China’s GDP Growth Beats Estimates However Markets Unimpressed | Bloomberg: The China Point out 4/16/2024

Allright. Good morning.We are half an hour away from the opening bell.Hong Kong, Shanghai and Shenzhen. You're watching the China show.I'm David Inglés. Our top stories this morning, China'sfirst quarter GDP and monthly activity numbers set to provide a reality checkon whether the economy has turned a corner.Stocks across the region following Wall Street lower after hot U.S.retail sales numbers spark concern about stubborn inflation.Treasury yields hitting new 2024 high.

And German Chancellor Olaf Scholzprepares to meet with President Xi Jinping later Tuesday, even as the EUlaunches a raft of trade investigations against China. All right.We're just about an hour away until that data drop out of China.That's certainly going to be front and center here as we break those numbers atthe top of the hour and whether we're going to see that this rebound in theeconomy has some sort of traction here in the first quarter, That's certainlyone thing they're are watching very closely here.4.8% is a consensus here today outside.

Of what we're seeing right now isbasically still those risk off moves. You know, you hear what people aretalking about higher for longer and the like.Obviously, we heard from John Williams overnight talking about he still wantsto cut rates, but certainly that narrative seems to be pushed back moreand more. And I think traders aren't reallypricing it quite in until as early as November or late November now for thenext first cut. But Bank of America is talking aboutDecember now as possibly when this rate cutting cycle can begin.So certainly that leads to a bit of a.

Risk of moves.U.S. futures are pretty much flat after wedid break below that 5100 level when it comes to the S&P overnight as well.And we're watching very closely those dollar moves.Once again, I think we're up for a fourth straight session, five monthhighs for the dollar. And we're watching this is reallycertainly roiling some of the Asia equity benchmarks.You look at Japan, we're down 1.6%. Cosby is down one and a half percent.The tech plays certainly have been hit very much overnight as well.Seems like we're feeling that here.

Taiwan just coming online, also down byabout 7/10 of 1%. And you continue to watch what goes onwhen it comes to those treasuries. Right.That strong U.S. retail sales friend.We almost briefly almost touch that 5% for the U.S.two year yield. We've come off that a little bit now at490 to stabilize a bit. And a ten year break continues to see aslight bid here given all the Middle East sort of tensions here.We have heard from Israeli military officials saying that they still vowthat they will retaliate on Iran.

And we're watching very closely whatgoes on with China. Right.So right now, we're kind of in this holding pattern before the big datadump. But everything from the consumption sideof things, industrial production. Are we going to see a more relativelyslower start to the year? That's according to what BloombergEconomics suggests here. Now, Cycle and Dragon did this not awhole lot to really in terms of conviction and you take a look at reallywhat happened yesterday was that divergence between the onshore andoffshore with the CSI 300 coming back in.

A big way, snapping out of seven days oflosses. It was all this talk in that statecouncil meeting about market supervision, capital market developmentthat has sent stocks flying yesterday. Will that continue?That certainly is one key thing here. UBS had a pretty interesting note sayingthis brings us back to 2004 to 2014, Dave, back when they brought inmilestones like the stock connect. So maybe we could be seeing somethingsimilar along the pipeline there. Right now, futures slightly lower.Yeah, there we go. Certainly a jampacked session today.In fact, at the bottom of the hour, a.

Challenge and I would be joining us outof great interest to talk us through these markets.And the last time we actually had her on Bloomberg Television, the conversationrevolved around some of the direct engagements they've had with Chineseofficials on how to boost sentiment in this market.We'll unpack what her latest thoughts are on this market alongside the openingbell later on. And also alongside I should also mentionYvonne talked about economic data. New home prices are due out this hour.And we're looking at so far going into this month, nine straight months ofmonth on month declines across new home.

Prices, across 17 cities.Right. Other things happening today.We talked about all the shots, of course, in China.We should be at some point getting more lines on out of Robin Li of Baidu, ofcourse, is air conference. Remember Ernie Boortz, get the latest onhim or it. What's the anyway?Okay. I won't get into that as well.And very, very quickly. We'll show you this later on.To everyone's point, earlier on, short trading volume, CSI 300 ShanghaiComposite spiked to the highest level in.

Six months, six weeks, rather, onMonday. So want to watch.There we go. Let's go to our news desk editor, JillJesus, now. She's with us ahead of this big datadump. What are what are you guys to bewatching out for the most? Well, I think at this point, you know,so far what we've seen this year, Yvonne, is it's really a story of a twotrack economy. We've seen industrial output actuallyholding up pretty well through the first couple of months of the year.Export data, I think has been a bit.

Shaky recently.We saw a big surge in January, February. But then those numbers that we just gotfrom March late last week really not as strong.So I think any kind of comprehensive data that we get that indicates howwell, again, the factories industrial sector is holding up will be reallyrelevant for us right now. And then again.But you know, for much as well as factory output has really performed tothe start of the year, consumption silver remains a major drag on theeconomy. I really want to look at those retailsales figures to see if there's any kind.

Of upward momentum there whatsoever.Not really sure that that's going to be the picture, especially because we sawconsumer prices essentially stall in March.So a lot of concerns there about what that recovery looks like.And then obviously ultimately what it may mean for continued policy support inthe months to come. New home prices.To your point on, consumer prices are also due out this hour.Yes. And I think at this point, we're stilllooking for that, you know, ongoing negative trend month on month for newhome prices.

I mean, look, if we're also looking at,I think I'm home prices on the secondary market as well, since it's a bear marketnow. So really sort of changing the calculusa bit, what really matters there. But yes, I mean, look, the real estatecrisis continues in China. I think we've you know, we've continuedto see, you know, various, you know, elements here showing us that we reallyhaven't seen a comprehensive turnaround for the property market in China rightnow. What does that mean, again, forcontinued policy support? Not quite sure yet what it mayultimately take to kind of turn things.

Around.But yes, I think we still haven't seen real estate really meaningfully turn acorner in China yet. Not just yet.Jill Thank you Jill thesis there. Let's bring in the market angle here.Mark and Phyllis with us out of Singapore.And let's try to just mark yesterday CSI 300 up 2% moving against the grain.There's weakness coming through, of course, global equity markets thisTuesday. Can we expect China to continue doingthe opposite? Well, you are talking about divergencethere, which we we saw between CSI 300,.

For example, in H-shares in Hong Kong.There was another divergence onshore in China as well, which is probably a bitmore worrying. So you had the CSI 300 up 2%, but theCSI 1000, which represents the small cap stocks, it dropped by 1% yesterday.So quite a big divergence between onshore indices.Now, the main reason for that was this this news about the new regulationswhich are likely to come in from the state council because the threat thereis there could be more de-listing of China stocks going ahead.They're seeing it before it's happened where they delisted a few companies thistime round.

That could be a lot more because thenumber of IPOs over the last few years has been much larger.Now, that obviously impacts the small cap indices a lot more than it does thebig ones. There was also some suggestions the ETFswere being bought aggressively yesterday to help make the the big cap stocks looka little bit greener as well. Now, this can't go on for too long.Eventually, if investors are really nervous about the delistings and they'relosing money on their small caps, it will feed into the big caps as well.So you can't have a divergence like that going on for very long.Investors will start to get nervous now.

If today's data is not helpful.If we don't meet all the expectations, that could quickly turn around thesentiment that looked on the surface to be good yesterday, it might not lastvery long. And that my pulse survey that you guysconducted did show that it still seems like whether it's equities, whether it'sthe currency in China, there's still you know, people are still quite negativeabout it compared to even the yen or the rupee at this point.Is it time to kind of go against that as well and be a bit more contrarian?Certainly, if you look at the way people seem to be skewed, they seem to have apreference.

If we asked them which currency wouldrebound the quickest, whether it be the Indian rupee, Japanese yen or theChinese yuan, and certainly the yuan came in third of the three.So on that basis, it looks as though people are rather underweight the yuanand they have low expectations. So certainly if you're a contrarian, youwould look at that and you would suggest that if anything has a chance to catchup, it will be the Chinese currency. There was a similar read out forequities as well. Again, they put China at the bottom ofthe stack of those three countries as well.So, yes, it would appear, but people.

Don't have high expectations, so itwouldn't be too difficult to beat that. But at the same time, you need a lot ofthings to come together. What you are seeing is is a momentum inIndia and Japan, which just isn't there in China.And in the end, a lot of major investing decisions are made on where the money isflowing. So if you see money flowing into thoselarge markets, that's a deterrent for you to put more money into somewhereelse. So there needs to be some kind of apositive change. It could happen.It might happen in the next few months.

But certainly there is a reason whypeople are skeptical. On China's chances of rebounding.And Mark, before we even get to the point where, you know, we we have the Iguess, the scope to pick within Asian effects.I mean, the dollar is giving us something to think about, right.Five month highs And whether you're a dollar index or a Bloomberg dollar indexfan, you know, your question of the day, ofcourse, out of the analyst team is on the yen and whether 160 or before thatis a level of intervention we need to watch is put this together for us.How strong is this and can this continue.

