure, down 3/10 of1%. Of course, we're awaiting that tradedata coming out later today, some say, but it is going to come in later thannormal, three, perhaps 3 p.m. probably.And of course, that GDP data due out next week.But CSI 300 index down 3/10 of 1%. The yuan, of course, front and center aswell.

Another strong six offshore yuan hasbeen rising versus the USD for four out of five trading sessions.And of course that has to do with that. Strong effects from the PBOC.See, in terms of the yuan, it is at seven 2364 as China goes to long, Japancomes back from lunch break taking a the where we are in terms of the Nikkei 225.It is getting a lift boosted by a surging real estate sector by bankshiring estimates making them pretty attractive.In fact the topics calling up by 6/10 of 1%.Topics real estate gauge up 4%, by the way, extending gains year to date toabout 30% right now in terms of the yen,.

One 5320 remember, we're looking atintervention at 152. That intervention not yet coming.Now people are saying expect intervention 155.Let's get more bring in AM live strategist Mark Cranfield.The yen oh my intervention when is that coming?It's a lot to do with the speed of the of the movements.That's what we've seen in the past. The Japanese authorities just haven'tand quite rightly they don't give the market indications of specific levels.That will backfire, of course, because then traders were just no where thoseareas on the drive the market straight.

Down.So it's more about the pace of of the movements.That's what we saw, especially in 2022. Thorium was going up too quickly.Basically over a period of a of a couple of weeks accelerated something like 5%,which was from the Japanese authorities point of view, that was just too muchtoo soon. This time around, we've, as you say,gone through 152. Some people were surprised by that.But if you look at what's happened in the past month or so, apart from thisweek, we haven't really seen a fast increase in dollar and it's been verygradual.

So the Japanese authorities are probablyrelaxed a little bit. Not much they can do about the US sideof the equation. You get things like US CPI data comingin above forecast. They can't control that.So of course people want to buy U.S. dollars.They can only do from their own side. And so far the Bank of Japan have beenvery slow to increase interest rates. So from here it's really a question ofthe kind of pace that we've seen this week.If that accelerates again next week, certainly the risk of interventionbecomes a lot stronger.

And you see, if there is anintervention, they will intervene outside of Asia.Also linked to that, if you take a look at the condom model, what does it sayabout timing? So one of the reasons why people arethinking that they will probably use the time zones in Europe or New York,they've done it before. It's been very effective, but it alsotends to be where the bigger short positions for against the yen tend tobe. So the most active hedge funds tend tobe in Europe or the United States have already built up very large positions.Currently they're holding very big.

Shorts against the yen.Also, we tend to see more momentum outside of Asia now as well, typicallyaround the time of U.S. data releases.Now, our colleagues in Tokyo built this kind of model.He's the man who's most responsible for deciding when the Japanese authoritiesgo ahead. He's the Mr.Yen these days in terms of the Ministry of Finance.And he unusually, he gave a little bit more clarity earlier this year when hetalked about a ¥10 movement. Now, that one seems to be the movebetween early December to February when.

Donnie Yen effectively went for 140, 250in a relatively short space of time. After that happened, he became veryactive and speaking regularly, telling traders this is too fast, is calm down.Since then, if we follow that same kind of logic, actually that the move looksas though 156 would be the kind of area where he would want to stop the yen fromfalling because we dipped back to one $0.46 or yen.We're currently 153 ish. ¥10 in a short space of time wouldequate to 156. Whether that is the case or not, orwhether you want to spring a surprise who not.But certainly we're looking at higher.

Levels.Suffice to say, like you said, we're looking at higher levels.It is a weakening yen trend. I mean, what does it mean for otherasset classes? Well, it affects everybody, of course.I mean, the whole foreign exchange world is watching dollar yen.Chinese especially are very concerned about it because it affects the Chinesecurrency as well. And you can see they're intervening orthey're setting the fixing very on a very strong level to try and reduce thevolatility then. But then, of course, it affects bondmarkets as well.

We've seen this week the Japanese yieldcurve a steep and. Quite sharp.Now, that's not just because of what's happening in U.S.Treasuries. It's also a reflection of the Bank ofJapan have said quite clearly that they will be taking into account the yenmoves because of the inflationary impact.That means higher interest rates in Japan.So the Japanese banker has steepened quite aggressively because the Bank ofJapan is watching. So.And but on the flip side, it's very good.

For Japanese equities.Talking about the real estate sector today is up more than 4%.So several parts of the Japanese stock market are enjoying the weaker yen, butnot so much the bond market. All right.In the end, it is also about the Fed. You talk about Treasuries.Yeah, it is about the Fed and where the Fed goes from here.And one strategist, Mike Granville, thank you.Now, the US, Japan and the Philippines say they are committed to a free andopen Indo-Pacific. The statement comes after a summitbetween the three countries leaders.

Following increasingly assertive Chineseactions in disputed waters. The United States.Defense commitments to Japan and to the Philippines are ironclad or ironclad.As I've said before, any attack on Philippine aircraft vessels or armedforces in the South China Sea would invoke our mutual defense treaty.Facing the complex challenges of our time requires concerted, concertedefforts on everyone's part, a dedication to a common purpose, and an unwaveringcommitment to the rules based international order.China's current external stance and military actions present unprecedentedand the greatest strategic challenge not.

Only to the peace and security of Japan,but to the peace and stability of international community at large.Strong words from the three leaders from all.Let's bring in our Manila bureau chief, Manolo Sopo.Manny, what are some of the takeaways from this try in that meeting?Basically, I think the leaders, especially Japan and Indiaand the Philippines, sought to boost defenceties with both defence and security ties with the with the U.S.And that's what that's what that's what they got.I mean,.

President Biden said he was committed todeepening maritime security ties with both with both allies.And I think it was quite interesting respect to the Philippines that Bidensaid that any attack on the Philippine aircraft vessels or armed forces in theSouth China Sea would invoke the mutual defense treaty between the Philippines,between the Philippines and the U.S. because previously, I think what he wasjust saying is any armed attack.So it was quite an interesting change, if you would call it, in terms of thewording there. And it was also quite interesting thatthe Japanese Prime Minister Kishida, as.

