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00:00Good morning from Hong Kong it's 9:00 a.m. here in the city up in Beijing in Taipei and in Shanghai. Welcome to the China Open. I'm David Ingles. Let's get to our top stories today. Global stocks are closing in on a bear market that says U.S. inflation remains elevated strengthening the case for faster Fed tightening. Now Chinese Premier Li Keqiang calls for more fiscal and monetary support to boost the lockdown hit economy. Now within that market of course to knock China's fourth largest developer warns it does not expect to make payments on any of its bonds when they come due. And we're also looking at crypto currencies right now as that space tumbles and crumbles as the terror collapse triggers an exodus from Delphi favorites. Welcome to the show. Hope you're all well. These markets are not. We're looking at a further rally in the long end of the Treasury curve. And the dollar is looking like this. U.S. futures are seeing some stability. But when you flip the boards and have a look at how Asia is doing though playing some catch down we should be down 9 10 days. Now we had a blip yesterday off about the marginal gain. They're just breaking that streak. But certainly the trend is much lower down 1 percent recalled lower on the Shanghai mainland markets. And we're looking at a fairly busy data agenda. Does read about that bottom of your screen there in terms of the data coming through today. Have a look at ethics markets right now. Cable euro the Hong Kong dollar. We'll get more on the Hong Kong dollar in just a moment. Here bumping its head in that ceiling and dollar. China at six. Seventy seven right now as we talked about here crypto currencies. Let's have a look at that. Where Bitcoin is right now following that collapse was stable. That's relatively speaking of course. Up 5 percent following the collapse that we had yesterday. Brent crude four tenths of one percent. And certainly the slowdown story playing out quite clearly in industrial metals. We talked about this already. Seventh straight weekly drop is what we're poised to see across that space of the commodity markets. All right. Let's talk more about this red hot U.S. inflation number. No no signs that all the things are slowing. Let's get more on this. Kathleen Hays joins us right now from New York. Global economics and policy editor of course. Kathleen what is keeping inflation hot is keeping consumer prices so hot so high. Well the problem is that originally it was a locked down right and supply chain constraints and people couldn't do anything but shop. They pushed good prices up at the Fed said don't worry it's transitory because all that's going to ease. And then we had supply chain shocks and they didn't need. And then the economy opened and then demand got strong. And now services prices are starting to rise. But let's start with the fact that inflation doesn't look so. It's persistent. It may have peaked or that's fine if it's peaked at 8 1/2 and gone to eight point three. But it didn't get down to eight point one thing. Same same thing with the core. They really barely moved last month. And the problem is that services prices have really started to rise. In fact you can see that core services rose nearly eight percent annualized rate over the past three months. People are traveling. Airline fares at a record jump. They're staying in hotels. And hey they're eating out in restaurants core goods. Some prices are down like used cars and apparel. That's nice. If you're going to get a nice new outfit but new car prices shot up. So they're still remaining on the high side. The problem is what economists are saying and what people were warning. If you wait too long if you wait to see too long and don't act preemptively you're going to see this happen. Wages are going to start rising. Services prices are going to start rising. You're going to a problem that's much harder to deal with. Any chance that inflation cools moving forward faster than the Fed can raise rates Kathleen. Well I don't think so. But I think the main answer here really David is that look what you have. I didn't mention even the war in Ukraine. Look what happened to food prices. I think it was the biggest biggest merely year over year prices something like nineteen eighty one. That's not changing. And in fact the lockdowns in China aren't going away yet. Now we just had Jim Miller President St. Lewis said it was the first one to even mention that a 75 basis point rate hike might be possible. Asked yet again what do you think. Are we going to need to do that after those hot him inflation numbers. So we've laid out a case for 50 basis points at a time. That's what we're going to do. Bill Dudley former New York Fed president Bloomberg opinion writers saying hey that you've got to be more aggressive aggressive and more real. You're going to have to go at least 4 percent on the key rate to get to the real neutral. And you might have to go to 5 percent. This is the debate. Now David if inflation starts coming down faster it would help the Fed out. But most people are saying oh the Fed's the one that's going to have to help it come down even if it doesn't come faster. Just come down at all. We're moving into 12 months from the time we were talking about transitory inflation. Yet the conversation Kathleen Hays you point out the Fed is still catching up. Kathleen Hays there are global economics and policy added a single part just coming on line seven tenths of 1 percent to the downside as well. Taiwan also in Malaysia by the way surprise rate hike yesterday talking about these markets. Right now we're at 20 20 lows. July 4 the Asian benchmark Simon Flint is with us. He's with our M Life team of course one of our strategists there. Simon good morning. What's gonna save us now. Probably nothing but a