Bloomberg Morning time: Asia 02/29/2024

This is DAYBREAK, Australia.We're counting down to Asia's major trading opens here.And Heidi, at the outset, we're going to be tracking Japanese equities prettyclosely because we're within a whisker now of the Nikkei 2 to 5 crossing that40,000 mark. Yeah, we're also watching Bitcoin, ofcourse, but what about ten, 11% away from an all time high for Bitcoin.But we're sort of coming back to the fundamentals, right, watching thatinflation number out of the US, watching for Fed speak more and more scrutinyover the data. So that print is going to be critical.Yeah, absolutely.

Really, that countdown to the core PCEreading and that bumpy path to achieving the 2% inflation target the focus forinvestors as well over the course of this week.But we've got the opening here for Japan and South Korea and at the start oftrade to, as I said, taking a look at how the Nikkei 2 to 5 is faring prettyflat at the start of the day. We did as well worth noting, have someeco data at just in the last 10 minutes or so and the numbers month on month,you're seeing industrial production there falling 7.5%.That was worse than what economists had been expecting.There could be a bit of.

Well, the production hold essentiallyDai had to over the course of January playing certainly into those numbersbecause we saw that that fall in production.This could be perhaps more of a shorter term blip year on year.Actually, the rating was better than what had been expected and retail salesas well out those numbers better than what economists had surveyed or whatthey had been forecasting, both on a year on year and month on month ratingshere. So a little bit of a brighter spot forthe Japanese economy. The Japanese yen, I mean, we'recontinuing to hold around that 150 mark.

It really hasn't budged off that forseveral days now. But that is the state of play for Japan.Let's roll over and take a look at how Korea's coming online today as well.A little bit of weakness again, but fairly muted.And as we said as well, the dynamic here, fabs, Heidi, is just what we hadin Wall Street overnight. More weakness creeping through, but thatcalmed down, as we say, to the core PCG rating, given we have seen thoseinflationary pressures picking up again in the US economy.Yeah, it is really sort of, you know, the volatility going into this last legof the cycle, Right.

What that holds and true of so manycentral banks, but a lot of them taking leadership from the Fed, of course.Take a look at some of the weakness that we're seeing across the Australiansession at the moment, about 3/10 of 1% lower, really some selling that we'reseeing in financials in particular, the mining sector isn't doing terribly welleither, but really tracking that decline that we saw through the US session aswell. We're seeing Kiwi stocks also a littlebit on the back foot, taking a look at the Aussie dollar, pretty steady, 6495.We did see some pretty good gains for the dollar going into that inflationprint.

To the moment the dollar index is kindof going sideways at the moment. So a little bit of weakness being heldby the Kiwi dollar there as well. We had a governor all saying that thecash rate needs to stay at five and a half percent this year.Remember, that was quite an elevated sort of outside risk of another hikecoming through yesterday. Ultimately, obviously, they decided tohold. Also watching all markets in particular,we are seeing a bit more downside there. Just over 72 $8 a barrel there for NewYork, traded crude oil extending that decline.We saw that build up in US inventory.

Inventories really kind of creating asense of caution there. Nationwide, US stockpiles rising by 4.2million barrels last week. We're also watching that expectation ofopec+ nations to agree on crude output policy soon.But of course a lot of focus when it comes to the Treasury markets, right.In fact, looking at the question as to whether yields have peaked for the year,that final core PCE data before the March FOMC will be key.The forecast for a slightly higher month month number.Do we kind of finally see this this proper alignment of the rates marketswith the Fed plotting pricing for the.

Next potentially three rate cuts thisyear? Let's get some answers on this.Our chief White House correspondent for Asia and live contributor GarfieldReynolds is with us. And we go to you, all of you.Do you think we have seen a proper realignment and have we sort ofstabilized or peaked? No, I think yields can go higher thisyear. You know, even if the PC data comes into the soft side, there are a whole range of other risks going forward.And in particular, if we got a somewhat soft PC print, we already had the strongCPI and jobs data.

Recently, Fed officials were emphasizingthe idea that they need to see a series of data that can give them confidencethat they're really on the way and that they're not about to be too calendardriven by. They're going to be data driven.So with that, speaking of data, you've got PCI.Then we also get the next jobs reading. We get a whole slew of your purchasingmanagers index is and similar. Your gauge is designed to take thetemperature of various parts of the economy, both output and in particular,what price pressures are doing. And you havethe Fed chair, Jay Powell, appearing.