I pointed out, thatthe world needs the U.S. in terms of, you know, playing thispivotal role in terms of securing global order and especially towards Asia, giventhe tensions with China, not just between the Philippines and and and the.China over the South China Sea, but between the Philippines, between Japanand China over the East China Sea. Is one good that the Japan that the UScontinues to back Japan as well as the Philippines.The question really is how far the US is willing to go.I mean, from the perspective of the Philippines, what is its ownunderstanding?.

Basically, that's why the Philippines, Ithink, has been trying to adopt a that that stance that whatever China isdoing, whether it's water containing Filipino supply boat oror Kaleigh or or blocking its efforts to dictate that a supply military outpostin a disputed so the South China Sea. But it's what the Philippines is doingit's trying not to retaliate or or or what.One of the kind of back to the two Chinese ships.But I think the U.S. is now quite clear in terms ofsaying that such is the commitment to the Philippines in terms of mutualdefense treaty.

It's quite ironclad that any attack onthe Philippines would invoke that that treaty.Precisely. And for the Philippines,as we have heard from Marcos during our interview last March, that.The Philippines is trying not to poke the bear.Really. It's trying to, you know, be as as as asas calm as it can in terms of what it needs to do.It needs to rotate the resupply and military outpost that's been there forover a quarter century. And in the second term, I showed itsoutside and see.

But it's doing that hopefullyand asserting its its claims and within its exclusive economic zone.But obviously it's hoping that China would not oppose those efforts.Many. We know that Marco is is in DC for thesecond time in less than a year, suggesting deepening relationshipsbetween the Philippines as well as the US.What kind of cooperation can we expect beyond defense?Actually, what they've been doing is not just.Yeah, outside the defense ties. Outside their defense ties.What they've been doing is the U.S.

Has been supporting efforts by thePhilippines to boost its infrastructure. Right now, there was there was anagreement between the U.S., Japan and the Philippines to put an economiccorridor in the main Philippine Luzon Island that will involve construction ofrail ports, modernizing ports and boosting semiconductorsplants. And and and it involves actuallythat corridor, which would include. I what covered the the two formermilitary bases, Subic and Clark which are now economic zones.And beyond that I think there was also a grantby the U.S.

To a Philippine mining company to thepush to help push the Philippines bid to to encourage downstream processing inits mining industry. Many.As much as Marcus is pushing back on China.China has a strong presence in the mining industry in the Philippines.How do you how do you balance that relationship?That's true. To be honest, actually, the Philippines,the Chinese remains the Philippine stock trading partner.And I don't think there has been a real effect in terms of the tensions in theSouth China Sea.

I don't think it spilled over to affectthat was such that it would affect the trade relations between the Philippinesand China. For one thing, China remains the topmarket for Nicolau, which is the Philippines main American export.So and also it's a China is a major destination for agricultural productslike bananas. So I don't think we're seeinga collapse, if you will, of relations of relations between China and thePhilippines on the economic front. But what the Philippines is doing, it istrying to diversify its trading partners are countries that can invest in thePhilippines.

So when when when its relationship withChina becomes more strained in the future, it's ready.Manila. Sara Po, a manila bureau chief, thankyou so much for that. Plenty more ahead.Keep it here with us. This is Mumbaiand. Well, trepidation in terms of markets inAsia on the back of higher than anticipated data out of the US.Of course, traders repositioning and dialing back on expectations of thoserate cuts in the U.S.. MSCI index pretty flat at this point intime on the back of US.

BPI tat softer than estimate but stillrunning hot. Adding to worries about us inflationtickling where we are in terms of Hang Seng index now down about 1.7%,extending the last hour, extending its loss for the day as well as do a checkon Indian markets. It starts trading right about now.Let's take a look where we are for the Sensex index and all the otherbenchmarks under pressure like the rest of Asia, Sensex down about 4/10 of 1%losses to for the rest of the benchmark. Citi, though, says India may see higherprofit upgrades than the long term average.That could be one to dry sentiment in.

That particular market.Now top traders in South the South Asian nation here, of course we're talkingabout India, have never had it so good with Big bang scouring for talent in thebooming economy. The employment market is so strong,stories are circulating of million dollar salaries and private bankersdemanding 50% pay hikes. Asia stocks reporter Isha Mukherjeejoins me now with more on today's big take.Wow, that's a massive uptick. Absolutely.And the optimism is wherever you look, right.Foreign firms are expanding into India.

For us, it's for the first time thelikes of BlackRock, HSBC, UBS, who left India in the mid 20 tens, are comingback because of renewed prospects in the country.It's done a lot of work in terms of ease of doing business and getting rid ofsome capital controls that were really weighing on these businesses when theyfirst came into India. And all that is concomitant with a payhike, right? With salaries booming so market makersat foreign and local firms are seeing decades of algo driven strategiesgetting $1,000,000 annually. And then you have private bankers whoare jumping ship at a 50% pay hike.

They're demanding no less than 30%,going up to 50% at times. And then you have employers who arefinding that fund managers aren't turning up when they're supposed to on amonday morning and just ghosting them and turning up at a rival fund instead.That really tells you how this is really the employees, this market right now.But that's based on the assumption that this is a Goldilocks situation.I mean, there are risks to that. Absolutely.And you can see that the Indian authorities and regulators are startingto, you know, go like, hang on, there's overexuberance here and you don't wantthings to crash.

So they've climbed on an IPO financing,They've clamped down on speculation in the currency derivatives market.They're also trying to get small and mid-cap funds, too, to stop taking innew money because there's overexuberance in that space for a lot of companiesthat aren't even profitable at this point.So they are taking steps. But at the same time, India's winningfrom, you know, the the M. S China floors for sure.And this is a country that is expected to potentially overtake China as thegrowth engine of the world rate by 2030, as our own story said.So.

There is overexuberance in parts, butthis seems like a structural trend. That's right.If money keeps flowing, what do you do? Right.You got to pay them. Asian stocks reporter Ayesha Mukherjeethere. Now let's stay with India.The world's largest exercise of democracy gets underway next week.Nearly 1 billion people will be eligible to vote in India's general election, aprocess that will stretch over six weeks.To help us understand the mood of the electorate.Let's bring in just one.

Deshmukh is founder director of theCentre for Voting Opinion and Trends in Election Research.Good to have you with us. Give us a sense of, you know, the issuesshaping this election. Well, the issue the biggest issue isPrime Minister Modi and his popularity and the kind of trustworthiness that hehas gained among the electoral masses in India is unprecedented because prior tothis, there's only one prime minister in India that was the first prime ministerwho actually won two or three mandates consecutive mandate in a row.So it is unprecedented, observed that he is most likely to win a third mandate.And also incredible in a way that in the.