lot of analysts are hoping that China will step in. The Chinese authorities have been at least reassuring us that they will act. A number of analysts in fact a large minority groups are expecting an MLS cut this week and a majority are expecting an LP markup next week. So there is some hope that Chinese pilot see actually will keep the Chinese market relatively going. And that does seem to a form of base. Will that be enough. I mean the. They have been incrementally coming out more and more whether that's rhetoric mostly in terms of concrete action yet to be seen but without inflation print overnight it seems that the equation is still very much skewed towards higher rates ahead. Well what will you know what China is doing be enough to offset that. No you're absolutely right. Probably not. The Chinese themselves their policy space is relatively constrained. We had a very poor CPI number there yesterday. We're hoping that the credit data will expand of course in April. But generally speaking because banks are being pushed to lend they really only meet those quotas towards the end of the quarter. So that's going to be fairly unhelpful. In addition of course the spillover from Chinese markets to global markets is really vanishingly small. So it really is unlikely that the Chinese efforts alone will be enough to stop the rupture in global markets at least. Simon Flint live for us there out of Singapore. Speaking of China let's get to the latest lines right now as far as the local Kobe case numbers are concerned. Nationwide numbers one thousand eight hundred and fifty two. That's as of Wednesday. And the top of the next hour of course we'll be having that briefing out of Shanghai to take us through of course the latest coming out of the mainland financial center. You're looking at live shot there. Pretty much nothing happening which is really had been the case here for the last what six weeks already if not seven. OK. Let's get it over now to New York from Shanghai Vonnie Quinn. There she has your first big news running. Thank you David. And good morning. North Korea's leader Kim Jong un has ordered all cities to lockdown for quarantine after the country confirmed its first Covid case. State media say the announcement came at a meeting chaired by Kim. His regime has long denied that it had seen even a single case of Covid claim doubted by experts in the US Japan and other countries. It's not strict border culture is in place since the pandemic began in early 2020. China has announced the World Health Organization's criticism of its Covid zero strategy. A Foreign Ministry spokesman hailed the merits of the approach which has left the nation increasingly isolated from the rest of the world. The spokesman said the WTO director general Tendrils Dani Burger should get a better understanding of the facts and refrain from making irresponsible remarks. Philippine presumptive president Ferdinand Marcos Junior says he's looking to prioritize the economy energy prices jobs and infrastructure as he looks to boost economic growth. The country has been forecast to grow at one of the fastest rates in Southeast Asia this year. The Marcos campaign victory in the presidential election on Wednesday citing an unassailable lead. The economic managers are going to be critical for the next several years because of the pandemic and the good only crisis. So that is something that we are looking at very carefully. Hong Kong media reports say national security police arrested for a prominent democracy activists on Wednesday including 19 year old Cardinal Joseph Zen master Margaret NG and singer Denise Ho were also reportedly detained on suspicion of colluding with foreign forces. RTX reported that the four were later released on bail. The White House issued a statement condemning the arrests. Local news 24 hours a day on air and Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries and Vonnie Quinn. This is Bloomberg David. All right. Vonnie Quinn some great guests coming up here in the show. We're talking everything. Fixed income credit. Jeebies here where Chinese bond markets and focus is high. Inflation globally continues to sound the alarm for investors. Wilfred we will be joining us at about the open. And also coming up here we're talking equities with Tim Moe from Goldman Sachs his investment strategy and what you should be doing right now given the pressure growing in central banks to tighten even further. Counting down to the open. Just over 20 minutes away Shanghai Shenzhen and here in Hong Kong you're watching the trying to open. Good morning. Welcome back to the show you're watching the China Open what day is it. Wednesday Thursday Thursday. OK we're almost there. The color in these markets has been the same pretty much these last week and a half or so what eight nine days now of losses here across the Asian benchmark Asia ex Japan. We're looking at declines a 50 futures doing that a fifth of one percent. You should be getting the extra package coming up anytime soon. There certainly pressure that's going to be the same story. There we go. Six tenths of one percent. You look at multiples given price has basically come down what 30 percent from the peak. Right now we're looking at the lowest level here is as far as forward PE going back to almost the lowest level since that pandemic bottom you see on your screen. And Goldman Sachs as you can see here refreshing their targets for Asian equities. These are the new numbers. Tim Moe Asia-Pacific equity strategist is with us right now to talk us through these numbers. Tim before we get to the numbers themselves. It's hardly an environment really to be in equities right now. What are you telling your clients who might be losing faith. Well I mean it's not that it's a challenging environment and that's in fact what we just thought about yesterday. There's