To mark?Well, the dollar is a problem for everybody, but there's not really muchthat anybody can do to it to fight that. There's no major central bank that wouldhave the the really the wherewithal and the power to take on the US dollar whenit's flattening everybody. Now, the Japanese authorities within theG10 space especially, they're probably the only one who would be prepared toput together a huge amount of ammunition to try and turn it around.We saw that in 2022. The level of intervention now wasabsolutely massive and it overwhelmed the foreign exchange market.But the other important factor was at.

The same time, Treasury yields werestarting to decline. So they were getting a boost from the USside of the equation as well. Those floating yields helped to softenthe US dollar. Japanese authorities came in and theysupported the yen. This time around it looks as thoughthey're on their own because USD which keep on going higher.That's not helping anybody, especially Japan.So if the Japanese authorities do come in, they are very much taking on theforeign exchange market one handed. There's going to be no support for nowfrom falling US yields.

And of course it looks as though ratecuts are going to be delayed further in the United States.That doesn't help Japan either. So there may well be intervention before160, but how successful it is might not be as good as 2022.Mark Great stuff. Mark Cranfield There are onlinestrategies joining us out of Singapore. We're also going down the open of tradein Shanghai and Hong Kong. This is the China show. All right.Welcome back. Futures are, in fact, taking a furtherleg lower.

We're now down half of 1%.So you know what? This is something we normally see ofmagnitude. So we'll see what happens here.But we should be getting the reference rate of the day out, too.Yep. Here we go.Oh seven 1028 against the US dollar. I missed yesterday because I wasn'there, but this should be something of note was it was around that.It was around the same. It's around.It was still sub 710, I believe. Okay.Well, it's seven 1028 the estimate seven.

2457.There we go. Let's leave this charts and give it alittle bit. Oh, there we go.Check that out. Boom.So they're 720 are no PBOC weakening the yuan fixing to one month low.The dollar on the back of the dollar index hitting a45 month.I knew this fix looked funny. And so anyway, we'll stay on top of thestory. 15, six, 12, 14 minutes from now, newhome prices are out and in 45 minutes we'll be breaking you some backwardlooking data, GDP numbers plus, of.

Course, monthly activity numbers comingout of Beijing. It was 709 still yesterday.So this is a bit of a weaker, weaker fix here is certainly one that we're seeing.That's why that reaction, that spike up in dollar China.Let's focus a bit more on the German chancellor, Olaf Scholz, who is set tomeet with Chinese President Xi Jinping later on today.After what are the officials to address overcapacity and treat foreign firmsbetter? His comments echo criticisms deliveredby the US Treasury secretary last week. Let's get to our German governmentreporter Michael Nienaber.

He's traveling with the Chancellor andjoins us now from Beijing. Michael, just tell us more about whatShultz said in his warning on overcapacity and how does it comparewith what we heard from Yellen last week?Yes. So it's arrived in China already onSunday. It's one of his last trips yet to asingle country. It's accompanied by a huge businessdelegation. Germany being one of the most importanttrading floors of China in Europe and vice versa.China, it's the most important trading.

Partner of Germany.So he's facing a delicate balancing act here.But during a stint in Shanghai yesterday.But first, talk to students at a university and later also told reportersthat he's part of free and fair trade, which basically means, in his view,there shouldn't be any kind of tariffs, But then came to the crucial point.And he added, it's really important for the Europeans that the Chinese thatthat China takes serious the concerns about overcapacity, about dumpingpractices. And he even got more details.She complained about Chinese practices.

Of not allowing European companies toparticipate in tenders. And she also mentioned concerns aboutviolation of property rights. So it was quite a detailedwarning to the Chinese that they finally need to take those concerns about fairtrade more serious, otherwise Brussels might have to act.Right. So, Michael, these comments were made inShanghai and of course, I believe you guys arrived in Beijing late last night.Effectively that that's the talk. What's the walk going to be?What do we know about these actual restrictions against China from the EU?So that process is what's currently.

Launched a probe into unfair dumpingpractices of Chinese electronic assaults.So the Europeans are looking into whether China is massively subsidizingthe production of green tech. Andas soon as some of the European Commission might come to a conclusionand as part of its mission, when we first meet Chinese President Xi andlater the Premier Li in Beijing for talks.One of the key aims is to explain those concerns to the Chinese and make clearto the Chinese side that China must actually act on thoseconcerns, not to avoid a deterioration.

In trade ties, which it definitelydoesn't want. But he also made clear that it cannotcontinue like this because the concern is that those dumping practices willactually destroy thousands, if not tens of thousands of manufacturing jobs inEurope. Michael, thank you.For a preview also of what's coming up today,the German chancellor, Michael Nienaber, in Beijing for us, our government.Reporter Just to recap these big moves we're seeing right now in the ethicsmarkets and coming off a week reference rate out of the BBC, north of the 710handle, which we normally see below that.

We're now trading close to 7 to 8 on theoffshore rates is certainly one to expect is an adjustment in the onshorerate when things come online in about 10 minutes from now.We're also looking at some weakness across the current against other keycrisis as well. And of course, the U.S.weakening to one month after the start of strength story.We've seen a lot of mixed signals, I guess after we did see a weaker figurejust a few weeks ago. And then now here we are.We're watching, of course, those short of proxies.Your futures looking like this in the.

Pre-market in Hong Kong.Certainly, we are hoping to see maybe a little bit more rebound after that.The big sort of lashing that we saw in Hong Kong.Plenty more ahead. This is Bloomberg. Right following the PBOC weakening thereference rate to one month low, The currency is down against just abouteveryone in the neighborhood, as you can see there on your screens.All right. Let's get back to why you talk about thedollar moves and what we've been talking about in the Fed.Your Fed president, John Williams,.

Believes that the Fed will likely startcutting rates later on this year if inflation continues to gradually ease.And he also discussed resilience and consumer spending in the economy.An exclusive conversation with Bloomberg TV.Consumer spending has been strong. I think it is driven by strongfundamentals. Job growth has been solid.We've seen real wage gains. We're in a pretty strong economy withgood growth. So, yes, it's part of that story.But, you know, we I think what we're realizing is we're getting a nicetailwind from the supply side of the.

Economy with good labor force growth,strong productivity, good real wage gains.So with that, I think, you know, consumers are spending.What's the thinking in your office and among your colleagues about does thislast or is this a surprise that you think could go away at any minute?Well, one thing that makes it really hard to forecast is we're still feelingthe effects of the the after effects of the pandemic and Russia's war in Ukraineand all the things that have happened in between.So we're definitely still seeing an adjustment process by the consumer, byin the economy overall.

But overall, I think that the economywill continue to grow at a solid rate this year, probably not as high as the3.1% we saw last year, but something like 2% or around that.So I feel like we're still in a good place, probably not as rapid a growth aswe saw last year. You do have the strong growth, you havevery low unemployment. Why cut rates if the economy is doingfine at this level? Well, first of all, I think monetarypolicy is working at the rates we have now.So I think I think monetary policy is in a good place over the past 12 to 18months.

We've seen all pretty much all themeasures of imbalances in the labor market, in our economy recede, many ofthem back to levels we saw in 2018 or 2019.So we're seeing that restoring balance in the economy.We are seeing a slow decline in inflation.So I do think monetary policy right now is in a in a good place.I'm not fixated on where do rates need to go.You know, over the next year. What I'm focused on is how do we bestachieve our maximum employment and price stability goals.The data we're seeing show that the.

Economy is strong, and that's reallygood news and labor markets strong. At the same time, we are getting abetter balance and we're seeing some decline in overall inflation.So for me, it's really about getting that right.And then whatever we need to do to adjust monetary policy, we can do tobest continue the progress towards our goals.So that's how I'm thinking about it. And we just have to keep watching thedata and make the decisions based on those goals.What is your base case that you will cut rates this year?My own view is I think that with.

Inflation continuing to gradually comedown and I guess I would say gradually is the operative word here and with theeconomy remaining strong, I do think that given where the level of rates are,real interest rates now are considerably higher than they were before becauseinflation has come down quite a bit. So we will need to start a process atsome point to bring interest rates back to more normal levels.And my own view is that we will you know, that process will likely startthis year, but again, it will be driven, driven by the data and achieving ourgoals. That was the New York Fed president JohnWilliams, speaking exclusively with our.

Colleague Michael McKee right ahead ofthe opening bell. And it's not looking good across thesemarkets. We're looking at losses beyond the 1%handle 2% in some cases, like Japan, for example, Hang Seng one and a halfpercent to the downside. Asia stocks on track for the worst dayin three months. The open is next.This is the China show. Welcome back.You're watching to try to show the price action just the last couple of minuteshas actually been quite volatile. If you take a look at how stocks aredoing here across the region, the.