Last this is the third election whereevery time he goes back to the election, he gets even more a stronger mandatefrom the previous term. So instead of any routineanti-incumbency, which is a stable electoral, distinctive machine mechanismin India and in rest of the world, this time it is we are looking at the proincumbency sentiment where every time Prime Minister Modi goes to the polls,he comes back with even better mandate. So that is pretty impressive andinteresting. The question is why?Josh One, why has he been able to do that?And this time round, is he likely to.

Gain support from the southern stateswhich traditionally have voted opposition?The thing is that he's a relentless worker in terms of political equitymanagement, if I may say so. He knows very well that the South andsome other states have now been very, very, very excited towards him in termsof electoral prospect. But he has invested a lot himself in allthose states, and he has been a relentless campaigner.You know, even the critics, diehard critics of Modi, they they have toconcede that this person is a 24 seven campaign machine.He works hard any bullies around.

I mean, not just in terms of poorcampaigning, but he works out in terms of delivery of governance and then hegoes around campaigning around that. So I guess that's more important thananything else is the trustworthiness of Prime Minister Modi, which is workingfor his party primarily. And that's something which is veryunique. You know, it's not that India is notknown for reporting. Very impressive opposition leaders.There are very impressive opposition leaders at the state level.But when you talk about the national alternatives, is the last ten years ofgovernance, the things that he has.

Provided for, the things that he hasdone and had shown the vision to do a common Indian,which in our tracks, by the way, have been writing that that everything is notrosy, but they hope for a very good future, the kind of future they areinvesting in. What's the state of the opposition?Some say that this is a crucial election for the opposition party Congress toshow that it remains relevant in Indian politics.But in the last ten years, you know, barring the second phase of post-COVIDscenario, there are only three months where Prime Minister Modi's popularityrating of satisfaction rating actually.

Went below 50%.Otherwise, in the last ten years, his satisfaction ratings have been always50% plus. And when you compare that to the mainopposition leader, Rahul Gandhi, he still struggles to cross 30% in thatway. So I guess the main problem of theopposition alliance is the dwindling fortunes of the Congress party itself.And the main problem of the Congress party is the dwindling popularity ratingof their main, you know, family, which has been which has been at theleadership of the Congress for almost like seven decades.So that they are, you know, in a very,.

Very presidential form, this thing isnot picking up for the opposition. Yashwant If Modi is so confident, if BJPis so strong, why is there a need to clamp down, intimidate, and even putopposition leaders to jail? Well, that makes a lot many peoplecurious, even in the public opinion. You know, you know, what triggers a bignumber of people have been saying that a lot of it is have been, you know,politically used, quote unquote, in that way.But, yeah, I mean, there is a disapproval for that kind of using ofthe agency. But there are two different things hereat play.

There is disapproval for political useof that they didn't see. But there is hardly any sympathy for thepoliticians who have been at the receiving end of these agencies.So that's the big difference. It's not it's not like they're getting ahuge sympathy wave out of the uses of central probing agenciesagainst their disproportionate asset on the corruption cases.So there's one sentiment that the idea that this should not be misused.But there's another sentiment, which is sympathy for the opposition leaders thatis upset. Yashwant Deshmukh, founder, director ofSI Voter.

We thank you for your insights.Plenty more ahead. This is Bloomberg. 12 noon here in the Lion City inShanghai. Welcome to Bloomberg Markets Asia.I'm Haslinda Amin. Here are the top stories.Treasuries edged higher while stocks and futures are flat as traders brace for USearnings season. Gold surging to fresh records setsquarter reports on the big Wall Street. Banks begin rolling in later Friday,with investors focusing on whether they can maintain momentum.Chips making headlines, too.

Apple revamping its Mac lineup within-house air processes. And Samsung set to unveil a $44 billioninvestment in the U.S. First off, the markets.And about jewelers is on top of that bell.Thanks, Nancy. We're just heading into the midpoint ofthe trading session here in Asia today and a couple of different themes youwant to pick up on in particular. Firstly, just tracking those moves we'vegot in bond yields here. Again, edging a little bit higher.So that theme across the week, even though we had that US spy data comingthrough overnight offering some comfort.

To investors still it has that been thatrepricing we've seen in that pushed back of expectations for when we're going tosee the Fed finally cutting rates. So that's the sort of play that we'reseeing here in the sovereign bond space, also playing out across what we see inthe markets as well. The Korean one is standing out here.That weakness coming through for the currency.We actually had a be okay meeting earlier today.The the central bank in Korea electing to keep its key rate unchanged.That was a decision seen by every single economist that we surveyed.But still to be okay in its press, it is.

In the last couple of hours saying it isopen to a rate cut if they do start to see inflation recede in the second half.Equities wise, actually overnight on Wall Street, we did see some optimismcoming through, particularly for big tech.It's not really translating across the screen here today.So perhaps a little bit of wait and see because we're also approaching earningsseason and we've got the big US banks kicking us off later today.Jp morgan, Citibank, Wells Fargo, they're all on the docket for latertoday. Commodities space, the one to track isactually what we're seeing in gold so.

Far.Let's change on. Take a look at the price that we'reseeing here, because gold hitting a fresh record high in the session here.That is leading to more optimism coming through into the Chinese gold miners.They have really been on a tear, but has we've really talked about all thedifferent directions. What is behind the moves that we'reseeing in gold? One of the factors being attributed toit is just the level of buying from central banks and the PBOC chief amongthem. That's right.And Haven play as well as geopolitics.

Come into play.BELL, thank you so much for that. Now, monetary officials from both theU.S. and Europe making it clear that they'renot in a hurry to cut rates. Boston Fed President Susan Collins saysit may take more time than previously thought to gain the confidence needed.And ECB chief Christine Lagarde refrained from speculating much beyond aprospective move in June. We will continue to follow datadependent and meeting by meeting approach to determining the appropriatelevel of and duration of restriction. And we are not pre committing to aparticular rate path.