three key factors that are really conspiring in a kind of poisonous cocktail that's hurting markets. And those of course are rising rates. Worries about a growth slowdown particular recession in the US and zero Covid impact policy in China. And then on top of that a strengthening dollar sense to be adverse for Asian equities. So it's not that it's challenging. And we're off to the worst start in Asian equities in the entire history of the Amex FPGA index. This is the second worst start for January to March to May on record. So it's it's tough. I think the mitigating factors if you can take a somewhat longer view because the near term clearly is going to stay say bumpy. We think there are mitigating factors. As you just mentioned David are that the market the index is down 30 percent from its highs last year before PE multiples compressed from 18 times to twelve times five a little bit lower. China's trading at 10 times a little bit less. We've seen nearly the same amount of foreign investors selling in Asia as we saw in the global financial crisis. We don't think we're operating conditions are as bad as they were then. And you do get some positive seasonality kicking in later in the year. So our message really is it's going to be tough and bumpy in the near term but we think there are clear reasons to expect better returns on a toll on few. Right. And before we look at some of those I guess or what you're calling alpha themes amid challenged beta I just want understand at twelve twelve and a half times earnings right now. Are you changing the way you guys look at how you use your methodology surrounding valuing stocks in other words. I'm trying to get to is how are you guys accounting for rising rates. Rapidly rising rates. Sure. So we we have a top down P model which is one of the valuation tools we use. We've got a pretty wide suite of ways we look at the market. But one of them has served us quite well really for the past decade or so has been a top down PE model which incorporates a lot of the different macro factors that impact markets. And those would include things like growth in Asia growth globally U.S. tenure rates commodity prices the level of valuation the S & P because investors look at markets across sexually globally in the U.S. obviously as a dominant market you have to take that into account. And we also account for fund flows. So we think we've got a way of describing how markets should trade. Given the macro backdrop that they find themselves in and what that's telling us right now is that on our expected conditions over the next year that's something around 13 times should be a fair and appropriate valuation for Asian markets. We actually take a bit of a haircut to that to account for geopolitical risk. We've done some work on how the equity risk premium tends to change when you've got heightened geopolitical risk environments. So that additional haircut than we come up with our twelve point seven times the forward multiple. Now there's nothing super magical about that but I think it's a pretty good approximation for where markets should find their central tendency of how they should trade. Right. And the benchmark six thirty is the target. That's about what 17 percent 20 percent upside. That's about 70 percent up from current levels. And I think that may sound like what you guys are super bullish. But if you just aggregate that it really breaks down to two things. One we still think we've got about 10 percent for CPS growth for the region as we go into 2023 and as we go through time that's what markets will be keying off of. So that's number one. And number two as I mentioned we're trading about 12 times earnings now. And if we think twelve point seven is a fair target you can get a little bit of multiple recovery I think especially in China. And if you combine those two then you get sort of mid mid mid to high teens potential returns. I want to ask you about your call in Taiwan and alongside Korea which I understand you're still overweight. I thought about Korea anyway. You've you know why. When I read it. Okay. I understand what you've read Taiwan. The reason I put those two in the same basket we've seen outflows from both those markets. Why do you have differing views basically on those two markets. Yeah it's a great question. I mean the larger point to start with is that North Asia tends to be more sensitive to the sort of adverse headwinds that are blowing from a global perspective. So they tend to be more trade oriented more globally exposed. Taiwan us a lot of linkages with with China as does Korea. So they're sensitive to the slowdown in China there. We've got some analysis that we've recently done on that in our piece. I'd say the difference here is that Korea's valuations have compressed more than Taiwan's. I realize you have to account for the fact that the trend of different trading levels. But even if you look at them relative to their ranges Korea is a little bit more sold down. And then there's an additional issue which we've written about which is there is this upside potential for Korea if it's again included in the MSCI list of potential upgrade to developed market status. And we've quantified that that could actually be a meaningful kind of Korea specific upside potential. So at this point we think there might be a slightly better tilt towards Korea. But but both of them I think a longer run will look attractive. We just need to get through this global growth concern and also see a a more favorable turn in the tech cycle which both both markets and economies are sensitive to. Tim Robbins right on cue at a time when Central Bank is out right now talking about inflation will remain or will be over 2 percent in the second half of this year. Talk about that. These alpha themes commodity super supercycle and you like metals and mining. Yeah