Currency and it really started withoutus retail sales. Print was really looked at the dollaryields as well. That's why you're seeing a 728 said wesold three eight handle for dollar China on the PBOC letting that currency gojust a little bit just given that dollar pressure but yeah the weakest fixingwe've seen in a month Dave it needed to come right We were having thisconversation during the break certainly given the adjustment we've seen thedollar index, you know, highest level in about five months or so.In a couple of seconds we'll be getting the open, we'll be getting the initialpricing on the onshore yuan rate and.

Also new home prices coming out in acouple of seconds. In the meantime, though, it's not goodto be along these markets. The dollar, the dollar's a problem.It's a very big problem across these markets today.As you can see, some steep drops, as you can see of stock index tech, heavybenchmarks like that one, like the Taiex index, like the Nikkei, 2 to 5, forexample, the Cosby index are all seeing substantial losses.In fact, at these level 16 three, 16, four, we should be opening below your 50day moving average, which was actually up until yesterday.And we'll see how how we closed today.

Did provide some decent support for thespecific benchmark as well amidst of course, what's taking place, the Nasdaqindex worst two days, NASDAQ 100, to be more specific.Worst today since since October of last year.Okay. We don't have the onshore rate justhere. We've been looking, of course, and alsothe sell off taking place on the CSI 300.My producers might be able to show us your onshore yuan rate on bottom of yourscreen. So that should be coming out any timenow.

We'll get you that number in a moment.In the meantime, though, one thing to pay attention to here as we await that,as we await new home prices are volume. So yesterday, CSI 300 and the ShanghaiComposite volumes in both actually spiked to the highest levels going backsix weeks or so. So certainly worth noting and to trackit very closely as we approach, of course, by the thick of this sessiontoday, and as you can see, we're down about 14 points on the CSI 300.So I'll leave it here for now as we continue to unpack what's on what'sshaping up to be quite an eventful session across.It certainly is.

And we just got those about home datathat you mentioned here. And in terms of March, maybe you couldcall us slightly better news, new home prices, marginally speaking, we'retalking about dropping 0.34% month on month.So that drop is slower than what we saw in February.Used home prices also see maybe a bigger drop of half of 1% or so from a monthago. That drop also so slower than February.But we're still talking about, I think when it comes to new home prices, a 10thstraight month where prices have been falling continuously here.Yeah, not very good as the fundamental.

Backdrop.And in 28 minutes from now, we'll be getting the activity numbers comingthrough to simply confirm and give us a more holistic picture of where thisrecovery actually is. So let's bring in Sheldon Chen, head ofinternational at Crane Shares, joins us right now to talk us through thesemarkets challenge. And as always, a pleasure to have you onthe show. I wanted to get started and we'll talkmore about China specific themes in a moment.But I'm wondering how you're thinking aboutthe macro picture Now.

I know you're bullish on China, but canwe be bullish on China with the U.S. just presenting just such a goodalternative? Look at the U.S.dollar, for example, today. Thank you for having me on your show,David. This is obviously China as a singlemarket. Typically.Traditionally, China is a hydrator place to us.And then the US doing well kind of in a normal circumstances should also dorelatively okay in this year are the second year post the pandemic orbeginning with sitting here post.

Pandemic restrictions completely removedin China. Where are we in China today?We have very rich liquidity, very pro-growth market policy in place.Again and again, the policy maker came out and you can recall in recent of thelast year, it's always been, how can we help?How can we grow the consumer? How can we going to clean technology,Some of those policy and money is in place valuation that could cheap.I know there's the flipside of the arguments there and the good companiesare buying their own stocks back. At this juncture, you have moreopportunity to take from the upside than.

The overseas oversight.Oversold downside. You know, obviously China will notdecouple as equity market for the US equity market.And then on the day if all these in place the intention to grow the economydoesn't come through. I think the Chinese policymakers have alot more tool tools they put aside to use in the near term.Yeah, it's interesting you mentioned I mean.Yes. Today.We saw that with the onshore stocks, right where they basically buck theentire world in terms of outperformance.

Does it again prove that maybe China canstill be that diversifier amidst all this macro madness that we're seeingwith the Fed higher for longer and the like?It's a great question, Mom. China Shops presents its uniqueness interms of the business. They focus on the customer base.They have uniquely isolated in some ways just based in China.Those are star boards names from China. And you say it's not really 2% positivein terms of performance. Those companies are sold is exactly thesector. These are clean, semi active technologysongs.

It's China just focus is on.Of the 870 million people living in Sydney.It would be surprising for the Chinese company to back home their suit for longterm customer growth. They still need to internationalizetheir business in terms of a diversification play for Chinese equitymarkets in the global portfolio, which is where global investors owning thestocks we see, where the floor we have been seeing in the last few months.Finally, February, we start to see global mandates.You know, yeah, portfolio managers actually started buying Chinese equityin February.

I mean, we need to see March dataconfirmed shortly. But overall, I think this is presents abit of a fundamental attractiveness to portfolio managers globally to own thisspace. And, you know, you're you're in constantcontact with European investors specifically.And I'm and I'm wondering what the China bull case arguments that you observethem starting to listen to that previously fell on deaf ears.In other words, what are they more convinced about now as it pertains tothe China and what remain sort of nonstarters for them as well?Here, challenge and.

Regret and do it?I think the most important is the commitment from tracfone's maker isemerging country policy makers the most. Obviously, we have, you know, from lastyear, March until now is 12 months in a row that they have seen commitments fromthe top senior leadership in China, India, that now that the announcedtrading program, the liquidity all these things and not was of the old trial longdated bonds all these actions European U.S.is perceived that its consistency and persistence.The announcement by the Chinese people is meager in terms of support ofeconomics.

That's number one.And they see the attractiveness side of the asset presents at this juncture.But ongoing was a bit of a quality tape is one to see if the consumer will pickup. They want to be wait and see.And having a very small phasing in now a wait and see mode, but is more positivea wait and see mode. Obviously, geopolitical issues also ontheir list to wait and see because of the largest.You know, these would probably be the largest election year in history for thebig Hondas in China in terms of safety. I'm sure you've been tracking all theseflows and I'm wondering what you've been.

Seeing when it comes to these statefunds buying each year. I mean, how active have they been andcan this market still rally without that sort of support?Support? It is more symbolic, in my opinion.Obviously announced 2 trillion, which is good and the market knows the money'sthere. Apparently somewhere around 200 billionis already being put into place. They have a huge room to continue to dothat if they chose to. I do think there's more legs to comethan just the stabilizing power of 2 trillion.Think about it.

CIC, China's Asian started buying theseequity markets just like what defended and these can be a massive you from thenational team into Chinese equity market at least value then they got a nicevaluation you got to see this asset class to be attractive to to their ownbook even with civilization in mind on that.The other things you got to be very mindful is the Chinese policymaker istrying very hard to produce a healthy financial market, a healthy financialframework in place. And yes, it's been announced a nightmeasures all of that being goal to say we got to provide a very solid stabilizeand basically create more value for.

Shareholders by issuing more dividendsign for publish on the big type confirm not doingright. And my understanding is correct me ifI'm wrong, that you've actually sat with Chinese policymakers and officials.Well, you know, as they try and bring sentiment back into this market, whatother pro-market measures you think are in store for investors here this year?I think the policy team or policy makers in China we did had a meeting with theChinese regulator in Beijing. The very first question they asked mewas, I'll ask our team was how can we help the global investor?What is the sentiment?.

What do we need to do?Ideally, very clear, very honest with the closed door meeting is stillcommunication which they are doing now. Was very pleased to see and betransparent. Why the policy team introduce?What's the purpose? Why the reasons they're, I think,satisfied with the credit to the new leadership.They are doing exactly that. But I also want to say don't alreadygone as healthy or solid framework in place.A good but not already done. I think they are not already done.They are just correcting what is left.

Already in the toxic swamp.I think solidly working in one place consistency piece to say communicated.They accommodated to the market and put and start action, you know put moreliquidity in the market supporting the companies which they are doing creditspeak Peacock march which is amazing to see that households stopped borrowingcredit card is also stepping in to borrow credits.Those are the actions they made. You want to see leading activityhappening in China or change.Alan And maybe no nasty surprises coming through, right?Chen Yellen, head of international.

Trade, is live for us out of London.Thank you so much, by the way, for staying up or really being upthis Tuesday. Right.Some movers to tell you about 10 minutes into this cash market session times.China is perhaps the biggest one to the downside here, receiving a winding uppetition, I believe, from Hang Seng, well filed by Hang Seng Bank.Shares are down by. Water, which should be the biggestsingle day drop going back at least at least three years or so.January 2022, the stock fell by 27%. We're closing in on that specific day.But that being said, there we go.