The recent data have not materiallychanged my outlook, but they do highlight uncertainties related totiming and the need for patience, recognizing that disinflation maycontinue to be uneven. And this also implies that less easingof policy this year than previously thought may be warranted.Well, for more on markets, let's bring in Moody's Analytics director ofeconomic research, Katrina El. Also joining us is Bloomberg's executiveeditor for Asian markets, Paul Dobson. Christina, let's start with you.I mean, well, we got it so wrong. We went from 7 to 3 to now two, and soperhaps none at all.

I mean, your thoughts on the data thatwe've seen so far and the repricing we're seeing in the markets.Well, I think when it comes to the US, it's very clear that the Fed is going totake a very patient and cautious approach when it comes to potentialeasing of policy. We have dialed back our expectations forwhen we do see the first cut. We're expecting that it will come inSeptember and then possibly one more in December.I think that the data just doesn't support a more aggressive pullback inthis restrictive policy at this point. We've got still elevated CPI, but alsoimportantly as well, the labor market is.

Holding incredibly tight and that's alsofeeding through to the underlying strength in domestic demand and alsounderlying inflation as well. And I think the Fed is very cognizant ofthese data points. And so they're notwanting to move more aggressively than potentially only seeing 50 basis pointsworth of cuts this year. Katrina, you've gone from 3 to 2.What are the chances you may go to one or zero?I mean, at this point, you can't rule anything out.Right? And what we're seeing from central bankofficials, including the Fed, is that.

They're really being guided by the data.There's no clear set path here. They are looking at what's happeningand, you know, odds that we might see even more pull back in how many ratecuts we do see this year is high, unfortunately.And Paul, of course, we saw a major repricing in treasuries.In fact, a two year yield yields just under 5%.I mean, is it justified? Yeah, well, it's definitely been apretty painful week for investors in fixed income.You know, right up until the start of this week, we've seen plenty of buyinginterest around those four and a half.

Percent levels in the ten year Treasury.But we've been through that and kind of eviscerated some of that as well withthe market really pricing out pretty much a whole cut just in the space ofone week. But it does feel like maybe the marketwas a little bit slow to really wake up to what was going on.The Fed policymakers have been telling us pretty noisily already.And, you know, it's just a question of really seeing that data where they allcrystallizing around the CPI number that really triggered that, that move.That said, it didn't create the kind of turbulence you might expect across therest of markets despite that big move.

Backwards in the treasuries market.Repercussions for us. Kind of interesting.You know, our dollar your problem the fight back and the the PBOC embassythere drawing that line in the sand and then the Bank of Japan having to grapplewith the weakening yen as well. So you know, kind of I think therepercussions for us are almost as interesting and important as they arefor the treasuries market is. Exactly.You've got to wonder what central banks in this part of the world will be doing.We had Indonesia all set to cut rates and now it's holding back because ofpressure on the currency.

How is this factor in shaping thethinking in this part of the world? Yeah, well, I think that's it.All of the central banks are going to have to take into account what's goingon with the dollar and what that means for their markets and also what's goingon with inflation. On the one hand, you know, you do havesome recovery in industrial production and manufacturing output exports.You do have commodity prices showing some recovery signs as well.And you've also got that kind of Middle Eastern factor which has been on oilprices recently. On the other hand, central banks wouldlike to be able to to to stop hiking and.

Start cutting again.You know, and so wrestling with that kind of dilemma, being stuck with overhigh interest rates in order to prevent too much currency weakness in aninflationary environment is making it very awkward for a lot of them.Katrina, let's bring you into this conversation.I mean, we talk about how U.S. exceptionalism is putting a lot ofpressure on Asian currencies and central banks here.Now back to worrying about what the Fed may do and where inflation is going toend up. Oh, definitely.I think they were always closely.

Watching the Fed, and I think it washoped that the Fed would start to cut around June and that would providerelief for the opening the door really for central banks over in Asia-Pacificto start easing. But what we've seen is that, you know,obviously with with Fed rate cut bets being pushed out, that is bringing thatthat currency weakness really back into play.We saw it from the one today when the Bank of Korea did signal that they wereholding rates. And so I think it's an ongoing story.And I think that that currency weakness is going to remain front and centerbecause of the the addition to imported.

Inflation that it brings.Because, you know, in this part of the world as well, inflation is clearly notback to central bank target ranges. In most places.It is still above comfort levels. And now with that ongoing renewedcurrency weakness that we're seeing, that that imported inflation is cominginto play. Unfortunately, at the same time thatwe're seeing elevated energy prices. Energy prices are up about 10% in thepast month. That's significant.And if producers do have that ongoing pricing power to pass on those higherinput costs to the consumer, we might.

Actually see that renewed risk toinflation come up again. Which countries are most at risk withIndonesia, for instance, with its subsidies, be it?I mean, it's hard to pinpoint one in particular.I mean, what we're looking at, you know, across the range, particularly inSoutheast Asia, that there are significant risks there.I mean, we've seen that, you know, other economies like Singapore, for instance,that are heavily reliant on imported fuel and food as well.You know, they're another one that is is, you know, really at risk of thishigher imported inflation, kind of.

Derailing expectations for easing laterin the year. Indonesia, with its fuel subsidies, asyou mentioned, is certainly there. You know, there's others as well that nono economy in Asia is really immune to to higher energy prices and then thatrisk of inflation resurging, unfortunately.And so, Katrina, to put you on the spot or to drill down on that just a littlebit more, do you think that, you know, kind of six months down the line, wewill have been able to ride it out in Asia, or do you think it's all going toend in tears? I mean, the expectation and the hope isthat we will be able to ride it out.

But I think a lot does depend on whathappens with energy prices. I mean, Russia's invasion of Ukraineearly in 2022 really crystallized just how important energy prices are toshaping the global economy and in particular to shaping monetary policymaking across the globe and of course, in Asia-Pacific.So if we can see some sort of receding in energy prices, then I think that's apositive. And I think that that will give centralbanks across the globe, including the Fed, but also here in Asia, a bit morebreathing space because we should see inflation continue to recede.But if we do see that resurgence, then I.

Think that will be problematic.And then that could be two years under that circumstance.But that's that's not our baseline circumstance.Katrina. Trade data out of China today.GDP data out of China next week. Deflationary pressure still the issuefor China. Oh, definitely.I mean, what we're seeing in China is that domestic demand is is stillincredibly weak, despite policymaker efforts.There've been targeted efforts, but they're still being stimulus on themonetary front and also the stimulus.