that's correct. So we have a very very strong view that collectively in our macro research unit we've been espousing which really embraces the idea that there's a commodity supercycle going on. We don't have time to go into all the logic for that now but it's basically predicated on very significant and longstanding supply constrained because of underinvestment particularly in energy but also other areas an expectation that will have some structural demand changes going on. And we put those together. It says to us that we think that energy prices are going to be higher for a longer period of time and also base metals as well. So we've been overweight energy. We've upgrade our view a metals and mining thinking that the shorter term sell down we've seen really caused by some concerns about growth in China which of course is a big consumer of those gives us an opportunity to re-enter it somewhat better prices. So we think one of the places that we feel most comfortable comfortable about is this theme of a commodity supercycle and especially because the stocks have not treated the way that the that the spot commodities have done. There's still sort of a lag between what spot has done versus the stocks with some catch up potential inequities in our view. Jim great stuff as always. Take care. There are two more out of Singapore there. He's with Goldman Sachs's chief Asia-Pacific equity strategist. From Singapore we'll take a straight right now. It's almost ten thirty in the morning in Tokyo. The EU Japan summit live pictures day taking place. And we'll get you guys up to date of course of anything that comes out of this summit. And of course there we got the prime minister is set to meet EU leaders. Just ahead on the show apart from obviously this preview of the trading day ahead here in the Chinese mainland and Hong Kong here soon CAC just confirmed a few hours ago that it will not make did not make that deadline here and probably won't be able to make upcoming debt payments. We'll discuss that. And the credit crunch credit developers space next. This is Bloomberg. Right. Couple of stocks that we're tracking here at the open. There we go. Some crypto related currencies give a quick clip. Crypto related stocks given the just the drop that we've seen. And as far as that part of the investment universe is concerned some of these power plays of course on the back of some support measures out of Beijing to help the industry. We'll talk more about that later. But certainly help is needed when you look at a property sector and a cash crunch there for many companies including Sue of course which just about over an hour ago confirmed that it did miss that bond payment that was due yesterday. And the company is also basically saying it probably will not make the payments that are coming due. Let's bring in Rebecca Shery Ahn Wilkins are trying to credit editor to talk us through this. So is this now considered officially Rebecca a default. Well we haven't had snack or anyone yet coming out to use the D word but it certainly does look likely particularly given the scale of mis payments that snack itself is staying. We might see here. And of course with this missed payment at the end of a grace period in Q4 there is a risk of cross default. In any case on the other dollar bonds either way it does look like we are in for quite a significant restructuring and soon act saying it puts its hide advises to help. I'm in and of itself. You know the risk of default has largely been priced into the dollar bonds. You see they're trading at around 19 20 cents on the dollar. But I think the important thing here is really soon. That is one of these stronger developments that just a few months ago back in February trading around eighty five cents on the dollar that was thought to be immune to the credit crisis that we saw take many of the sort of other prominent names Kaiser the brand and so on. And so we really are moving into this sort of second phase of the crisis where many of these much larger developments are now coming under enormous financial stress. And the other point was to think about with Sue now. Is that really what triggered this latest crisis is just four or five sort of coupon payments that actually amounted to quite a small total dollar payment. Right now put this against the backdrop of this big picture. You guys were out with the credit tracker of course high yield high yield yields are back above 20 percent. What's the state right now. Absolutely. Well in some ways this is a global phenomena in that you know is a really rough time for global high yield credit. We're seeing this very sharp sell off. But for China in particular it grappling with so many different crises that develop a crisis of course continues. And part of this is because of the now the Covid lockdowns that we're seeing and the stress about that. It's sort of implicated in so many parts of the Chinese economy of course. But for offshore debt in particular we are seeing stress that is highly highly elevated levels continuing even as defaults pull back a bit of course. Sue NASDAQ now raising the issue of more possible defaults that coming through. And of course the other question is well we have these kind of sort of lockdowns across very parts of China. The issue is whether or not developers that are struggling logistically can they continue to sell assets. Can they continue to develop their projects. There are so many issues that they are now facing. Rebecca. Rebecca Wilkins there but all the latest here a brief look at the agenda today. Everything from earnings Logan Group by the way along those lines. There you have analysts action CRM me getting cut to neutral at J.P. Morgan. And just look at this list really off the agenda for today. Tech crypto intervention. The open is just ahead. This is the trying to open. Good