Winding up petition there.A couple of other things you have to watch out for.Yeah. Cattle earnings story, its earningsstory on Friday and a big drop yesterday.A big drop for the today. And some of these European or Chinesemedical device makers are on the back of our reporting on potential or probes andinvestigations out of Europe. We're down 5.4% on one exchange in mind.We bottom of the screens and also some changes as far as this watch list ofMorgan Stanley. Top two are being added bottoms who arebeing removed from the focus list out of.

The guys at Morgan Stanley that we got.Right. Plenty more ahead was a preview of themonthly activity numbers, which are due out in about 19 minutes from now.Stay with us. You're watching the China show.Happy Tuesday. If you're long, these markets eitherclose your eyes now or forever hold your peace.Well, at least today, Asia Pacific on price.We're down one and a half percent. So it's a bad day to be along thesemarkets. And as you can see, some of these techheavy related benchmarks, TAIEX index.

For one 1.4%, 1.8%.In fact, I guess this is what happens when the dollar strengthens and yieldsare at year to date highs. But at least we have a stand out hereamongst the earnings picture. And we're watching Seattle.Of course, the battery maker first quarter profit rose as its supplydominance in batteries really helped offset weakening overall car sales.Let's go to our asia trezor reporter daddy lee joining us now with histakeaways. Yeah, i think for seattle and as we kindof forecast, if they could continue that that profit momentum, it's a good signcompared to its peers struggling to.

Maintain the momentum and are strugglingas this wider broader competition really ramps up.So Seattle as a market leader now really the stand out for the last couple ofquarters beating expectations and Seattle know a price upgrade there fromfrom Morgan Stanley so a pretty good across the board when it comes to youknow control of its cost got a solid product mix as well so you know prettygood looking into the future it's this is this a Seattle story or is this anindustry story or is it simply a Seattle story?Because they're, as you point out, they're the leader in this space.I think it's a Seattle outperforming the.

Rest of the industry and given alreadyhow dominant it is, holding a 38% global market share.And compared to LG Energy, who is the second biggest player with only 13 oddpercent, you know, you can see how far and away Seattle has a tight grip on themarket and there's very few people who can shake it off.And you can see why maybe there are governments elsewhere concerned aboutthe rise in the dominance of someone like Seattle in a critical industry thatthe world is trying to wrap its head around.Danny, Thank you. Tony Lee, our Asia transport reporter.Seattle, up 6/10 of 1% amongst amidst.

Generally a sea of red out there.Looking at crypto, I'm trying to look behind camera for price.Yeah, here we go. 6/10 of 1% up up on bitcoin and ether.The big news, of course, yesterday here in Hong Kong you have several assetmanagers now saying that Hong Kong has given them conditional approval to startspot beat bitcoin and ether ETFs. Yeah.Let's bring in Rebecca in our Bloomberg intelligence ETF analyst to talk usthrough okay tell us who got approved to list spot bitcoin and ether ETF in HongKong and how significant is this. So the three people that got approvedare Sarah China, AMC and harvest from a.

Numbers perspective.But Sarah has six ETF and 40 million in assets under management China.AMC has 15 ETF and 3.6 billion so they are the largest of the three and harvesthas three ETF and 10 million in assets. So those three ETF issuers will belaunching both Bitcoin and ether ETFs. And the significance of this isultimately Hong Kong's trying to be the virtual asset hub of Asia-Pacific andthis gives them the advantage because ultimately they can now take Bitcoin orether and swap it into an ETF. So Hong Kong has positioned themselvesslightly different to the U.S. where they're allowing in kind creationand redemption.

The U.S.is only allowing cash, redemption. And what this means is for someone whowants to purchase this in the US, they have to give cash to get the Bitcoin ETFin Hong Kong. If you are a holder of bitcoin ether,you can swap that coin into an ETF and so slightly different mechanism.And so it's a historic moment and this could be very important for Hong Kongbecause ultimately it will attract different types of players.So those already holding virtual assets can be interested in this ETF now.And at this point, can we already have an early guesstimate on Ethereum, forexample?.

So in terms of and we expect that thiswhole market could bring as much as 1 billion in assets under management tothe Hong Kong market. To put into perspective, Hong Kongcurrently has 51 billion in assets under management.Hong Kong already has future based ether in Bitcoin, so CCP and Samsung AssetManagement have this and they have roughly 200 million in assets in futuresbased. So if each of these ETF issuers gatheras much as 100 million in assets, we think that that'd be super successful.But we can expect as much as 1 billion in assets under management and toreplicate this in the US.

In terms of the Bitcoin ETF, it'sroughly 1% of the market. And so Hong Kong is roughly 1%.The Hong Kong market would be cool into 500 million.So we think 1 billion is a pretty fair estimate.What about demand? What are you looking at and what sort ofdemand could we get from mainland China even to Rebecca?So that's one of the question. A lot of people are like, is thisproduct going to be added on ETF Connect?And our assessment is that initially, no, because there's currently only eightETFs that are approved on.

The southbound of ETF Connect, but thereis a 50,000 U.S. dollars remittance quota quota thatpeople can use from mainland China. We were just in China last week inShanghai and we've seen that there's huge demand, but ultimately people wouldhave to apply through the KUDI system for this and it's unlikely that CSR willapprove this, at least for the time being, given that mainland China has aban on virtual assets. But we do see there is demand.And so those in mainland China that are holding the physical bitcoin ether couldpotentially swap this out, but it'll be interesting to see.All right, Rebecca, thank you.

Rebecca said there are ETF analyst forBloomberg intelligence on of course Hong Kong giving a nod when it comes to theseBitcoin ether ETFs as well. You can get an insider's guide to themoney and people shaking up the finance hub in our new Hong Kong editionnewsletter out every Thursday, you can sign up at the website Bloomberg.comslash newsletters. Watch very closely these currencies herethis morning. Just given the dollar, King dollar isback in a big way. We're talking about that onshore Russellhiring at 724. But certainly we've been seeing the sortof catch down story with the renminbi,.

Just given how the others have reallyunderperformed of late, just given this dollar strength.So the PBOC letting loose a little bit that fix there to let that weakness goand you're talking about now 730 could be that red line or line the sand forthe BBC Aussie dollar also seen weakness this morning this is Bloomberg. We saw a bit of inventory accumulationin the first quarter. So you can't keep accumulating inventoryquarter after quarter. There's a possibility inventory turnsfrom a tailwind to a headwind in the second quarter.And also investors have been expressing.

Some concern that now that the firstquarter data are decent in line with the Government's target, perhaps theGovernment will not feel as much urgency to continue increasing easing measures.Equation there. Goldman Sachs Chief China economist andtalk a little bit more about why they also boosted their growth forecast forthe year to 5%. And now we're just a few minutes awayfrom that big data dump and of course, those first quarter GDP numbers as well.You know, retail sales, industrial output, investments, jobs, all that's ontap here, 4.8% is a consensus when it comes to GDP, given just the weaknessthat we're seeing in the currency.

I just got to wonder if we're going tosee a bad number here today. Dave, Are we going to see China gohigher? Yeah.And might that also cause traders and based on some of our reporting a fewminutes back, the traders are saying banks are being asked now to selldollars in the offshore market in case we do get that bad number or we needsome good data to help stop all this too.And you know, and hopefully we get that. Yeah, hopefully we get that today.It's also this sort of situation. It happens four times a year, of course,because of the GDP numbers is do you.

Focus on the GDP numbers or do you focusin on the activity numbers, which will tend to give you a change as month tomonth and the direction of travel in this economy estimates, as you can seeon your screens. But when you look at markets, this isreally comes down to this really comes down to a dollar story out there.In fact, let's have a look at where we all are market wise, please.And you know, we opened today at HCI, which a very good example opened belowthe 50 day moving average. Yeah,we were cheering to some extent us being able to close above 17,000 last week.But that you know that's a last week.

Story for now and Asian markets areabsolutely getting floored today but the strength coming through in the USdollar, just about everywhere you look in the equity markets, specificallypointing to losses here as well. I'd point to this we have a story in aBloomberg outlining this maybe out of consensus call out of UBSabout rates rates. Yeah.Yes, six and a half percent. The Fed hiking rates of six and a halfpercent is a real risk, according to UBS.The tail risk is what they're saying could be more real.Right.

Basically sticky inflation.You have strong US growth that's really raising the chances that the Fed mightactually hike rather and cut rates as well.So that's what they're saying. In terms of six and a half percent, thebase case is still for two rate cuts this year to UBS.But there is this growing possibility that they don't think inflation is goingto fall to target this year. No letting scenario even, they'resaying, could lead to a sharp flattening of the US Treasury curve as well asthey're talking about in terms of equities, a decline of 10 to 15%, too.So lots of conversations to tell you.