Front as well to try and reinvigoratedomestic demand. But we're just not seeing that comethrough. Households are just not out therespending as exuberantly as we would have expected them to be in the absence of ofCOVID policies no longer being there. You know, what we're seeing as well isthat private investment is still incredibly weak.But I think more critically, the property market is still correctingforward. Indicators are pointing to ongoingcorrection. And it's unfortunately with this hugegrowth driver of the economy and.

Unfortunately, you know, the industrialside of the economy isn't roaring back to help pick up the weakness in theproperty market at this point. I find it really interesting what you'resaying there, and that creates this kind of really polarized sort of world viewwhere you have the inflation that's going on in the US and the higher bondyields and pressure in that direction. And in China, the disinflationary kindof impulses and the lower bond yields and that's creating that really hugepressure now that we're seeing on the U.N., how do you think that the PBOC isgoing to manage those currency risks and get through this?Yeah, it's it's a really interesting.

Question.And I think what we're seeing from the PBOC is is there is a concerted effortand I think we will unfortunately see ongoing weakness when it comes to twoeffects in China. But I think what's really interesting aswell is when we actually dig down into the inflation data in China, I mean,headline inflation is contracting. If we look across the first quarter, itwas actually flat. But core inflation so far, excludingfood and fuel prices, it's doing a little bit better.It's almost at 1% year on year, which is, you know, better than what theheadline suggests and what what is.

Causing a lot of that when the headlineweakness is, of course, pork prices, they do have that abundance of supply.And so that's contributing to it. But, you know, underlying inflationpressures are actually showing a little bit of signs of improvement.It's still not fantastic by any stretch of the imagination, but it has improved.So it does give us a little bit of hope that domestic demand, although it'sstill weak, it's soft, but it is still kind of gaining some traction, which iswhich is a positive development. But because we do have those weakinflation pressures, it does give the PBOC that flexibility to at leastprovide some ongoing targeted relief and.

That that they will, you know, treadthat very carefully because of the the subsequent implications on a weakeraffects. Katrina.Hang tight. Bloomberg's executive editor for AsiaMarkets, Paul Dobson and Moody's Analytics director of economic researchKatrina ELL, is sticking around. Still ahead this hour, investors gearingup for first quarter earnings for major U.S.banks with J.P. Morgan and Wells Fargo are among thosereporting on Friday. YDSTIE will be joining us for a previewshortly.

Plus, Singapore's biggest property dealof 2023 said to have fallen apart. We'll look at what went wrong later thishour. Keep it here with us.This is Bloomberg and. Welcome back.The U.S., Japan and the Philippines say they're committed to a free and openIndo-Pacific. The statement comes after a summitbetween the three countries leaders following increasingly assertive Chineseactions in disputed waters. The United States defense commitments toJapan and to the Philippines are.

Ironclad, are ironclad.As I said before, any attack on Philippine aircraft vessels or armedforces in the South China Sea would invoke our mutual defense treaty.Facing the complex challenges of our time requires concerted, concertedefforts on everyone's spot, a dedication to a common purpose and an unwaveringcommitment to the rules based international order.China's current external stance and military actions present unprecedentedand the greatest strategic challenge not only to the peace and security of Japan,but to the peace and stability of international community at large.Well, let's discuss the geopolitical.

Risks facing markets with Moody'sAnalytics, director of economic research, Katrina ELL, who is still withus. Katrina, I mean, we've got to say thatgeopolitical risks of heightened, especially bearing in mind that we havethe US election at the end of the year as well.Oh, definitely. I would say that geopolitical risk isone of the single biggest threats to the expectation that the global economy willcan improve and kick up in the second half of this year.I mean, if we see any sort of escalated tensions and in geopolitical risk evenfurther, I mean, we've already seen.

Energy prices being aggravated bytensions in the Middle East. So any further kind of escalation couldactually put the global economy on on a darker footing.I mean, we saw, you know, Russia's invasion of Ukraine early 2022 reallydid change that. The whole expectation that we, you know,around monetary policy and around global growth.And so, you know, we can't forget that learning.And so that is something that is continuing to threaten us now.How would you assess the risk from the US election and a possible Trump 2.0?I mean, that's a certainly a risk that.

Is continuing to float around.What we're seeing is that, you know, US-China relations look very differentunder a Republican versus a Democratic government.We've seen positively in the past couple of weeks that relations between the USand China have stalled a little bit, which is positive.And we do know that when there are escalated tensions between these twopowerhouse economies, it does lead the global economy down a darker pathbecause not only do we sometimes see trade restrictions, for instance, but italso does really knock global sentiment around.We know that businesses across the globe.

Are already under significant pressurefrom elevated borrowing costs consumers aren't doing to crash either.And so if we do have this escalation of tensions, then, you know, certainly itdoes really knock things off course potentially.If Trump does come back to power, Katrina, how do you see him pushingthrough with that 60% tax on Chinese products?I mean, as an economist, I can forecast a lot of things, but I wouldn't evendare to to forecast. But to forecast what a Trumpadministration can do, I mean, from an economist perspective, my hope iscertainly that we don't see those sort.

Of trade restrictions coming in becausethey do really hurt economies, but they also hurt in particular businesses andeventually households as well. You talking about oil prices.I'm just wondering and what oil price would you have to reassess theprojections you're making? Yeah, that's a really good question.So our kind of rule of thumb is that any oil price that's, you know, over $95 fora sustained period is actually consistent with a global economy goinginto a recession. So we're already dangerously close tothat level right now with Brent hovering around that $90 per barrel.So if we do see a further tick up for a.

Sustained period, that's when we wouldkind of reassess our expectations that the global economy has actually skirteda recession. And, you know, it would send you know, Ithink what's been really interesting is that this year, the narrative aroundglobal economic sentiment has been a lot more positive because the expectation isthat rate cuts would come. But what we're seeing now is,unfortunately, this combination of higher oil prices at the same time asinflation across the globe isn't quite playing ball, it's staying stickier thanexpected. And unfortunately, as a result of thatrate cut, expectations are being pushed.

Further and further out.So, you know, this this combination of sustained higher oil prices andimplications for CPI do have us worried. And so that $95 per barrel is when wewould definitely reassess expectations of a global recession being avoided.Katrina, thank you so much for your time today.Have a great weekend. Katrina ELL, Moody's Analytics.Plenty more ahead. Keep it here with us.This is mom back. Well, here are some top global storieswe're following. Morgan Stanley shares fell the most infive months after a report that U.S.