morning. Good morning. Welcome back to the show. Just under a minute away to the open there everything from red hot inflation. There's the long end of the curves actually starting to really come down as we speak. You have a slowing economy and then you have this record rainfall that essentially you can see quite literally on your screen. Shanghai's on the left and Hong Kong a live shot of Victoria harbours on your right. I hope you're wearing your cheap shoes today walking into the office if you're in the elevators going up to your office. Welcome to the program. Hope you have the audio on. Ten seconds to open. We're on two days of gains across mainland equities. It doesn't look like we will get a day three. It is still very early but of course Asian equities are under pressure. We should be down about eight nine days in the last seven or eight. But essentially the trend is fairly consistent there as far as valuations are concerned. Back below 12 times earnings here on the regional benchmark. There we go. Declines at the open amid this risk roots. We're back below for a grand to see. It's a three hundred. Change things up. Please have a look at the open here in Hong Kong where the benchmarks back below twenty thousand and a Hang Seng index and that one. And within this we're looking at many many many different sectors. You're looking at some of these power producers. You look at crypto related currencies you're looking at some of the property plays. And within that of course that takes you into sort of high yield and what's been happening there soon CAC. That's a lot of earnings coming through today. Big ones there. Bottom of your screens. AC Tech Samsonite also coming out with some earnings today. Plus of course I'm a busy front as far as briefings are concerned which I'll get to later on in the show. Very quickly Hong Kong dollar. Let's look at where we are right now. The Hong Kong Monetary Authority had to intervene for the first time in twenty nineteen after we bumped our head on that ceiling. Not that there's a story in and of itself but what it means about future liquidity conditions is certainly as Hong Kong monetary authority continues to buy a Hong Kong dollar to support that. Well we'll talk about that later. Let's talk about credit right now and bring in Wilfred Wee. He's PM at ninety one Wilfred. Pleasure to have you on the show. This rising rate environment isn't friendly and it's not really lifting all the boats including of course what's been happening in credit and jobs and what have you. How were you approaching right now deploying money into fixed income given the sort of macro environment. Good morning David. Indeed I think we are seeing an aggressive Federal Reserve. Interest rates are going up and it's going up of course not just because growth is better but because inflation is also rearing its head. I think especially in credit. Let's go back to valuations. You look at where investment grade especially investment grade China is today at four and a half five percent compared to where it was about nine months ago at the low 2 percent area. Valuations are definitely a lot more attractive. I think you know if you if you wanted to put money in at 2 percent when there was nothing else to buy versus today whether proposition is that the economies globally are still recovering and the that's a lot priced in already. And the front end of US interest rates. I think you know if you have a medium term horizon able to stomach a little bit of more volatility i.e. credit especially in the belly makes a lot more sense today. And I think when it comes to duration I still think that the convergence trade between China and us has room to play out. You think of the long end of the China government bond curve still yielding above that of the US. And again what drives the long end rate. You these structural themes of aging demographics high savings you know an economy that ultimately is looking at decolonization et cetera et cetera. You know it still argues for a long end Chinese bond use to be fair value range bound to maybe even lower over time versus that of the US which obviously is dealing with a different set of conditions high inflation inflation expectations and an industrialist having to deal with all of this at the same time. So I do think that in credit there are a lot more interesting opportunities today than there were nine months ago. Do you still feel that way given we are seeing some outflows. I mean you might be feeling that way because of the outflows. I just want to get your sense of how you're approaching right now given that money is being pulled out of this fixed income market in China. So I think if you're referring to some of the outflows that we have seen so far especially in China government bonds on onshore based I mean that number I've seen is about 30 over a billion dollars the last two three months. And even in equities that number's about 7 billion dollars. Now in context 30 billion dollars is still zero point one percent of the entire 21 trillion dollar market contact. You know that is not not huge. And it's not done anything really to onshore bond yields which are still determined by the domestic growth and inflation dynamics. So in that sense you know that outflow per say is not going to materially affect. I think that domestic decision making or the inclination towards easier monetary and fiscal policy obviously to fight the growth headwinds. So you know that structural story I think for China is still fairly intact. But of course you know as a foreign investor you do want to pick your spots. Right. And do you want to be in the front end of China versus you know us which is giving you a bit more higher yield. Probably not. Which is why it goes back to my earlier point which I think especially in the front end. And very you do want to actually look