About on the back of that.So we'll be talking all things China with Moody's.But before that, the vice chair at BlackRock joins us to talk us throughall things macro. This is the China show. Welcome back to the China show or abouta bit away from the release of China's activity data for March.Also, those first quarter GDP numbers, 4.8% is a consensus when it comes togrowth in Q1. And certainly we're going to be seeingif those answers, any questions on whether the economy has turned a corner.We just had those new home prices and.

Used home prices that came out abouthalf an hour ago. The trend still remains the same, but atleast these price declines have, I guess, moderated a little bit if youtake a look at month on month, but certainly but to watch for more clues onwhat those other growth drivers are going to be in this, see what thecontext will be as well from officials as they sort of take us through thecontext and the environment as well. So we should be getting that inliterally 3 seconds from now. Forecasts were generally speaking forabout 4.8% was the median. And wow, there we go.Okay, we are now out.

Let me just bring up my screen.So we're getting a GDP. Shall we start with GDP?Why not? Yeah, 5.3%.That's a sizable beat from what the survey was suggesting there of a sub 5%print. So this is also seeing an improvementfrom the previous quarter. So 5.3%, that's a strong number.If you take a look at how the seasonally adjusted quarter on quarter numberslooking is also a beat 1.6%. And we're watching these activity data.So in March, maybe not looking as good though.In March, Dave, almost the complete.

Opposite of what the GDP print wastelling us. Let me start with retail sales coming inat 3.1%. The median was, let's call it mid fours,four and a half percent, 5.4%, in fact, was the estimate as far as that wasconcerned. Now, all that being said, 3.1% is almostat the lowest end of the range. And I should note the range was quitewide and this one as well, fixed asset investment, four and a half percent.So that one beating estimates. But industrial production, which by theway, we should mention. So manufacturing was the one that reallypicked up the slack here.

Industrial production coming in at fourand a half percent also. That's almost a two percentage points,miss, when you compare that to median estimates.So certainly the weakness in consumption is still there, right?I mean, 3.1%, I think that's still the standout in terms of what looked theworst. And this in this series of data andproperty investment still continues to be a down arrow story.The jobless rate is still holding, I guess will still ticking lower.So at least you're seeing a little better in terms of job numbers.But residential property sales, did you.

Mention this one?Actually not. Sorry.We need to let me just issue a correction for you.Can we get the can we get that other graphic back, please, as well?So March the forecast for March is actually 6% and not 6.6, which you seeon your screen. 6.6 is actually the estimate for year todate numbers, but still a missile since we sent ourapologies for that 3 to 3.1% and fixed asset investments year to date.Sorry, I'm double checking my graphics here for you guys.Four and a half percent there.

We got some strength coming through.And I guess initially you are getting an initial approval, if you will, maybe onthe GDP front coming out of markets after to push weaker in the currency,we're now a little bit stronger. Yeah.So we're seeing maybe better data when it comes to the GDP numbers.That's why we're seeing a bit of a turnaround in the currency here thismorning. Let's go a bit more analysis.Let's bring in our Dmitriev, our Asia economics correspondent on on what wereyou learn from these numbers overall, your take?Well, as you mentioned, the industrial.

Side of things really helped pick up theslack. I think the consumer is still lookingvery weak. If you're looking at the retail, sort ofthe retail sales component, if you're looking at any ofthe other kind of home prices, real estate, the places where we really wantto see a pickup in consumption, we just don't have it.As you mentioned, retail sales actual is up 3.1.We were expecting a 4.8 and even that was sort of on the weaker end.The maybe positive silver lining here is that the fixed investments are actuallyquite strong.

So that really shows that the governmentsupport is there. You know, companies are spending onfactories, on building out their current locations.This is a positive. And it also shows that, you know, duringthe NPC this year, we heard quite a bit about further support of the economypotentially going forward. So this shows that really comingthrough, even when the consumer is not necessarily there quite yet, it's toyour point, it's hard to come up with a consistent read through here because theso the GDP actually beat every single forecast.Yeah but when you look at China new home.

Sales January to March and propertydeveloper investment that's continuing to fall as wellyou know turn this Greek into English for me as well.It is a big it is a big question right. It's like if all.Estimates were beat by GDP. What is actually driving that?And it looks like for now that it's really driven by industry and exports,because remember in March we had that decline in exports that was so great.But the first two months beat estimates and they really exceeded expectations.We're also having some strength in the US consumer.So retail sales advanced.

The jobs market is incredibly strong, sothat should help drive exports and manufacturing going forward as well.Really, the only thing that explains it is factory output at this point.And you can't have an economy continuing to grow strong just on one leg of thestool. You also need to have the consumerthere. You need to have the real estate marketthere. And what these numbers underscore isthat's not happening. If anything, it's being moreconcentrated into factories and the manufacturing sector.Katia, thank you so much.

Katia Dmitriev working on that data forus as well. I want to bring in our guest now, PhilipHildebrand. He's vice chairman at BlackRock and he'sjoining us out of Singapore this morning.Philip, it's always great to have you back here in the region.I want to get your take on China, maybe your assessment of the economy hereright now. Do you get a sense, just given thatfirst quarter GDP number of 5.3% that we've seen the worst from this economyand really we're seeing a pretty meaningful turnaround now?Well, I think, as your previous guest.

Has said, you know, there is a lack ofdomestic demand. That's going to be a challenge goingforward. The number probably came in roughly alittle bit above expectations. You can see that global activity helpsin support here. The policy stance helps, But over time,the challenge is going to be this domestic demand problem and of course,the fact that China is really in deflation.So these are these are big challenges. And then when you look further down theline, you look at population growth and so forth.You know, you really see growth.

Declining on a structural basis, andthat's going to be a challenge going forward.So I'd say this is roughly as expected with this big caveat around domesticdemand. Which Philip David, here is what youalluded to, a very important part of the puzzle.China is doing well because other economies are doing well.I guess there's one other way to to to phrase that, Philip.What do you think is the next big move that policymakers should put in placehere to address the domestic demand issue?You know, I think it's it's a tough one.

There's only so much easing you can do.They have to deal with the hangover on the on the real estate side, as we allknow. I think it's about confidence and it'sabout the global environment, frankly. I mean, this is a challenge that we'reall going to face, that a lot of the global developments currently,you know, make business more expensive, makes it hard to cut rates aggressively.Inflation is sticky in most of the world.Different than in China. Butthe external environment basically is one where you're going to facechallenges that you can only address up.

To a point with policy measures.I think this is a theme that will be pervasive throughout the global economy.And Phillip, one last question. And China, if we could, on inflation andwe've yet to see a meaningful pick up from some of these deflationaryconditions that we've become accustomed to, but have been afeature of, you know, economic reports going back about a year or so.Should we should markets be worried about China entering structuraldeflation here? I think it is in a state of deflation defacto. So it's it's already the case.And yes, this is a concern.

Undoubtedly, you know, that the globalenvironment here helps a little bit in that we're seeing that inflation,although it's coming down globally, certainly on the on the goods inflationside. But services, of course, have proven tobe very sticky. And I think what we're going to see isthat, you know, we're not going to reach the 2% globally as quickly as people sawit not long ago. When you think back to the Davosbeginning of the year, people were discounting six or seven rate cuts.That's, of course, gone now. So we are seeing a global environmentthat is stickier in terms of inflation.

This may help the Chinese story here ofdomestic deflation. Are central banks here that are at themercy of the Fed? I mean, just given what we're seeingwith the strength of this dollar and a Fed that wants to cut rates but can'tquite just show, just given how strong the the data has been.Are we likely to see central banks here are going to have to step up and doubleup their efforts to really preserve their currencies in some way?Phillip. Well, you know, central banks don't lookat the currency in an isolated way. They look at overall monetaryconditions.

Right.And so the currency movement can be helpful or not helpful.And what you're targeting in terms of overall conditions, what we have seen inthe case of Switzerland, I think we'll see it in the case of Europe, centralbanks can act independently of the Federal Reserve up to a point.And we're seeing that. We saw it in the case of Switzerland.We'll see it again, I believe, in the case of Europe.But it is it is also clear that the global picture, which is very muchdominated by the biggest economy in the world, matters a great deal.And so I think we're going to be in a.

Space where there's going to be someability of central banks to act independently.The currency will be currencies will be a big part of assessing the overallmonitoring conditions. That's certainly true when you look atJapan at the moment. But overall, it is clear that the Fedpolicy path is extremely important and that path is changing in light offragmentation, in light of geopolitical conflicts, in light of service inflationnot coming down quickly. And what we're seeing is we areessentially heading into this environment that we've talked a lotabout in the past couple of months,.

Where you have relativistic inflation,relatively high rates, higher rates for longer,and the central bank will find it difficult to cut rates as aggressivelyas people thought only a few months ago. Philip, is that still a safe assumptionyou think we can make that the Fed will cut rates this year?Well, they want to cut rates. I would still think, you know, one ortwo rate cuts certainly is possible. But we also can see that the math justdoesn't add up If you. Of course, you know, goods inflation, Icontinue to think will continue to fall. That will kind of lead this expectationinto rate cuts.