Regulators are scrutinizing the firm'sefforts to prevent potential money laundering by wealthy clients.The Wall Street Journal says the SCC and the Treasury's Financial CrimesEnforcement Network have sought information on certain clients outsidethe U.S. who raise red flags and on the bank'spolicies to address them. The Federal Reserve was already known tobe looking into those money laundering controls last year.The largest U.S. airlines are asking the Bidenadministration to block new flights for Chinese carriers, citing what they callBeijing's anti-competitive policies.

The Airlines for America Trade Group andseveral unions have made the plea in a letter to the secretaries of state andTransportation. Flights between the US and China aregrowing, but remain well below the average 340 per week before thepandemic. President Biden is moving to block oiland gas development in millions of acres of Alaska's North Slope with aninitiative that could be finalized within days.The administration says it needs to balance oil development with protectinghabitat for polar bears, migratory birds and caribou.Companies with leases in the region,.

Including Santos, ConocoPhillips andArmstrong, have objected to the plan. We're keeping an eye on the yen, ofcourse, a breach in 152. Pretty steady right now.It went as high as 153 and now at one 5321.Plenty more ahead. This is the back and. Welcome back.You're watching Bloomberg Markets Asia. And we're going right back to marketsand well, of course, is about recalibration.That's certainly been the theme of this week has.And I'm actually just taking a look at.

The game and function and just thinkingabout some of the things that are standing out.First, they've got those yields continuing to move to higher.So that is that story again. Yes, the Fed perhaps pushing out ratehike or rather expectations, even some saying a hike could be the next step.But the PBI data overnight, of course, a bit of relief, but that's still the maintheme. You've also got those moves that you'reseeing in the space. You've got the Korean one, for instance,under pressure. We did see the BOC electing to keep itskey rate unchanged.

You've got the Singapore dollar again,they're a little bit weaker. We did have the Nasdaq out with a policystatement again electing to keep its settings in place.So it's really just that wait and see. Central bankers, monetary authorities,they want to know whether inflation price pressures that really coming undercontrol. So patience perhaps is the other keyword has what we're seeing in the stock space.Again, it's pretty interesting moves today because we did actually have somegains on Wall Street overnight. And you're still seeing Taiwan, forinstance, in the green today.

But across the screen here, we're reallyin negative territory. And I'm looking at Hong Kong, the HangSeng in particular, because you're below that 1700 mark,which would be a negative sentiment to the rest of the regional markets here,which is also interesting to note, because, again, taking a look at futureshere, you can see euro stocks, U.K.stocks as well. They're looking to some gain.So it tells you perhaps that optimism from Wall Street could skip Asia, butthen end up in Europe. Let's change on.Take a look at some of the movers.

One of the things they're watching isthat jump. We had an apple, for instance, overnightof nearly 5%. That was after we had a Bloomberg scoopout. Essentially, they're getting a new A.I.chip for their Mac line up. So that is also helping some of thesuppliers here in Asia. And then also just keeping an eye onsome of those gold miners. We just mentioned those at the top ofthe hour. But worth noting today, because we'veseen gold hitting a fresh record and that is really pushing some of thosegold miners to the upside has.

Well, speaking of going gangbusters,just one stock we're tracking Berkeley come making its debut today, surging asmuch as 35%. This is, of course, India's biggest IPOin a year. It is a telecom service provider.It raised $514 million to become India's largest in about a year, rising as muchas 35% on his first day of trading, now up about 34%.Now, speaking of what we're keeping an eye on, investors gearing up for firstquarter earnings from the major U.S. banks, J.P.Morgan City and Wells Fargo reporting on Friday.Let's do a preview.

Let's bring in Sarrazin Waller, GlobalFinancial Services managing director. And it's good to have you with us.We talk about an environment of higher for longer.It's great for banks. Well, I mean, as of right now, as wewere saying for right now, for the next couple of quarters, it looks prettyrosy. But we keep asking how sustainable isthis? This higher for longer that's going tocome to 40 by the end of the quarter, end of two quarters maybe.So it's a bit of a short run. That's what I think.But you have to draw a distinction.

Between the bigger banks and the smallerbanks, which still have to make provisions for that higher Tier onecapital. Correct.Know the bigger banks had a relatively smaller exposure in the larger scheme ofthings, you know, you're looking at about 100 billion at the most.What happens to the smaller ones? And now we've seen a couple of thesmaller ones go under because of the real tea or real estate type exposure.The same thing happened with the big four, the big five in China.The impact in the U.S. is predominantly for the smaller ones.So the big four are going to breezed.

Through this quarter and even the halfyear results. But I think the commercial real estateis going to catch up by the end of the year.You talked about how there's clarity till the end of the year, but not somuch in 2025 and beyond. If you were a longer term investor, howshould you be looking at it? We are longer term and I think we are atad bit skeptical, not because of the sheer exposure that the banks have, butwe're unclear with regards to what their growth strategies are.Now, Jamie came up and laid out a beautiful growth strategy.Jane, on the other hand, is fixated on.

Cost cutting and which is paying hergreat dividends in Citi. All of that, you know, deprives us froma longer term view with regards to what exactly and what is going to drive them.JP Cash management global transaction banking great.GOLDMAN Predominantly around assets and wealth management.Great. How is Wells Fargo going to grow whatcities A call to action now that retail has gone or predominantly gone?So those are some of the questions we have for the longer term.And here's another risk. Real estate loans.I mean, for 2024, we're looking at what,.

900 plus?Yes. Dollars Billion.That's a massive amount. You got to wonder whether that's goingto transpire. 900 billion just in the U.S.So commercial real estate exposure is tracking at about 920 930 billion.That's now. Now, imagine the feds say this rateadjustment refraining has gone on for too long.They come in by October, November. Consumer spending is up, Banks arewell-capitalized. They tamper with the rates.People in turn can't pay up the.

Mortgages that are outstanding.So that 900 billion is the tip of the iceberg.Again, would it be as catastrophe as the 2008?I don't think so. But still about $1,000,000,000,000 atstake is going to cause a significant dent amongst the big four, the big five.Not to mention we have seen this happen in China, too.Yes, Big five, the top five. Absolutely.There is a possibility it may happen in the US.It is possible. China wrote off 1.7 trillion last yearamongst the big five.