Before Congress next week as well, afterwhich soon after that the Fed then goes into a quiet period before the next Fedmeeting. So all the way through there, especiallybecause the next Fed meeting will have an updated dot plot, you've got a rangeof risk factors which would tend to limit the downside for yields andprovide the potential for a pop if we do get, you know,some data or some Fed speak that sounds pretty hawkish.We also could get higher yields if once we're past the month end, rebalancingequities regain their mojo and start to shift higher.And if there's strong risk appetite, it.

Also becomes hard to see, you know, atopping for yields yet. Yeah I mean equity is pushing higherGarfield given the moves we've seen we have seen it sort of tapering off alittle bit over the past few sessions. But how how durable and how strong doyou think the rally has been or is this something that's pretty fragile still?Well, I think it's been very strong. And to some extent, it's I'm I'm I'veoften been skeptical of equity moves. But part of the difficulty of beingskeptic about this one is that earnings have been strong.The economy has stayed strong even. Yeah, there were some wobbles within theGDP data that came out overnight, but.

Consumer spending was better thanexpected. So there's there's that there's also thefinancial condition situation is interesting I was looking at GoldmanSachs has indexes on financial conditions for Europe, financialconditions for the US. The US financial conditions are actuallysomewhat loose, whereas Europe are fairly tight, even though, you know, theECB's cash rate is nowhere near as high as as the.So you've got a range of factors which are saying there's no necessary reason,there's no sort of smoking gun for equities to turn around and move lower.They're definitely becoming more.

Vulnerable, more exposed.You know, there's talk of the equity premiums,the equity risk premium becoming too compressed.So with all of that, you have to be apprehensive, but you know that youmight miss time. Things all the sameequities. Look at the moment like they've got themomentum. And so far in the last few months,momentum has been a winning strategy, especially in Japan, but not only inJapan. So there's a good chance that equitiesare going to keep moving higher unless.

We get the sort of serious set of baddata. That would mean there's a cap in yieldsthat would mean the Fed is going to cut sooner rather than later,where we have seen some momentum and a bit of a rally, of course, as inbitcoin. And and we've been discussing thismorning the reasons for that. We know there's some supply demanddynamics that are playing into it as leverage as well that's creeping backinto the sector. But I'm curious.Bitcoin and crypto overall makes up such a small percentage of institutionalinvestments.

Do you think that we're likely to seeany sort of pivot or change here? Although, I mean, I actually thinkbitcoin's continuing to climb now that that underscores the idea that that riskappetite momentum is is still fairly strong.And I think that some of what's going on the last couple of days is rebalancing.Very strong month for equities, very weak month for bonds.So you've got some of those flows shifting around.You also have a lack of immediate equity triggers.Meantime, yeah, Bitcoin, it's got the supply demand dynamics.It just fits that general Zeek guys of.

Yeah, things are doing well doing betterthan expected. You know if you remember part of thereason we ended this year bonds have done badly because we went into thisyear with people saying the Fed is going to cut six times or maybe even seventimes this year. That underscored that people saw a lotof economic risks because the Fed would hike rates so much and it held them sohigh. What do you know?The economy has done just fine with so far with yields at those levels, withthose levels. So I think that's something of an almostwell, okay, a relief rally for risk.

Assets because the economy is remainingstrong. All right, Garfield, that wasBloomberg's chief rights correspondent and live contributor, Garfield Reynoldsthere. And you can get more on all of the day'strading on our Markets live blog. That's on the Bloomberg at MLive go.You can get a market rundown in one click and there's commentary andanalysis from Bloomberg's expert editors so you can find out what's affectingyour investments right now. Up next, we speak first with the BNZgovernor about why he's softening threats of further rate hikes this yearand when he thinks they may start.

Cutting.Adrian Orr joins us live next. This is Bloomberg. But it's to 15 minutes into the sessionso far for Japan and Korea today. And I think this board really puts it inperspective. It's a lot of right across the screenhere, but the decline so far, again, is stillfairly rangebound, but we are seeing weakness creeping through.It tracks what happened in Wall Street overnight.So the focus really is coming down to the Fed's preferred inflation gaugethat's due Thursday, and that's going to.

Help, of course, identify the pathforward for interest rates here, given we have seen some signals creeping backinto the market of more research and inflation.But as I said, just about 15 minutes into the session, weakness for theNikkei for the Cosby here in Australia is one hour into trade.What else we're tracking in the session so far is what's happening in the cryptospace because Bitcoin has been one of the big movers over the past few daysand crypto stocks generally have have been one of the sectors to watch.But Heidi, again, it is a focus on on the Fed and and of course some othercentral banks including of course the.