But the service inflation piece looksvery, very sticky to me. And so it's it's going to be hard toreach the 2% target. And in a sense, you you sort of face atrade off. Either you accept that,you know, you settle on higher inflation above target inflation, which is notsomething the Fed has acknowledged until now, or you end up having to do morework or having to wait longer before you can cut rates.There's just no there's no way to get around the fact that service inflationis proving to be incredibly resilient. And so it's hard to get back to the tothe 2%.

And and certainly you're not going toget there if you think you can at the same time cut interest ratesaggressively and the market is coming to terms with that.It's been a long kind of a longer term adjustment since the beginning of theyear. And I think we're at the tail end of it.But we are. Yeah, there's so many things in theglobal economy right now that are basically pushing cost up fragmentationwars, the transition to to net zero, frankly,population growth, demographics, rates of so many factors across the worldbasically lead you to a conclusion that.

We're going to move into a verydifferent environment relative to the great moderation of the last few decadeswhere inflation is going to be stickier, rates are going to be higher on balanceand growth is going to be relatively, relatively weak.And Phillip, I mean, that's why you're in Singapore.You're attending this eco spirit of financing Asia's transition or fastconference this week as well. I mean, there seems to be so muchbacklash politically when it comes to ESG.I mean, what are conversations with regulators like to you now and how is itimpact BlackRock's investments into the.

Renewable space?I think we're focused on the transition, right?We know we need to transition. Asia has been in many ways veryprogressive on this. We know in order to do that, we need tomake enormous investments in the renewable space that is happening.That's the good news. If you look at new investments goinginto the energy complex, the ratio has shifted quite significantly from fossilfuel to renewable energy. We believe that's going to continue tohappen. Infrastructure, renewable energy,infrastructure is a very big theme that.

We're focused on.One of the reasons we're excited about the announced acquisition of CHIP,there's going to be a lot of focus on private public schemes in order tomobilise private capital by using public capital in a in a smart way.Again, something that Singapore has been very focused on, something that Asiagenerally has been focused on. So I think the key is really how do wecreate a realistic, fair and just transition to a renewable energy complexwhere the ratio is going to go up in terms of renewable energy relative tofossil fuel, But you cannot get there overnight.I think the world is coming to terms.

With that.And and in a sense, what we're seeing is kind of an adjustment to what I wouldcall a more realistic and perhaps a more pragmatic way of getting us to a newkind of architecture of the global economy.That's going to take time. Philip, a pleasure to have you on theshow. It's nice to see you in the region.Of course, if you find yourself in Hong Kong, at some point, do do give us aring. Let's let's see if we can have aconversation. Philip Hildebrand there, vice chair atBlackRock in Singapore, live for us.

There from Singapore.We'll take you straight back to Beijing briefing out of economic officials.John, of course, just released about 15 minutes back a GDP print which blewthrough just about every single estimate out there, 5.3% growth for the firstquarter. Yeah, they're taking out the foundationfor the stable economy is not solid yet. That's according to the National Bureauof Statistics, adding that the external environment is complex, uncertainty isrising. We'll have plenty more analysis comingup. This is Bloomberg.

All right.What can you do? Watch what goes on with these dollarmoves here this morning. You're still seeing some pressure acrossAsia. Affects Taiwan, dollar dropping to theweakest since 2016 amid this dollar strength.And we're inching ever so closer to 1400 for the want.It is the clear underperformer here where weakening by more than 1% Dave.Yeah, that's a that's a problem. And in fact, when you look at a costindex, it's also taking a very big hit. It would be if we cross that line, wouldbe the first time he'd have to go all.

The way back to 2022, in fact, to get aone at this week level. Other currencies to know that are not onyour screens. The Taiwan dollar has dropped to theweakest level in about eight years since 2016 and the Indonesian rupiah early on.And that cash market coming on line this hour, weakening past 16,000 against thedollar for the first time in about three or four years.So the strong dollar story is really slapping everyone inside.Yep. And it has to come down to the Fed,right? New York Fed President John Williamsbelieves that the Fed will likely start.

Cutting rates later on this year ifinflation continues to gradually ease. He also discussed resilience andconsumer spending and the economy. An exclusive conversation with BloombergTV. Consumer spending has been strong.I think it is driven by strong fundamentals.Job growth has been solid. We've seen real wage gains.We're in a pretty strong economy with good growth.So, yes, it's part of that story. But, you know, we I think what we'rerealizing is we're getting a nice tailwind from the supply side of theeconomy with good labor force growth,.

Strong productivity, good real wagegains. So with that, I think, you know,consumers are spending. What's the thinking in your office andamong your colleagues about does this last or is this a surprise that youthink could go away at any minute? Well, one thing that makes it reallyhard to forecast is we're still feeling the effects of the the after effects ofthe pandemic and Russia's war in Ukraine and all the things that have happened inbetween. So we're definitely still seeing anadjustment process by the consumer, by in the economy overall.But overall, I think that the economy.

Will continue to grow at a solid ratethis year, probably not as high as the 3.1% we saw last year, but somethinglike 2% or around that. So I feel like we're still in a goodplace, probably not as rapid of growth as we saw last year.You do have the strong growth, You have very low unemployment.Why cut rates if the economy is doing fine at this level?Well, first of all, I think monetary policy is working at the rates we havenow. So I think I think monetary policy is ina good place over the past 12 to 18 months.We've seen all pretty much all the.

Measures of imbalances in the labormarket are our economy recede, many of them back to levels we saw in 2018 or2019. So we're seeing that, you know,restoring balance in the economy. We are seeing a slow decline ininflation. So I do think monetary policy right nowis in a in a good place. I'm not fixated on where do rates needto go over the next year. What I'm focused on is how do we bestachieve our maximum employment and price stability goals?The data we're seeing show that the economy is strong, and that's reallygood news and labor market strong.

At the same time, we are getting betterbalance and we're seeing some decline in overall inflation.So for me, it's really about getting that right.And then whatever we need to do to adjust monetary policy, we can do tobest continue the progress towards our goals.So that's how I'm thinking about it. And we just have to keep watching thedata and make the decisions based on those goals.What is your base case that you will cut rates this year?My own view is I think that with inflation continuing to gradually comedown and I would guess I would say.

Gradually is the operative word here.And with the economy remaining strong, I do think that given where the level ofrates are, real interest rates now are considerably higher than they werebefore because inflation has come down quite a bit.So we will need to start a process at some point to bring interest rates backto more normal levels. My own view is that we will you know,that process will likely start this year, but again, it will be driven,driven by the data and achieving our goals.That was the New York Fed president Joe Williams, speaking exclusively with ourcolleague Mike McQueary.

Again, market check coming up on yourhead. This is Bloomberg. The US and its allies are urgingrestraint here, as Israeli officials say they have no choice but to respond toIran's drone and missile attacks. For the latest, let's bring in bloombergsenior editor Bill Faries in singapore for us.So we've now moved past the point where it's not so much if but when, but alsothe question and how. Bill.Yeah, that's very much true. I mean, israeli top israeli defenseofficials saying that they will respond.

To this Iranian attack that was largelythwarted over the weekend. But there's going to be a big questionon the timing and how they respond. And Israeli response doesn't necessarilymean missiles and jets flying towards Iranian territory.They could try to strike Iranian targets outside of Iran and they could also usesome less less obvious military tools. You remember years ago, Iran.Israel was believed to be behind a cyber attack on Iranian nuclear facilities.So the nature of the response remains to be seen.But for now, Israeli officials telling their public that they will respond tothat attack over the weekend.

And we've heard that the likes ofPresident Biden and leaders in France and Germany have all in some way spokento Prime Minister Netanyahu. Can you talk to us about some of thediplomacy at work here right now? Can some of these allies in the U.S.in particular, rein in Israel to avoid a further escalation at this point?Well, when you look throughout this process, the last several months, therehas been an attempt by the US and its allies to change Israel's strategy onthe ground in Gaza. That has had very limited effect so far.And there's opened Israel up to a lot of criticism from very close allies.That said, there's almost unanimity.

Among Israel's allies and in the Mideastagainst seeing this turn into a direct Iran, Israel war that could wrap up theentire region. So there's going to be a lot of pressurecoming to bear on Netanyahu and his coalition in terms of how they respondwhen they respond and kind of the nature of that response.Bill, thank you. Bill Faries, our senior editor inSingapore. Let's check about all these markets hereright now. You're still feeling across stocks arestill fairly across Asia. Affects here today the dollar strengthreally percolating.

You could see basically it's sizabledeclines across the board. Taipei is certainly feeling it.We're down some 2%. We talk about these tech heavybenchmarks and affects. You talk about beggar Indonesiaintervening as well, just given the weakness that we're seeing in theircurrency and the dollar holding to those five month highs.This is Bloomberg. We'll take you straight back to Beijing.Press briefing taking place amidst this release of economic numbers comingthrough. So monthly activity, numbers, GDP,print.