Yes.Given that it's a drop in the ocean when it comes to the larger China market andall of the tickers, but for the U.S., it's a significant blow.Again, it calls a simple question if commercial real estate is compromised,people aren't spending all that much, say nonfarm payrolls are, you know,balanced out. Where will the big four in the U.S.grow? And if that does clear, we are okay withthe longer run. If that is not very clear and they arehoping for net interest margins to kick in again, that's not a good strategy.So far as we've been tracking flows,.

We've seen how money is flowing fromChina to India, for instance, and we've seen how, you know, the Max seven havedone. Is their expectation or are we seeingthat flow going from banks to technology, big tech in particular?As traders look for returns. Absolutely.Yes, yes, yes. You just said, you know, the biggest IPOin India this year. It wasn't a bank.It was a telecom company. Some of the largest tech stocks,including, of course, the chip manufacturers who are the apple of theeye for all the long term investors.

Because, again, the sheer addressablemarket that you have there and the sheer growth, the propensity.Plus there are four, maybe five large producers, some tech stocks, and I'mtalking not just the blue chips, not just Apple, Microsoft and everybodyelse. You're looking at a huge amount of othertech stock. The Nasdaq has done exceptionally well.That predominantly technology and solution led stocks.So will there be a massive outflow? No.But will longer term investors way out? Banking and financial services versustech?.

I'll take tech.All right. Beware, Cyrus.Thank you. Cyrus Drew Walla, IDC Global FinancialServices. Coming up here, how the US dropped theball on his chance to take the lead in the technology underpinning the AIrevolution. Stay with us.This is Glenn Beck. Now to the battle for global supremacyin Chipmaking. The U.S.took a crucial early role in developing the technology that underpins today's AIrevolution.

But a Dutch firm now holds a monopoly inthe process, while Asian manufacturers dominate production.Bloomberg Originals has been looking at how the US dropped the ball.This is arguably the single most important machine in the world rightnow. Technologically, economically andgeopolitically, without the global economy would slow.The pace of technological advancement would stutter.They cost $200 million each, and of the 200 or so that exist today, just ahandful on U.S. soil.What's more, successive U.S.

Administrations have had to scramble toensure that none are sold into China. And that's despite the fact that much ofthe early work on the technology originated in the U.S..This is a story about where physics meets business and has a massive impacton the world's economy. So how did the United States manage tomiss out on this colossally important piece of tech? It's called an extreme ultravioletlithography or EUV machine, and it produces the world's most advancedsemiconductors. Even technology is the only reason thatwe have iPhones that are as fast as they.

Are.The reason that we have this revolution with the chat bots and chhatrapati thedevice has turned the only company that produces it, the Dutch firm ASML, intoEurope's biggest technology firm. Lithography is how circuit patents areengraved onto chips. This is a very, very important part ofthe process of making semiconductors. The scale of extreme ultravioletlithography machines is mind boggling. Each device is the size of a bus, but isdesigned to etch patterns onto chips that are billionths of a metre across.How they do so is a remarkable feat of engineering.A high powered laser is fired at a tiny.

Target of ten droplets about 15,000times a second. That creates a plasma that emits extremeultraviolet light, which has a wavelength of 13 and a half nanometers.Dislike doesn't occur naturally on earth.In fact, it's absorbed by most materials, including air to the wholeprocess is conducted in a vacuum, and a series of mirrors reflect and focus thatUV light. Each mirror is coated in layers ofmolybdenum and silicon and polished to a smoothness of less than one atomsthickness. That's important because any blemishreduces the quality of the chips being.

Produced.Midway through this process, the eve light is reflected by a radical thatcontains the pattern of the circuits that would be etched onto the chip.These are then reflected and focused even more to make the pattern eventinier before hitting the silicon wafer. Each wafer is etched with billions ofsuch patterns. The problem was it's so difficult to do.The semiconductor industry is always racing to make things smaller, and itsability to keep doing that helps the global economy keep growing.Now, some of the layers of materials that go into making semiconductors areone atom thick.

You don't get thinner than one atom.Semiconductors eventually faced a problem where they were really gettingto the limits of physics. In the 1980s, scientists started tothink that EUV light might be the best way to get to that atomic level.The US government, through what I called the national labs, has always beenhelpful to the semiconductor industry at sort of underwriting some of thesefundamental advances. In fact, the Department of Energy endedup putting tens of millions of dollars into EUV research at three labs acrossthe U.S. to make the jump from research toreality.

An alliance was formed with companiesincluding Intel, AMD and Motorola that match any government spending.In 1999, a little known Dutch lithography company called ASML joinedto remember that in the 1990s, the Japanese were a major threat to U.S.dominance of the chip industry. The US government, through its weightbehind ASML over the Japanese companies who were really leading inPhotolithography at the time, ASML went all in.They reckoned the tech could be ready commercially by 2006.If technology is really a moonshot. It was incredibly expensive andincredibly complicated.

By 2012, progress had been made, butmore was needed. It looked like EUV actually might bepossible, but ASML actually needed lots of investment, so they turned to theircustomers. TSMC, Samsung and Intel decided, Wow,this stuff is really important. We better put some billions of dollarsbehind it to make sure it actually happens.And Intel was the biggest contributor to that.It was really thanks to a small stubbornness that they took years andbillions in funding to actually produce the technology as we know it now.Finally, in 2017, ASML begins shipping.

The machines in meaningful numbers.But despite the billions of dollars of investment from American companies likeIntel and the U.S. government, the first generation ofdevices all went to TSMC and Samsung. And it wasn't because ASML didn't wantto sell machines to Intel. Intel thought that Eve was reallyimportant, but like its competitors, they saw the issues with it.That was a decision they made and it was a decision that cost them massively.Essentially, the then CEO, Brian Krzanich, didn't think Intel could makeEUV work profitably and would be fine without it.Intel was the biggest company in town.

And the industry dominated the industryfor multiple decades. Everybody else was playing catch up.This is the scale of which Intel and TSMC have been able to make chips.Both have consistently got smaller. But with Intel leading the sizereduction until 2018, when TSMC overtook Intel for the first time.The reason was at its core, pretty simple.TSMC was making chips with the heavy machines and Intel wasn't.Soon after Samsung's Galaxy Note ten smartphone hits the market, the firstconsumer device featuring chips made with the EUV process Apple follows.But then that's a problem.