BNZ.Yeah, it was a little bit of a surprise I think for certainly some marketwatchers yesterday that they did hold keeping rates unchanged, softening alsoits threat of a further hike. So that overall tone of the policystatement remaining somewhat hawkish, but much less so than investors hadpotentially been looking for. So joining us out of Wellington is theRBNZ Governor Adrian Orr. Governor, always a pleasure to have youhere on Bloomberg. And look, I think some people weresurprised because there was speculation that there could be another hike and yousaid it had been discussed.

So talk us through the reasoning as towhy you didn't go yesterday. I thinkthe data I think is really the story we've been very pleased with the last 18months or so. The economy has panned out broadly asanticipated, and we haven't had to change our economic projections or viewsmuch at all, to be honest. But markets, you know, will pick thenext 15 or changes that they try to make.The challenge for us, we had between November and our monetary policystatement yesterday, a lot of confirmation that inflation is and iscontinuing to decline.

Inflation expectations are being betterreacted and we're achieving our targets with minimum disruption to broaderlabour markets so that, you know, we retain a restrictive position.But at the moment we have the confidence that, you know, patients will see thissort of Governor, was there a sense thatwould have been also risky to raise rates as the economy is slowing, or doesthat not kind of weigh in the reasoning as much with a single mandate?And is there a sense that come April, potentially that bar for a move islower? Do do you look at the fact that maybemore needs to be done to to to look at.

The long term neutral rate.Right. To not kind of be running while stillstanding still, in a sense. Yes.So, you know, we believe with the official cash rate at 5.5%, that is wellabove any estimate of a neutral interest rate for New Zealand.So, you know, we are comfortable, we are unambiguously in a restrictive monetaryposition. You know, yes, there is always a risk ofoverdoing it at either end of monetary policy.This is why patience is critical. So when you're sitting in a positionwhere you're confident, you're being.

Restrictive, you're confident theeconomy and the monetary policy transmission is working as theyanticipated, then have patience. And that's what we were reflecting lastNovember. You know, the inflation was stillprinting. Our expectations were higher, ourprojections were the same. But it's much nicer to actually havemore data and more confirmation. So that's what we reflected, I think, aswell. You know, our forward outlook isbalanced. You know, the risks are the side aroundour inflation outlook.

What hasn't been balanced is our abilityto weather upside inflation surprises. That is, that's where the asymmetry is.And our risk appetite as a committee and 4.7% aiming for two.You don't want upside surprises. Patience is a mantra.I'm getting that. That is maybe one of the things that themarkets and investors are not terribly good at.Right. And you even said this morning that yousee the cash rate as needing to stay at five and a half percent through thecourse of this year. The markets are still pricing in tworate cuts.

So do you want to give a message toinvestors, to the markets? Oh,you know, be careful.The. Rates are at a restrictive level.Engage the brain before you before you overindulge in debt.And if you are holding that debt with a view that interest rates have to golower, that is your risk. That's not our risk.Our risk is to make sure inflation hits its target.What is the risk, though, that you're seeing of holding rates for perhaps toolong?.

He is at this point low in the sensethat the economy is still strong.We're talking about economic growth picking up from here over the calendaryear. We're talking about employment growthremaining strong. We do see unemployment rising somewhat.But other than that, you know, household incomes being very strong.There's a significant government investment need.There's a lot of drivers of economic activity.And we're just trying to moderate the the demand side to to meet the to matchthe supply capacity.

So at the moment, you know, the risksbalanced with the outlook. One of the factors that sort of playedinto the supply demand dynamics has been immigration, because we have seen a bigspike in net immigration in in New Zealand.Did you look at that more from the inflationary effect by the housingchannel or was it more of the disinflationary effect on the laboursupply? Great question and and a complex one.As you well know, not all migrants are the same and not every migration periodis the same. We've had a 2% increase in ourpopulation, very similar to Australia,.

Canada, with a net migration.It's arrived at a time when there was enormous vacancies.People just could not find a labour. So it has been a net positive on thesupply capacity for the country and a potential growth rate and at thesame time it's moderated wage demands. So in that sense it has been useful formonetary policy, relieving some of the extreme pressure on the labour market.Of course. So there are now more people in thecountry and they want dwelling and they will be spending.So it is holding up at some degree. Total spending in the country.The capital spending is falling, but.