Literally a mixed bag.So activity numbers came in mostly below estimates, although the first quarterGDP numbers really coming in above estimates, in fact, beating every singleforecast out there. So, yeah, as far as that's concerned,that's taking some of the sting off the strong dollar.But it's not enough really to unwind these dollar bets coming.Yeah, I mean, it's a sea of red across the region here today.When it comes to equity markets, the dollar strength certainly is one thing.At least you see the seesaw 300 doing relatively better.Maybe we're still down, but slightly.

Down compared to the rest of the worldhere. But we're talking very closely thedivergence that we're seeing with the onshore, offshore, large cap and smallcaps. It's been insane as well.I take all of that. There you go.That's where you're seeing from the dollar strength, the rupiah, certainlyseeing it after we did break around 16,000.You're talking about the buy, saying that they did had to step in to thiscurrency as well. And yeah, overall speaking, it's just arisk off day despite this better than.

Expected headline numbers there.But the March numbers for China certainly did show still some weakness,especially when it comes to retail sales side of things.Your Asian markets dashboard is looking like this year right now at 2% down forthe rest of Asia. You talked about Taiwan.I believe that's the worst performance we've seen from the taiex down the mostsince October. And we're down some sizeable 2% or morein Taipei here. It's just it's it's bad.I mean, first it was a retail sales for the US that sent dollar flying and thisis what the follow through here in Asia.

Today US futures are now punchingslightly lower here this morning. Let's get more on what's going andmoving these Chinese markets and bring in our equities reporter Charlotte Yang.She's here with us now. So even better headline numbers for GDP,not enough to really change the direction of travel here today, but whatis your team watching out for the most? Yeah, so I won't be saying I hearingfrom investors that, you know, even though the headline GDP numbers isbetter than expected but they're focusing more on the weaker what theycall the weaker details, which is where I was retail sales as was no factoryproduction.

That's still like pointing to somelosing momentum heading into the second quarter.And also it was watermark. We're seeing this one corner of thismarket suffering more than the others, which is a smallcaps, I'm sure, whichyou're saying that a tracking CSR, CSI 2000 actually fell as much as 7% at onepoint. And some particular selling pressure forthat is not only because of small caps in this struggle with liquidity, butalso that the regulator is talking about.You know, if you don't give enough dividends, you might be given us specialtreatment tax and some worry that small.

Caps might be more vulnerable to be puton that, which will be bad for investors.Yeah, they're speaking bad for investors.Yeah. I'm just going to mention here.So the dollar strength, which we talked about before we brought in, has nowpushed the Korean currency beyond 1400 for the first time.Going back to 2020. Let me just double check that for you,because that headline should be crossing your Bloomberg terminal any time now.In fact, the color on that should be a bright hue of red.Charlotte, I'll bring you back in here.

What do you think this this drop off insmall caps indicates about the sustainability of the round?And can we expect the policy makers and the national team to come back in andstabilize this markets? Well, our team is definitely closelywatching If we get any hint of the national team, you know, coming back toboost the market, giving, you know, small caps off, that was what that'swhat bringing about investors memories back earlier this year when theysuffered the most. And that's really, you know, going toweigh on the border sentiment for the market.And at the moment, I think, you know,.

Given what we have, the bottom mark hashas only rebounded in over 10%. So investors really positive of whatthey should do at the moment. You know, give it economic data is nownot being that supportive and the sentiments are losing a bit.But we also have a Politburo meeting coming later at the end of this month.So we'll be watching if we get any more sort of, you know, signals of a supportcoming from that fellow. Thank you so much, Charlotte Yang fromour Asia equities team here. Let's bring in Lillian Li, vicepresident and senior credit officer at Moody's Ratings.Joining us now to talk us through these.

The latest economic numbers out ofChina. Lilian, good morning and a pleasure tohave you on the show. Your your initial take, ma'am, on thesenumbers. Yeah, we see that just the real estatehas 5.3% or Q1 status. Pretty delightful.But if we look into that data, we see a mix of pictures of China's economicrecovery. First, the aggregate demand is actuallya slow recovery That's has been reflected by the team meanstransportation, tourism data. Well, we see also some improvement inthe household income growth as well.

And manufacturing is expanding,supported by policies. It reflected by those PMI data as wellas investment data.But however, the household demand fundamentals seem so weak because youjust stated that, for example, retail salesgrowth and the year on year growth. So we can name, although it's weakenedfrom its high base from last year and then the permanent PMI data, theemployment as well as household loan data as gross or these are a little bitdisappointing and property sectors data, of course, it's weakening as expected.But exports also slowed in March of from.

Its high peak in February.But that's also mainly because of base effect and a seasonal effect of theoutlook of export pictures could be a little bit uncertain given the that'sreally much subject to growth resiliency in the global market as well.Such a political considerations. So all in all, we see some upsidepressures to our own Moody's forecast this year.But the current performance, as well as the policy support announced to so far,might suggest China may need to do a little bit more work to achieve itsgrowth target this year. Thank you.Okay.

So you mentioned as a mixed picture thatblow out number four, first quarter GDP, though.Do you think that's enough for for China to reach their 5% growth target for2024? Is it going to be a pretty easy targetto reach this year or do you think it's still going to be an uphill battle?Yeah, as I mentioned just now, I think the customer still or the China overalleconomic growth and fundamentals still need to see a little bit more upsidesigns to conclude that China will achieve its 5% growth.Yeah, so far it's fundamental consumer confidence and those, for example, thelarge infrastructures and investment,.

These parts, we don't see a clear signsof up yet. The the upside trend.Yeah. Lilian, I want to ask you about ratings.So you're one of your peers. Fitch recently moved, as you probablyknow, back in December, you guys moved and you guys cut your outlook onsovereign ratings here to negative. Since that point, let's say four monthsback now, has Moody's observed any improvements?In other words, can China avoid a downgrade from you guys?Well, you know that we have changed outlook to negative loss in November.The actual reflects some of the weakness.

In China's economic growth, as well asseeing its fiscal and institutional strength, mainly because of the elevateddebt. And the government needs to do a littlebit more, spend a little bit more. So that would erode its fiscal strengthas well as the potential growth in the medium term is slowing.It's trending down. So all these factors is having anegative impact on China's sovereign credit, and we'll continue to monitor itin the next 12 months. Our rating cycle is about 12 to 18months. So during this transition set, all theseeconomic factors and policy settings.

Will be take into consideration.Right. And so can we assume then that ifnothing changes within that 12 month window, you're probably going todowngrade China's ratings? Yeah, you know, I'm actually we cannotlike publicly a speculate to this rating changes.Yeah, of course as I said or this is a progress so dynamic progress it ordepends on the policy as well as the economic performances.Hmm. What do you make of you mentioned thatthere's still needs there's a need for more policy stimulus.I'm just wondering in terms of the fact.

That they've expanded that fiscaldeficit budget. Is that enough for you to at leastexpect that the eco outlook can improve from herenow? And so the fiscalimpulse would cause total fiscal expenditures from the governmentannounced plans. It's run up about 8.3% of GDP, slightlyhigher than last year. So fiscal spending as a percentage ofGDP. So that's not really a big stimulus fromour point of view. And then on the other side, on the otherside, the monetary policy is in the.

Target is to maintain a stableliquidity, very stable credit condition. So, so far, we don't either see a hugemode of monetary support and were likely to see this monetary policy stancemaintain like this throughout this year. We see a stimulus in the public sectorsin the customer side, but largely, I wouldn't expect a large stimulus cominga lot of going forward. It's more going to be seeing as finetuning of these policies, of these existing policy plans.So there is some gaps between its target versus the current support.It really depends on how the government is going to square those investments,square those monies across different.

Sectors.Yeah. So so which means that there will bechallenges for them to achieve those targets.But it really depends on how they are implement those policies.It seems like they're throwing my money into this new slogan called NewProductive Forces, which could serve as as new growth drivers for this economy,whether it's EVs, clean tech, the like. I mean, how how likely do you think thatthese these pillars of of the economy can be that ex growth driver to offsetsome of the weakness that we're seeing in property?Yeah, that's a great question.

So previous China has private sectorinfrastructure as its own growth drivers.Right. And those account for approximately halfpercentage of half of overall GDP and also probably more than half of thetotal investment. And but if you compare that with thecontributions with the new growth drivers of renewables, ICE, etc.,currently the total contribution from this new growth goes down cannot matchthose from the old drivers. We estimate that even for new EUV itselfnow it's about. 2%.And then by 2030, it's going to grow up.