at the U.S. dollar credit China. Speaking of credit we had that reminder from soon asked this morning how do you feel about Chinese high yield right now or would you largely be avoiding that space for now. I think we just stick to the winners. You know there's no need to be a hero in this environment. And you know look at really where we think the witness for the state will come out from. You know again soon I think was pretty much you know it's nonpayment of coupons. It's pretty much in the price. Right. Even in into the announcement yesterday that they missed the grace period for their coupon bonds didn't really react that much. Of course sentiment has been poor. And it's not just in China. You it's across the credit markets. But you know a lot of that is somewhat anticipated. We asked you looking at policymakers who are trying their best to relax and ease but of course a lot comes back to how China deals with the Covid policy. And I think we give them some time because the taps in the sense are open from the top and it's filtering down very slowly to the project level to the individual province level yet to still be felt. So a wholesale. We'll for then on that last point you made. We are seeing a lot more measures come through here to support the economy. You just mentioned you'd like investment grade. Are you expecting any pressures on cash flows for example and you know those investment grade companies being able to meet some of those obligations given the current crunch of course. Sure. I think again you know we're talking about these you know solid investment great names which still ultimately able to at least meet immediate cash flows. In this sense again sticking to the values to a lot of these names in China especially in the offshore dollar bond space these are the national champions. Right. And I would just stick to those themes where we see companies continue to engage with overseas investors you know even in the technology space. Right. Regulation has turned a little bit more soft not as hot line as it was many months ago. And in that sense I think you know even in some of the tech names which was in the spotlight spreads have widened. Use obviously have gone higher. And you are being compensated. I think value a lot better than we were many months ago. And no need to be a hero that values there if you want it. Wilfred Reed thank you so much. Great insights as always. Their portfolio manager at ninety one from credits. Let's take a look at crypto right now and an update here. Cryptocurrency. So you have. Well we can't list everything of course including all the alts but yeah there we go. Bitcoin is steady given the collapse we've seen yesterday some of these crypto related stocks. Please let's flip the boards Hong Kong and China. Some of these names that you're seeing there on your screens fairly mixed. Japan and Korea you have some listed there too. Last we checked mostly lower. But that could be changing. Still lower mostly. OK. Let's take a deeper dive into these last 24 hours of chaos in the cryptocurrency space. Su Keenan is with us right now out of New York. So what's the latest. Well what we know is that Terry USD stable coin really spooked the market and it put the selling of crypto which had already started last week in sync with the sell off in stocks into turbo drive. So let's drop right into the Bloomberg and see what Terry USD has done in recent days. Over the weekend it lost. It's pegged to the dollar. Now this is a collateralized algorithmic digital coin pegged to the dollar. One one. It gets slightly d pegged over the weekend 99 cents a dollar then plunged to the 70s 80 cent range and then lower it in a death spiral. That's an ugly part of the graph you're seeing there. In short the model fell apart. It was unable to withstand a black swan event or adverse circumstance. And importantly it was a collateralized protocol. They sold off the collateral which was billions of bitcoin into the bitcoin route and that wasn't enough. So then they had to raise money. And right now the backers of terror USG in talks which we're told have stalled to try and raise money. Meanwhile a lot of Bitcoin billionaires have lost their shirts. At least they've fallen into the extreme lower ranks of wealth as opposed to the billionaire extremes. I would you're looking at now is the fact that crypto itself got creamed in all of this. The Galaxy index down some 60 plus percent. We know Bitcoin is down more than 50 percent from its highs back in November. And while many Bitcoin veterans have seen far worse this is the first real challenge to decentralized finance. And it really has gotten the market shake. Still are Su Keenan. Thank you so much on all the latest out of the crypto space at stake it now. Also in New York Vonnie Quinn there she has your first renewed funding. David thank you. U.S. inflation slowed less than expected to a point three percent in April signaling higher prices could persist and keep the Fed on an aggressive rate hike pass. Core CPI also ease less than forecast services. Costs accelerated and inflation for most goods remained stubbornly high. Former New York Fed president Bill Dudley has suggested hiking rates to 5 percent or higher. ECB President Christine Lagarde has signaled a move on interest rates as soon as July. Bloomberg sources say that policymakers at the central bank are increasingly open to taking interest rates above zero before the end of the year. Logout says the first rate hike in more than a decade may happen weeks after bond buying ends early next quarter. Chinese Premier League China has urged officials to use fiscal and monetary policies to boost employment and the economy. CCTV reports that Li oversaw a meeting of the state council where authorities were urged to stabilise consumer prices and ensure grain output. It also said