Aggregate spending has been held up bythe larger population and the real pressure we see is actually in thedwelling market, not house prices but rentals, places to live.So, you know, we're still in that really tough position where we just need morehomes and houses, more dwelling. Do you think that wrap it up swingingmigration could actually fade pretty quickly?And does that take the pressure off rentals?I you know, it's we just don't try and predict.We make basic assumptions for immigration coming back to some longterm normal standard.

Why do we do that?Because no one can control the net migration.People can come and go as they like as citizens.So I think the pressure will remain on rents for quite some time.Building activity is actually slowing from from record levels at a time whenthe population has increased. So, you know, that rental challenge willbe there, that rental price challenge for some time to come.The drop in inflation has been pretty rapid, 4.7% at the end of last year,two, two and a half percent at the end of this year.Do you continue to have confidence that.

The next the last leg of the cycle willbe quite as effective in terms of monetary policy settings as a lot ofconcerns, certainly stateside about the stickiness of inflation?And then you overlay some of the geo political and potential supply chainissues that we might encounter this year.Is that a risk for the BNZ? It is a risk.I don't think it's a new or different risk, however.You know, we've been doing a lot of work to see if the monetary transmissionmechanism has changed at all. Just how impactful our interest rates ondomestic home grown inflation and all of.

Our work says it's business as usual.Again, we just have to be patient. Of course, you mentioned a couple ofpotential supply side or relative price risks.They're always going to exist. For example, we you know, we're talkingabout being inside the inflation target band the second half of this year, below3%, and then at 2%, not until the same time the following year.What's holding us up? Well, we've had to make some assumptionsaround some relative price pressures, including shipping costs as an example.But, you know, the core role of monetary policy is working.We will always be buffeted by various.

Relative price shocks.But yeah, I think that goes back to your point, Governor, or about the theability to weather upside surprises to inflation.So the risks of those really come down to to New Zealand being a majorcommodity exporter. But what challenges are you mostconcerned by presently? Aussie dollar You know, domestically Ithink the challenges are I don't want to sound too, too benign, sanguine, but youknow, the risks are pretty well understood.There's nothing kind of on the horizon there.If anything, they're more global, The.

Ones you've mentioned, the thegeopolitical risks and challenge to trade, the cost of doing trade Chinademand. You know,the main risks we've talked about some to the upside and some to the downside.Our terms of trade have done reasonably well over over recent months, you know,and so the the export sector is feeling a bit better about things.So really, if we can, you know, write out the next 12 months through the lastpart of the disinflation, it's it's a pretty positive environment.1040. The other thing that could perhapsbecome an inflation risk does come from.

A weak currency and the New Zealanddollar is weak at the moment. Of course, whether or not that'sinflationary, it depends on what that weaker exchange rate is reflecting.But do you think that the current levels of the Kiwi dollar can be explained?Yes, I think that's that's a great way to phrase it.You know, we don't have any unnecessary or large unexplained components to ourtrade weighted exchange rate. And likewise relative crosses.They have been reflecting very much any of the standard ways you might try andmodel a fair value for an exchange rate within the zone of confidence aroundthat.

So, you know, the currency marketstouchwood have been very well behaved over recent times.So you say that we're kind of weak? I don't know.Yes, we are lower than where we just were.It's not necessarily weak. It's reflecting a lot of the economicfundamentals. There seems to be perhaps morepreparedness across all the major central banks.The Fed have started talking about easing, perhaps even the RBA and theRBA, I should say, despite being one of the first at the start of this cycle.Could the ANZ potentially be one of the.

Last cab off the rank to ease?And are you comfortable with that in terms of that potentially then givingsome strength to the currency and reducing the risk of imported inflation?Yes. So, you know, all I can really say isthe data will tell we'll have to play the hand that's in front of us.We are an incredibly transparent you know, we've got that projection thatwe're subject to no future economic shocks, subject to the economy behavingbroadly as expected. You know, we do have an easing ofinterest rates. It's just not any time soon.It's a few quarters away.

When we get far more confident andcomfortable about easing is when inflation, actual inflation is a lotcloser to the target. And so, you know, we're getting there,but we're not there yet. Gardner You've talked a little bit aboutChina and the slowdown. And I do wonder, you know, we've sort ofgotten used to an environment where China is seeing such extraordinarylevels of growth. Do you think trading partners like NewZealand, very externally exposed economies, have adequately prepared witha future where we see a very structurally different rate of growthfor China?.