To 5% of GDP.So you see that there will be a gap of them.So that will depends on how government would provide a little bit more supportto drive productivity and increase the size of contributions of these newsectors to to GDP. Yeah.Lilian, great to have you. Thanks for joining us.Lillian Lee, their vice president and senior credit officer at Moody'sRatings. We're still checking what it comes tohere this morning to watch that strength of the dollar playing through.And you're feeling a basically a broad.

Based sell off here when it comes toeffect. So we talked about Taiwan dollar, theweakest since 2016 Korea one where weakens to 1400 or so.First time since 2022 and we're also talking about 154 handle for dollar yenseven 2764 offshore right here we have come off some of the lows for renminbi,though, after, of course, some of the numbers that we got out of that datadump as well. But the dollar still still strong thismorning. Pay more ahead.This is Bloomberg. Right.Welcome back.

You're watching the China Show.And so we'll take you straight back here.By the way, this is two by two. A developer conference taking place.Can't quite make out who the speaker is, but I would imagine at some point, RobinLee, if not already, has made an appearance there.Ernie Bortz, if you recall, I think the latest figure here, it's nowsurpassed 200 million users and 85,000 enterprise clients.So one can only guess what they're talking about at this point.We'll get that to you, of course, once we have a better understanding.And they've always been kind of the.

Leader in this whole sort of story inChina. Let's talk a bit more about whatBloomberg Intelligence is expecting. They're saying that Baidu's AI poweredearly buy will remain a loss making service until 2026.Here with us now is our senior analyst, Robert Lee.Why that long logo? Another two years for it makes any moneyI think that may not start it's competition.So obviously Baidu has some market leadership.But if you look at the latest data coming through that is being quiterapidly eroded, which again signals or.

Tells you that the barrier, technicalbarrier to entry within the chatbot and AI sector is actually quite low.So I think yourself and maybe some of your viewers remembered and theymentioned this was a startup company that was invested in by Alibaba, madeheadlines about a month or so ago. Companies only been around for a year.It's already the number two ranked chatbot in China.So it's come from a zero start overtaking Alibaba and now it's numbertwo behind only bots. And based on the latest user stats, thisis on iOS data only for China Moonshot. I had 12.6 million views on on itssites, whereas Baidu had 15.

So the gap between them is narrowedconsiderably. So in such an ultra competitiveenvironment, it begs the question is Baidu going to turn a profit with thischatbot? So competition among apart fromcompetition, what else are they facing in terms of challenges?Yes, I think I mean, it's a universal challenge not just for the Chinese AIcompanies, but there are parallels globally as well.So obviously, China has a unique challenge with access to the technologythat these engines run on, particularly in video chips and with the exportrestrictions we've seen that will.

Potentially forestall the developmentsof, you know, the big guys, Baidu, Tencent and Alibaba going forward.But I think a more universal common again, applies more globally asmonetization. We've seen the US companies launch,you know, AI enabled assistants or whatever, butthis sort of level of revenue generating so far is relatively limited, I wouldsay, and that's certainly true of the Chinese companies.So monetization of AI is a very early stage and the software companiesobviously generating limited revenue at the moment, but paying out tens ofbillions to build the infrastructure.

So to sort of caught in the middle,where is the infrastructure guys? The M video is in the TSMC, so thisworld are obviously doing extremely well.So if you have to look I mean, obviously Baidu was the first kind of earlyleader, but you're saying that's being eroded a little bit now by Moonshot.I mean, in terms of long term winners in AI in China, who are they going to benow is perhaps a slightly talents in that scale wins out ultimately.And one of the ways, main ways that the companies are looking to monetize thistechnology through their cloud business. Cloud is absolutely a scale business.The major cloud providers in China are.

Alibaba and Tencent, with Huawei gainingshare, as I think we've talked before. So I think in the long run thosecompanies are best placed to emerge as long term winners.Baidu has technology leadership, but that's being eroded.So I think it's going to be challenging for them to turn a profit in thenear-term and challenging for them to maintain their lead as well.Robert, thank you so much. Robert Lee, a Bloomberg intelligencesenior analyst from AEI. Let's turn our attention to property nowand the of Van Key is said to be preparing this asset package totalingaround $18 billion dollars here to use.

As collateral as it seeks money from thebanks. And will the banks part with that money?Loretta Chan, our Vonnie Quinn report is here with us to talk us through this.It's up in renminbi terms as 130 billion renminbi in assets.What what what more do we know about this?Yeah, it sounds like a lot, but yesterday we were just talking aboutbankers illiquidity problems, and that essentially stems from the decliningproperty sales, which in March we're seeing they still going down and there'sno signs that it's going to recover any time soon.So that money, if you think about it,.

Really is to fill that shortfall of cashfor a banker every single month when it's generating, you know, limited saleswhile having to pay a lot of the construction's having to pay back theexisting debts and interest, it's never a good solution, I guess, to solve yourdebt problem with more debt. And I think that's the dilemma a lot ofthe Chinese developers are facing. Right.You can try. To gain more time with that propertyloans if you can get it. But I think in the end you still needthat home sales to go up. And I think that ultimate problems stillhaven't been solved.

And we're hearing about another wind up,you know, petition this time with times China.And this is I mean we had Sharma just a few weeks ago what's what's the latestwith this case the links with Sharma four times China is that they're bothbeing winded up by a bank. So previously, for sure, Maui was ChinaConstruction Bank and this time has done is filing the winding up petition.It's it's interesting because in the past cases were mostly seen creditors orprivate lenders filing that winding up because they are the ones usually youknow are the most aggressive. They want to get recovery.And most of the loans that they're.

Filing aren't big size.But in the case of Hanson, this time, you know, this is the first time I thinka Hong Kong local bank is actually doing that.We're seeing more of that emerging. And I think it's a sign that, you know,banks are also getting impatient. They might have been involved in a lotof restructuring talks over the past years already, but now I think they'rereally stepping forward and really, you know, prioritizing that businessdecision over a so-called client relationship.But one last thing on China, Vancouver. Okay.How do you pronounce them and what is.

The Chinese character?So it's for the record, for the Chinese characters.One QU okay, in English, how do we say no?We can say one cool. Or and I was asking this in our newsroomfor months now, really.And I can guarantee you we have yet to close that debate.So many diversions in one hand. Yeah.Anyway, you have three options, Three options to get it wrong, I guess.Laura, thank you so much To Chen. They're setting the record somewhatstraight.

Plenty more ahead.There's just one word. Okay.Straight back to Beijing on your last live pictures coming out of the Thisshould be the national bureau statistics on the economic numbers which camethrough. And in case you missed it, those numbersare on your right. Yeah.And I think overall, the you know, certainly these are headline numbersthat were much stronger than expected. BP has come out with their reaction toall this and say, look, yes, serious doubts about the sustainability, justgiven that they think this pick up was.

Almost entirely driven by publicinvestment. And you're starting to see that, youknow, March, those numbers were, you know, seemingly slow.So maybe things are already losing a bit of traction here as we entered thesecond quarter. You take a look at how the rest of themarkets are looking like it's pretty ugly out there if you're into risk,because we will continue to see this bloodbath when it comes to equities,when it comes to Asia, affects times. China, we talked about that wind uppetition from Hang Seng Bank that was filed early this morning to theproperty.

Developers are certainly feeling it.KW Group also down some seven or 8%. There goes small as well also when itcomes to some of these medical equipment stocks.So there were some EU trade restrictions on China that came out overnight.That was where we're seeing a lot of the weakness here today.The likes of Wandoan bio light down close to six and a half percent.Of course, as the chancellor of Germany is on his trip to Beijing and meetingwith Xi Jinping, according to CCTV today as well.Yeah, okay. Let's pivot and have a look now at thepockets of weakness amidst really what.

Is a bigger pocket of general weaknessacross these markets. Global macro movers for you.And it's just about a sea of red out there with the exception of a few likethe US dollar. And, you know, when you get that blacktile on your screens, you, you know, it's not a not ordinary day across thesemarkets with some sizable moves, statistical aberrations.Looking at these scores here just about across the board, we're down.Every single sector is down. The dollar is obviously holding up.And I think the the dong is, I guess in some ways firming up a bit.Really what's just broad weakness across.

The Asian space.I should mention the the Korean one which crossed the 1400 level against thedollar for the first time in a couple of years.Years. Yeah.In two years. The the 14 day RSI, which is a measureof momentum is now closing in on the most well in the one's case from theone's perspective most oversold against the US dollar going back to 2011.So we are nearing some of these extreme levels, not just in price but also someindicators to how much areas to hide in this market here this morning, I thinkBrent's the only sort of standout among.

The commodity complex here today whereyou are still seeing a solid $90 when it comes to Brent crude.And we're still slightly up about three quarters of 1%.But yeah, you talked about that blaring red.You're seeing that in Australia in terms of the ASX 200 and the Indonesia rupiah,where we could see some 2% and well above that 16,000 level here.That's it for us here from the China shop WHO markets Asia is next.

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