While A which was the world's largestsmartphone maker at one point was buying chips from TSMC, the fact that Chinesedevice makers were making some of the most advanced smartphones caught theattention of the American government. Huawei is something that's verydangerous. You look at what they've done from asecurity standpoint, from a military standpoint, it's very dangerous.One of the ironies of EUV is that a lot of the underlying technology originatedin the United States, but the direct and indirect beneficiaries of thattechnology haven't really been concentrated in the U.S..You had a company in mainland China.

Buying chips from a company in Taiwanusing equipment made in the Netherlands. It's vital cog in the wheel was made bya company in another country, one that they couldn't directly control.So it took a lot of work by Washington to persuade the Dutch not to allow ASMLto export EUV to China. The details of how ASML did not ship toChina have really been a little bit obscure.All we know is that they state vehemently over and over again.We have never shipped EUV to China. In 2012, Intel was 15 times bigger thanNVIDIA and almost twice as big as TSMC. That's when it first invested in ASML.But Intel's failure to move early on EUV.

Has allowed a number of rivals toovertake it. Intel's growth has stalled as TSMC andespecially NVIDIA have boomed. Intel's leadership team under Krzanichreally gave away the keys to the kingdom and that caused a knock on effect insideIntel. Krzanich left some of the otherleadership was replaced and there was kind of a scramble to get that companyback on line. And one of the conclusions that newleadership came to was We need EUV. We have a very strong partnership withASML and our plans to now stay on the leading edge of EUV usage are wellunderway.

That's Pat Gelsinger, Intel's currentCEO. He's throwing the company's weightbehind the next technology. The new new thing in the world of EUV iscalled high numerical aperture or high end EUV.To give you an idea of how important this is, Intel has been loudly toutingto anybody who listen, they've got the first high end a machine.There's a lot at stake. The US's leadership in semiconductor.And the success of President Joe Biden's CHIPS Act, which is set aside $100billion in subsidies for the semiconductor industry, we will enableadvanced semiconductor manufacturing to.

Make a comeback here in America after 40years. Politicians have finally woken up to howimportant semiconductors truly are. And Intel's entire plan to turn thecompany around is predicated on the idea that they can actually get governmentfunding to build semiconductor plants and become a leader again insemiconductor technology. And subscribers can see that BloombergOriginals documentary again any time on the terminal and on Bloomberg.com.It'll be up on their YouTube channel later on Friday.Well, still to come, one of Singapore's biggest property deals of the year fallsthrough after authorities reject.

Redevelopment plans in a prime shoppingdistrict. More on that next.This is Bloomberg. Well, Bloomberg has learned ablockbuster deal to purchase a mall in Singapore's prime shopping district hasfallen through. That's after plans for its redevelopmentwere rejected by authorities. Let's get more from real estate reporterDexter Lowe. Wow.This is a huge deal. I mean, what happened?Well, I think the reason for the deal's collapse was actually quite technicaland quite boring in the sense.

Basically, when it was produced lastyear by this change being called Duchossois, basically there was only oneplot. So but there's this scheme in Singaporecalled Development Initiative, which basically requires that you have twoplots in order for a redevelopment of this shopping mall.So this shopping mall has been around for quite a while.It's these back to 1984 when it was built.So it was going to quite all the malls. And Orchard Road, which is quite aglitzy area, is the main shopping building up after.So when when the deal was announced last.

Year, huge to about 670 million USD, itwas the biggest of 19 trees essentially. And basically there was quite theexcitement around the fact that it was going to be redeveloped.But the authorities basically said that because of the fact that it's only onesingle plot rather than to the government, they said that that doesn'tfit the criteria. And so it was rejected and it was timeof how can we. Let's walk away.I'm just wondering whether it has to do with the fact that it is Chinese money.Yes. 670 million USD.But, you know, given the fact that we've.

Seen fraught cases in Singapore to dowith Chinese investors, whether, you know, that could be one of the reasonsabout the hesitance. I guess in a sense, the government havenot explicitly said yet and so far the explanations given by government atleast, is that there isn't actually any explicit reason why they're rejectedbecause of the fact that it Chinese money to as one account original Chinesetycoons that we meet a fortune in Singapore real estate like quite a whileback even before the main money laundering case came to light.So there's a lot more scrutiny of the fact that scrutiny of Chinese may knowbecause of the fact because of the huge.

Money laundering case.And so the more money that we're talking about here, it's significant.So this is scrutiny. And, Zain, there is a lot concern aboutit. And when it was announced, associatedirector of eyeballs. So and certainly after the dealcollapses, there's still this is more money out there which presumably had togo somewhere. So I think there's no attention, though.Where exactly do you put this money now? We put Singapore with with elsewhere inother countries, also Singapore, Singapore.I would hate to think that it's going to.

Say no to $670 million.What's next? What can be expected?I think the question now is, is in two ways.So first of all, obviously that more so as we develop, it's one of the oldestmodels in Singapore and one of the one of the things that the government inSingapore has put a lot of emphasis on this whole initiative essentially thatthey can't do in the first place is that they really want to spruce up orchardtravel because after all, some of the most competitive, some of the moreglitzy ones that we've seen in recent years have been quite old.And because of the pandemic and other.

Reasons for is kind of reduced andhasn't recovered back to where it was before pandemic.So there is incentive to really buy them all.So it'll be interesting to see which buyers can come forward to buy them all.As for do, I guess the question is where we put money.We put money in Singapore, where obviously the team and the kind ofregulations seem to be a bit more tighter than it was before and a bitharder to come up with a club. That's all come to be seen.And the market is going to be quite interesting going forward in the nextfew months.

A lot more scrutiny here.Real estate reporter Dexter Loh, thank you so much for that.Let's take it to markets. We're keeping an eye on Apple suppliers,in particular on the back of Apple's plans to perhaps overhaul its Mac lines.We're looking at new in-house processes highlighting I help drive a brought U.S.tech rally pretty mixed picture Samsung electronics down but gains for TDK TSMCas well as Hon Hai currently up by about 1.7%.Quickly take a look in terms of treasuries slightly higher in Asia afterselling off overnight, they're in oversold territory, ten year use up fourbasis points, two year yields particular.

In focus, inching ever closer to that 5%level. Will it breach five?Well, let's wait and see that is it from Bloomberg Markets Asia is Hong Kong andChina are about to come back from lunch break.Europe is next. Keep it here with us.This is the back.

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