measures would be taken to secure supply chains subsidise power producers and finance infrastructure projects. Falun Gong Monetary Authority has moved to support its local currency for the first time since 2019. The HK Army is buying nearly one point six billion Hong Kong dollars to defend it's pegged to the greenback. The intervention comes as the Hong Kong currency hit the weekend of its trading ban for the first time in three years. Sri Lanka's president to go to biologic Hang Seng has promised a new prime minister and cabinet will be named this week to end political instability. Rajapaksa is also pledging constitutional changes to give more power to the parliament. The long held demand of protesters. Meantime the country's central bank chief has threatened to resign if stability isn't restored. Protests have seen at least nine people killed and around 200 injured. Local news 24 hours a day on air and on Bloomberg Quicktake power by more than 10 700 journalists and analysts and more than 120 countries. ISE. Vonnie Quinn. This is Bloomberg Davis. All right. Just ahead here China blasting the WTO and the chief there and their criticism over the country's Covid zero strategy defending a policy that has essentially caused havoc across the economy. More details in that story is just ahead. This is Bloomberg. All right. Welcome back to the show. So we're watching inflation right. This could be something to watch. Moving forward we're on track for seven straight weeks of declines as far as base metals are concerned this goes into the slowdown we're seeing on the Chinese mainland. That's perhaps reason to take some money off the table after that massive spike that we had what fab and into early March here. Let's talk about the latest year out of China. Latest Covid numbers out of Shanghai and of course the latest nines out of the state council to support the economy. Stephen Engle our chief North Asia correspondent is here with us in our studios to talk us through the case numbers in Shanghai and what that means. Yeah I mean it's important we talk about this case numbers first before we talk about the policy response because again yesterday we got that first day of no local transmission of the virus in Shanghai in at least eight of the main 16 districts in Shanghai. That's important because you need to have three consecutive days of zero local transmissions. Not talking about within quarantine. Yesterday we got one. So today was day two and the clock was ticking. Well today now according to the latest numbers for May 11th there were two local within community transmissions that essentially resets the clock. Now we need to have three straight days. So no it dampens the prospects of having the lockdown in Shanghai which is into its seventh week now of being reset. So the case loads nationwide were pretty much the same as May 10th. But eighteen hundred. Shanghai was pretty much the same at about fifteen hundred cases. And Beijing was down a little bit from 60 70 to down to 46 as they are not in lockdown but they're in restrictions. OK. All of this is obviously having an impact on the economy in particular in April and the state council had another meeting that chaired of course by the premier Li Chung. He is urging authorities in China to basically roll out more monetary and fiscal stimulus in particular. In one of his main issues that he's been plugging is to support employment. That's a politically sensitive issue. And obviously one very important for the economy and one sensitive because all those college graduates 16 million plus whatever are going to be hit in the employment market soon. So there's going to be a flood of people who can't find work. So all of this we don't know according to CCTV what specific measures they're going to roll out. But economists are expecting further triple aren't cuts reserve ratio requirements as well as interest rate cuts to kind of help whether the April slowdown. And that looks like it's going to be a major slowdown as well. Yes. We have the medium term lending facility. I think that's an opportunity for them to lower rates. Also the NPR of course also coming out next week. At this time yesterday we were talking about and show what they have been saying about the Covid policy. China's hit back. China has hit back. And not surprisingly at Delhi Jan. He is the Ministry of Foreign Affairs spokesperson. He did not take kindly to the director general of the World Health Organization Dr. Tadros who essentially urged China to rethink its Covid zero policy because it's having an impact on the economy obviously is having an impact on people's lives. And it's not sustainable long term. And China is not taking that kindly. Essentially telling him to keep keep his mouth shut in kind words. Let's hear from Don from Delhi Jan. Don't take too long to be funded. We hope your individual will make an objective and reasonable views of China's epidemic clearly fall in policy and try to get a better understanding of the facts and refrain from making irresponsible remarks these actions do. And again not surprisingly Java Jam did cite that food on does a food on university report that we reported on yesterday that's basically says this new polling mechanisms extrapolates to show that if they removed Covid 0 they would have a tsunami of new gas is one point six million with the deaths deaths. What's the number there based on that study. Based on that study Stephen Engle chief North Asia correspondent there. Let's get to New York now. Vonnie Quinn there. She has your latest business flash headlines. David thank you. Disney reported subscriber gains for its flagship streaming service that exceeded estimates. Disney Pass subscribers rose 33 percent from a year ago to just shy of 138 million. Overall earnings rose to a dollar 8 a share but missed the dollar 17 average estimate