I would say no.I don't mean to sound controversial or panicked.Diversification of trade is critical. New Zealand went from being veryconcentrated in Europe, U.K. to now being very concentrated Asia,China. We are more diversified than we used tobe, considerably more, but we still have those concentration components.But more importantly, the value add is critical.The more you know that you've got in the systemthat you can manage these different shifts in prices.You know, really just continuously.

Trying to look after a government.We'll have to leave it there. Adrian Orr there, the governor of theBNZ. We do have some breaking news justcrossing the Bloomberg data. That is when it comes to Australianretail sales numbers. This is a picture as we see a rise of1.1%. The estimate was for an increase of oneand a half percent. This as we also get some data when itcomes to fourth quarter business investment, seeing a rise of 8/10 of apercent that was better than expected. Investment across buildings andstructures.

So CapEx rising one and a half percentquarter on quarter. We are seeing a decline across some ofthose other aspects of equipment and machinery.Investment, though are down just about 0.1% quarter on quarter.Then in terms of the planned spend, $145 billion roughly, is that 2020 24 to 2025estimate by Australian firms? And this as we continue to see somepotential indications of really some weakness across the last quarter of theyear. We heard from the Australian Treasurer,Jim Chalmers, are not ruling out that the economy actually contracted in thefinal three months of 2023, saying that.

Elevated inflation, the rate increasecycle likely weighed on growth and we have just been speaking to of courseabout the NZ government at this point in the cycle.There's so much scrutiny on each data points and how much that potentiallycontributes to these market expectations of easing to come again.Yeah, that's right. It really seems like the bar for anysort of hikes or further action from here, if it's not going to be a cut, itis very much under the microscope here.But taking a look at one of the stocks that's just started trading here, thisis the Japanese Linda Azer, and that.

Stock there is absolutely surging upmore than 15% at this point in time. What's happened is we've had Citi Index.That's a firm that's linked to active and activist investor in Japan, hasdisclosed taking a holding or a stake in the company or is.And so essentially what we're hearing about that stake or we're hearing fromCiti index is that they're going to be with that 5.4% stake, perhaps puttingforward some sort of proposals to as or as well.Azer is a as I said, a Japanese lender. Its stock has really plunged over thepast few weeks. And what's been really behind that hasbeen the bank saying that it expects to.

Post a net loss for the fiscal year andthat's given pretty much some bets on U.S.commercial property that turn sour. So.AZER Yes, up 50%, but still put it in context, it's rapidly dropped over thepast few weeks. But let's shift now to something else,another data set we're going to be tracking later today, and that's India'sfourth quarter GDP numbers that are due later Thursday.A Bloomberg survey expects 6.6% growth from a year earlier.It does remain the world's fastest expanding major economy.Government spending and private.

Investment have moderated, though, aheadof this year's elections. With us now is Radhika Rash is executivedirector and senior economist at DBS Erotica.Yes, start us off with what you're expecting from this print.Thank you. I think suddenly, like you rightlymentioned in the growth numbers, are expected to be quite strong, in fact, inthe works on a fiscal year basis. And if you take in our expectation,which is a bit higher than consensus, we expect about 6.8%.If you you've seen a third three quarter to, you know, average, it's well above7%.

So certainly more pluses and minuses inthe data outcome that we expect later today.You know, we do think the consumption is going to be doing better.I think it's a bit of change of hands between urban India and rural India.If you look at some of the high frequency numbers I saw and there wasfestivities as well in that quarter. So we do think that we would haveprovided some support to consumption. But the biggest one is of investmentgrowth, investment growth by the government.You know, for even residential construction, for example, inventorieson those low so that we are seeing some.

Buoyancy.And in the private sectors participating in the sectors where, you know, publicCapEx is growing. So if you talk about roads and railways,metals, power, those are some of the sectors that are seeing.And, you know, I mean, investment interest I find is the external sectorsuddenly slower global growth is a risk. But for India, you know, the theweakness in goods deficit is being offset by what's happening on theservices front. So that's again, providing support tothe external trade map. So in all, I think a quite a strong runrate.

When you talk about the first threequarters of the fiscal year 24 that we are in that country.And so how sustainable do you think that is, Radhika?I mean, we've spoken to so many people about just India being such a greatstructural growth story now to track anything.You know, several things have. I mean, there are manyactors of production that are well placed as we go into the New year, newfiscal year. That is, you've got elections coming upin April. Me And if you look beyond that, i.e.the private sector in particular is.

Quite well-placed.I mean, they are under leveraged. Are you also seen, you know, people incapital markets are doing well and so they're able to, you know, raisecapital. They require it using internal accrualsalso to fund some of the CapEx and consumption.Again, you know, but you see some signs of turnaround in the budget labourparticipation rate and also, you know, jobs in general doing better.Also structurally, I think it is quite the investment driven growth push thatwe have seen last year and we do expect that to to continue in the year ahead aswell.

You know, in the elections there'll be abit of moderation and after the elections it will pick up.And the overall, you know, like I mentioned, the trade mix is somethingthat's providing a buffer against what's happening globally.Risks, of course, you know, one should watch out for.And I think those risks are much more exogenous, you know, in our in our view.I think one is, of course, how global growth goes.And the second is the commodity price cycle.And, you know, if that turns detrimental and that will impact India's externalbalances, for example.

But insofar as a domestic story isconcerned, we do think that the investment and consumption Bush issomething that is providing a good buffer to the economy in an environmentwhere really seeing, you know, slowdown risks in the region or at least the G20countries. Even with those low down risks, do youthink the RBA could afford to be less hawkish as it is?We just had some numbers from Bloomberg Economics saying that potentially theactual levels of inflation could be half a percentage point lower than theheadline number officially released. Is there a sense that they're being toocautious here?.

I guess, your reaction to the recentexpenditure, you know, consumption expenditure survey that was released andwhat that was released after a decade. And what that showed us is that, youknow, patterns have changed insofar as how households are spending.They used to spend much more on food and they gave back and they're doing less.So now they're spending more on non-food items and on 44 billion means in rent,depending on whether it's over in India or rural India.So when you see those consumption patterns change, I think one is drawinga conclusion that if those rates are reflected in the current CPI inflationbasket, inflation actually would be.

Trending lower.As we would agree, though, I don't think that rerating exercise is going tohappen yet. I'll be waiting for subsequent rounds ofthe survey to happen, but suddenly it's telling you that changing consumptionpatterns suggest lower inflation. Going back to your question of what thatmeans for the RBI. You know, they have drawn quite aGoldilocks, you know, backdrop growth at about 7% for the year.We're going to go into inflation at about four and a half, still abovetarget. You know, and their commentary has beenmore hawkish and positive on growth.

Now, against this backdrop, you know,it's not it doesn't suggest that there is a dovish pivot which is imminent.I think that's why after the commentary, I've seen the rate expectations being,you know, part I don't take as we don't expect rate cuts before the finalquarter of this calendar year. So suddenly expecting them to be,you know, a way to see what the Fed is doing and also wait to see the domesticinflation story play out. Is that a potential risk?And then what what other risks do you see for the second half?There's a lot of geopolitical risks this year for sure.I mean, the cost of I mean, them holding.

Rates high, you know, for a longerperiod of time certainly keeps tight financial conditions quite tight.But at this this juncture, you know, like I mentioned, most of the you know,obviously particularly, you know, paying back some of their debt in sort of, youknow, building on more debt. So I think they're better placed fromthat perspective. But suddenly higher rates for longheard. And I think also the risks, what couldbe external for the second half of the year.You know, the Middle East Asians are very important, especially for oil.You also seen those, you know, Red Sea.

Attacks on commercial liners, which isslowing down or adding costs to the to the drilling community.So I would think I would rank and such that global growth slowdown and thecommodity cycle are the two big risks for the economy.And sitting up there and domestically, of course, would be, you know, howinflation plays out because it's quite, you know, part of the basket is quiteprone to what's happening on the planet. Crawford.I mean, it's always great to chat with you.Robert Caro, executive director and senior economist at DBS.We do have some breaking news on Donald.

Trump.An Illinois judge has removed Donald Trump from the ballot because of, quote,the insurrectionist ban. This comes as quite a surprise movewhere the judge in Illinois has removed the former president, Donald Trump, fromthe state's ballot based on the 14th Amendment, so-called insurrectionistban. That decision comes as part of a similaranti-Trump challenge that we've seen in the state of Colorado that's pendingbefore the US Supreme Court, and that is widely expected to reject arguments thatTrump is barred from office. Cook County Circuit Judge Tracy Porterheavily relied on the prior finding by.