of analysts. The company also tempered its outlook saying it will trim spending on movies and TV shows by around a billion dollars. Mining giant Varley and BHP are asking the court to let them vote as creditors in the debt restructuring of the Rozelle joint venture. In filings obtained by Bloomberg the companies argue they have no conflict of interest. The court battle will test Brazil's new bankruptcy law which allows creditors to present their own restructuring plans. Panasonic says Tesla has asked him to speed up development of its next gen batteries. The Japanese company CFO told a post earnings briefing that demand remains robust for his power cells including those that supplies to the leading EDI maker. But he did not give any update on plans for a much anticipated new battery factory in the United States. And those were latest business headlines. All right. There's plenty more ahead to leave you with a look at Hong Kong and mainland Chinese equities amid this risk routs and were holding OK given the risks out there but still of course and pressure on these equity markets. There we go. There's plenty more ahead. This is Bloomberg. Eighteen and a half percent is your draw down across global equities what will arrest this slide. What can save global equities. It looks like inevitable really ISE crossing that bear market threshold. Speaking of arrests let's talk about Hong Kong now. So you have the National Security Police detaining four prominent democracy activists including a senior member of the Vatican church. It's prompted this sort of pushback here from the White House and extreme attention from the Vatican. Let's bring in our co-anchor Yvonne Man. She has more details on this. Yes it's a lot. Take us through the story here. What do we know and what happened. Well these arrests are just the latest move against democracy activists in Hong Kong which has seen some of the most prominent political opponents either jailed or threatened with charges. But this the timing of these arrests are certainly interesting given the fact that John Lee was selected as the chief executive. Just days ago. And as we know this was an election where he was the sole candidate and he is a vocal supporter of the national security law. What we know from these arrests the four that were taken into custody and released on bail according to local media was as you mentioned Joseph said the 90 year old cardinal he was among trustees. As we're learning of the 6 1 2 humanitarian relief fund which was established to provide financial assistance to those involved in the anti-government protests in 2019. Nineteen reports say that there was intense scrutiny on him for the past year as you're seeing here in the pictures former lawmaker a barrister Margaret Oh and Canto a pop singer Denise Ho were also among those that were detained on Wednesday for allegedly colluding with foreign forces. And as you mentioned this did prompt the White House to send a rebuke from the spokeswoman saying in arresting these veteran activists scholars and religious leaders under the so-called national security law Hongkong authorities have again demonstrated that they will pursue all means necessary to stifle dissent and undercut protected rights and freedoms. And you mentioned about the Vatican a spokesperson there saying they are following this situation with extreme attention right now. Dave. Von beyond what's happening politically. You know the restrictions on what businesses are looking at as far as you know their future here in the city and what they need to do. Mean medium term here. What's the latest as far as confidence among businesses are concerned. I think it's still quite bleak in terms of what the business community is thinking. Yes we've seen some curves use but get the quarantine rules right now means the city is still effectively closed to visitors. I'm going through quarantine hotels. We speak to other. But there is little sign also of the border reopening with China as well which a lot of small businesses have said is going to be quite crucial for for their survival. And it's still not clear what those prerequisites are in terms of reopening the border with the mainland. We heard that from Carrie Lee just last week and we have seen the Hong Kong COBRA situation improve. So there is room for these controls to be eased. You've seen infections been around. What daily delicate serve below 300 now which is far cry from the 50000 that we saw during the peaks in March. Vaccination rates also continue to climb as well. And we have heard from the business community even Kathy the chairman speaking yesterday and saying the Hong Kong is falling behind as the rest of the world reopens. And so those those comments certainly is resonating upon markets as well as we can. You see not just this aggressive fed but also the growth outlook and a slowdown in growth in the city. Really sorry to hurt the markets there. Yeah. Get out of on get out this empty chair beside me. Who's going to be filled hopefully next week. Yvonne Man in quarantine there at latest on these markets. Their briefings coming up. Have a look at this list. And of course against a backdrop of this and a couple of minutes. The GDP report of the Philippines is out. Markets on offer. This is Bloomberg.

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'Bloomberg Markets: China Open' Full Show (05/12/2022)

"Bloomberg Markets: China Open" is the definitive guide to the markets in Hong Kong and on the mainland. Rishaad Salamat, David Ingles, and Yvonne Man bring you the latest news and analysis to get you ready for the trading day. And powered by more than 27-hundred journalists and analysts in more than 120 countries, we get you the global stories that will impact the region's markets. (Source: Bloomberg)

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