The Colorado Supreme Court, calling thatrationale compelling, realizing that the magnitude of the decision, the impact onthe upcoming primary Illinois elections, they have decided to remove Donald Trumpfrom the ballot for the general primary election to take place on March 19th ofthis year. So that is one month after theanti-Trump challenge was dismissed by the Illinois State Board of Elections.This was a unanimous and bipartisan vote by the election board because it said itdidn't have jurisdiction to review the matter.This now, I believe, makes Illinois the third state where Trump has been bootedfrom the ballot after Colorado and.

Maine.But those decisions were paused pending the appeal of that Colorado case to theSupreme Court. We're also seeing that the Supreme Courtwill weigh his bid for immunity from criminalprosecution as well. We'll talk more on trade next.Bloomberg is at the World Trade Organization Ministerial Conference inAbu Dhabi. You can catch our conversation with theUS Trade representative, Katherine Tai later on Thursday on BloombergSurveillance. More to come here on DAYBREAK.Asia.

This is Bloomberg. Taking a look at how crypto stocks arefaring in the session today. And it's just another session of gainsreally here across the board. And the reason underpinning that, ofcourse, you can see Bitcoin on the bottom of your screen here, but abovethat 60,000 mark trading in a two year high, earlier edged as close as nearly64,000, but a lot of different factors playing into that.In terms of spot Bitcoin ETFs, the demand for those that supply the netsupply demand dynamics off the back of leverage as well.Let's get more with our Asia finance.

Reporter, Silver Ghosh joining us fromSingapore and Suva. Perhaps you're not quite ready for usjust yet, but I will continue to talk about what we're seeing really, becauseas I said, it's it's supply, demand and spot Bitcoin ETFs.They launched back in January. So you're now around for around the sixweek mark of those being live. And and we have seen significantinvestor flows coming into those really and given that it has driven up thedemand for bitcoins, that's not really being met with the supply that's comingthrough from the miners here. So that's certainly one of the things.And as I said, leverage is also another.

Factor.But let's get more because I think Suva now is ready to join us from Singaporein Suva. Yeah, I just spoke about the spotBitcoin ETF, the demand, but I didn't get too much into the supply demand.What are we seeing with the bitcoin miners?Can they just start to issue more tokens?Exactly. It's a busy day for all of us, Annabel.And thank you for having me. Actually, it is, as you rightly said,our big supply demand mismatch, where we are seeing a lot of spot demand comingfrom the ETF, the exchange traded funds,.

Four spot spot Bitcoin.And mostly this is happening in the US. So hours because the trading ishappening in the US, our ETFs are in the US.So we are seeing a large amount of demand from the US for the US ETF fundsand that is actually skewing the supply demand equation for Bitcoin.Of course we have to also remember that the potential halving the halving whichis potentially reducing the supply growth of Bitcoin Bitcoin specificallybecause because Bitcoin is fixed, the supply is fixed.That is also kind of creating a you can see a FOMO among traders that what if Idon't get the bitcoins at this kind of.

Price is later.So that's again adding to the demand for for this so you know that the largestcryptocurrency that we have and that's again leading to this frenzy in themarket, I can see that. But however, I have to also add that theleveraged long positions have significantly gone up in the market,which means that there could be a pullback, a technical pullback, if evenif that is short lived. Because, again, as I as we re seeingthat the demand might continue to go, but we can see some kind of pullbackhappening given the very leveraged long positions and the funding rates forthese positions going up significantly.

For example, you should get basic guys.Sebastian, what are we seeing in terms of the volumes of Bitcoin leverage andwhat does it tell us about this rally? The volumes and the leveraged businessis going up very much like, you know, in the yesterday it was though the fundingrates were record highs. We're seeing the volumes going up mostlyin the US hours, which is actually showing that though the rally mightsustain going ahead. But you will see that, you know, in theAsian hours we can see some kind of pull back because as I said, that though thedriven the rally is driven from the ETFs in the US, So we are seeing some kind ofparing, some kind of, you know, sort of.

Silver movement as we speak in the Asiahours. But this could be again of a temporaryfactor given that traders are really, really looking at the the soon that therecord high level. So which is which is the next big levelwe are watching for as well which which could be a big, big domino effect ifthat that gets touched or breached in the next few days.Yeah. All right.Super. I'm sure you've got a busy few daysahead just tracking this ascent of Bitcoin, but that was Asia financereporter there, Siva Ghosh in Singapore.

And let's shift now to Hong Kong becausethe real estate sector is facing an uphill battle even after thegovernment's most forceful attempt yet to revive the market.Authorities have eased home by levies and mortgage lending restrictions aspart of sweeping measures to revive the financial hub.Our Hong Kong real estate reporter Shaun Cohen joins us.And Shaun, I mean, we were just discussing there in the ad break thatthat this was something that really took people by surprise yesterday, the move.Yeah, I think it's it's actually better than people expected because all ofthese so-called spicy measures are.

Removed.So in the past, foreign buyers have to pay a combined 15% tax or probablytransactions. And Hong Kong existing home owners haveto pay 77.5%. Sorry.So now everyone paid the same tax that is capped at 4.5%.And also the special stamp duty that is imposed on those sellers who sell theirproperties within two years of purchase is also scrapped.So everyone is free to sell the properties any time they want.What is the impact that we see on home prices in this year?So I think that most analysts is.

Expecting are expectingprices to stay flat or even drop by a slow single digit.So a lot of that will hinge on the the rate cuts.So if we see rates go lower this year, people will find it more affordable tobuy homes in Hong Kong. Our Hong Kong real estate reporter SeanaCohen there say in Hong Kong, Bloomberg Intelligence sees the city's tourism andretail gains slowing after the first quarter of this year.Let's get more from Bill senior Asia pacific consumer analyst Catherine Lim.So Catherine, should we be more excited about the prospect of increased Chinatourism into the city after hearing some.

Of these initiatives being announced?Right. It's good to actually see the governmentputting in more money, looking to actually prop up activities for touristssuch as monthly fireworks, you know, monthly drone shows.But really, I don't think it's going to be quite enough to actually try andbring numbers up significantly. Particularly do bear in mind that we arestill far off from where tourism levels were back in 2018 to 19 before theprotests happened. And we ended off at 49% of those levels.I think it's going to go up to about 58%, factoring in a 29% year on yeargrowth in tourism numbers.

I think that is going to be just aboutit based on what we have actually seen yesterday from measures taken by thegovernment. Fingers crossed on those.But, Catherine, given that Hong Kong's retail landscape has relied so heavilyon Chinese tourism, especially for the luxury segment, how is that sort oflikely to then play out in retail sales then?Well, you know what, It is interesting that we have actually recently startedseeing some of the luxury brand stores, you know, popping up again.And Hong Kong notwithstanding, that's got a few more of the bulgari's.The Chanel's actually coming up.

And it will be interesting to actuallysee how they manage some of the marketing activities, particularly sincethey have actually raised prices in Greater China in the last six monthsitself. So doing more of these campaigns toactually bring out, you know, some of the messages or the stories behind thebrand. I think that's going to actually stillbe a draw for the Chinese shoppers, particularly since there are still pricedifferences between luxury goods selling in China as well as Hong Kong.Hong Kong, obviously, you know, being cheaper given the absence of Texas.So I do think that, you know, the luxury.

Guys are still going to be doing well inHong Kong. Bear in mind, though, that we're seeinga moderation in terms of tourism numbers increase.So the magnitude of the increase may not be as significant as what we've seen in2023. Catherine, that was our senior Asiaanalyst, senior analyst rather, for Asia Pacific consumer, Kathryn Lim there fromBloomberg Intelligence. And you can get an insider's guide tothe money and people shaking up the finance hub in our new Hong Kong editionnewsletter out every Thursday. You can sign up via bloomberg.com slashnewsletters.

We'll have more ahead.This is Bloomberg. Taking a look at some of the corporatestories they're following this morning. In India, insiders sold about $18million worth of stock after the Chipmaker's earnings beats and shares toa fresh record. According to the Washington service.Insiders unloaded the most stock in a month since September and video itslatest results topped elevated expectations, while also deliveringanother strong revenue forecast. Microsoft is investigating reports thatits co-pilot chat bot is generating responses that users have calleddisturbing and sometimes harmful.

The chat bot was introduced as a way towave AI into a range of Microsoft products and services.The tech firm says some users have deliberately tried to fool copilot intogenerating the responses. Videogame publisher Electronic Arts iscutting 5% of its workforce, or about 670 people.AA cites shifting consumer needs or customer needs and a refocusing of thecompany. It's also stopping development on anundisclosed number of games. That's it from DAYBREAK Asia.Our market coverage continues as we look ahead to the start of trade in HongKong, Shanghai and Shenzhen.

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