tv Bloomberg Daybreak Australia Bloomberg January 31, 2021 5:00pm-6:00pm EST
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lockdown after the first new case of covid in months. and undermining the economic recovery of china. the first data shows factory output and service is weakening. hamdi ulukayaat let's take a look at how the asian session is kicking off. sophie kamaruddin is in hong kong. sophie: asian stocks are looking like a down start to february trading after the worst week. in australia, keeping an eye on minors. some voices are saying there is little risk of market contagion. be that as it may be, we have a cautious start to the week. decisions from india, australia, thailand.
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on the earnings front, alibaba will be on deck this week. chinese pmi numbers show the recovery moving. this is weighing on the aussie dollar which is also under pressure as perth enters a lockdown. the reading is coming in at 55.3. more pmi data coming from across the region in asia. factory activity has been seen picking up as exports have improved across the region. services have not been doing as hot. given the social distancing measures. we are waiting on trade figures. exports likely to have slowed from south korea. shery: gamestop. striking fear into anyone caught
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on the wrong side but barclays says the drama is not big enough to become a widespread contagion. the bank as that the value has fallen to the lowest level since 2008 proportional to the broader market. angry reddit traders are unlikely to drown out the bull market. >> gamestop, amc, blackberry and the like. >> it is a casino atmosphere there. >> it sounds a lot like market manipulation. >> none of this is questionable in my mind. >> it probably needs to be regulated. >> we don't need congress to come in and save everybody. >> it is a financial stability perspective. >> everyone is talking about rational or irrational exuberance. >> rationality over the long
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term will be irrationality. >> it will probably end in tears were a lot of these retail investors and hedge funds. haidi: let's see how they have affected management. julie biel joins us from santa monica, california. great to have you with us. we have seen a really rocky january. this gdp -- gtv chart on the bloomberg -- how has the recent retail frenzy affected your investments and portfolio? julie: if you are a long-term quality investor come it has not had a big impact on how you do and run the business. we are looking at quality businesses and many of them have very low shortage risk. it is been a normal week for us other than the fact that my phone is blowing up and i'm
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having to talk to friends about what is going on. my key takeaway is that what is lacking in this country is education around financial literacy. when you have like what happened at the end of the week where trading stops for retail investors, it is hard for their to not be a lot of suspicion around that. the more transparency and education around financial literacy will be powerful. shery: it is interesting that you say your phone is blowing up. it becomes a gameificiation for investing. even if you are a long-term investor, you have to start considering the ramifications of what has been happening? julie: for a lot of investors, we are wondering about where the opportunities are for sure -- for smart and thoughtful regulations. many of these are dispersed.
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they are not in a different then the idea generators that hedge funds have. i am concerned about the game-ification of certain of these platforms. the interest in the markets is a positive thing. your needs to be more education around that. shery: is this a continuation though of a trend we have seen? haidi: it is not just creating warning signs for the market but the emergence of spacs. is there too much richness in the market? where do you find longer-term value that will not be rocked by things like this? julie: for us, as we came to the end of the year and saw opportunities to cut back our
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exposure on the best tech names that had run past the point of rational behavior, we are dialing up the cyclical exposure. we do see the economy being able to rebound for the second half of the year but not so much that we are deviating from a high quality focus. his misses that can continue -- businesses that can continue to do well is the kind of company we are looking for. as far as spacs and the ipo's, those are the warning signs that keep me from going full throttle into cyclicals. there are too many warning signs that we could be in for a correction. haidi: one of the concern is the proliferation of fin tech. julie: the preponderance of fin
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tech is concerning because of the allowance of credit going to consumers. the models are new and have not been tested in a proper recessionary environment. my concern with some of these companies is that we are giving consumers access to products they want to buy immediately on short term payments but we have no idea what that looks like in a real recession. i am really concerned that there are all of these new modes of extending credit and they have not been back tested which could cause problems in the credit markets going forward. shery: do you go to the secular growth stories? where would you put your money? julie: we like the vertical software names. last year was a great year for horizontal software, software that could be a applied to any company could be using zoom for
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example. we see an opportunity for more modernization of companies overall. what we think now is that many cios will be looking at modernization within their core competency. we like companies that serve a specific industry like supply chains, banks, the retail industry. that is what we like -- sector focused tech companies. haidi: great to have you with us, julie biel from kayne anderson rudnick. you can get more on the gamestop story or other stories that you need to know. bloomberg subscribers can grab them on their terminal. let's get you over to karina mitchell in new york. >> welcome to all of our global viewers. china is trying to control a resurgence of the virus
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undermining the economy. january data shows activity expanded slower than in december with the services sector are markedly weaker. and you factoring pmi fell to 51.3. in other news, the world health organization team investigates the origins of the coronavirus have visited the wet market in wuhan. accompanied by a vast entourage of chinese officials. they also went to two hospitals. officials say a single visit is unlikely to produce any results. in vietnam, maintaining a policy path and reelecting the communist party secretary-general. the central committee also selected the politburo which will elect the prime minister and members of the national assembly.
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the leadership is seen as staunchly anticorruption and has repeatedly endorsed vietnam's integration into the global economy. former president trump heads towards his second impeachment trial in the senate with his legal team seemingly in disarray. some of the top lawyers quit this last week. senior trump advisors say much work has been done on the defense argument and a final decision on a legal team chief will be made shortly. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. haidi: still ahead on daybreak australia, chinese pmi picking up. we get the first reserve bank of australia decision. sarah hunter from oxford economics joins us to discuss
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the prospects for the rba. perth is under lockdown for the next five days after a hotel quarantine worker tested positive. for the latest, it is just ahead. this is bloomberg. ♪ (announcer) do you want to reduce stress? shed pounds? do you want to flatten your stomach? do all that in just 10 minutes a day with aerotrainer, the total body fitness solution that uses its revolutionary ergonomic design to help you maintain comfortable, correct form. that means better results in less time. and there are over 20 exercises to choose from. get gym results at home. no expensive machines, no expensive memberships. go to aerotrainer.com to get yours now.
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haidi: perth and other parts of western australia are in a hard lockdown after this date discovered its first community transmission in more than 10 months. west australia had some of the top the restrictions in the country. what are we seeing happening now? >> quarantine hotel security guard tested positive to covid 19. in the hotel, there were four active cases. the security officer developed symptoms on thursday.
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he did not know how he got it. he did not enter any rooms but he did visit dozens of venues. he was using the covid safe app so the government is optimistic that can help a lot with contact tracing. now, residents are in a hard lockdown. they can only go out for a central. work laces and schools are all closed. there is some talk that it could have an impact on the western australia election. shery: what has changed in terms of travel? >> just really as chief medical officers says the outbreak in new zealand is sufficiently low to ease the travel bubble. it detected its first community case of covid in more than two months, the south african strain. that person had already finished
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quarantine and tested negative. after six days, the one-way bubble is back on. australia has been open to new zealand since october with the exception of last week's blip but new zealand is still closed to australia. the prime minister is optimistic that we could see a two-way travel bubble by the start of april, and of march. -- end of march. shery: 10 republican senators have proposed an alternative plan costing about $600 billion they say would gain bipartisan support. they have urged a meeting with the president to discuss. we have been tracking this. how significant is it that we have 10 republican senators willing to play ball on a new streamlined package? >> it could be a way forward
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although a lot of democrats on the left are not happy about this plan. we heard a little from chuck schumer today questioning whether this is the right way forward. at face value, at least, it is action. the republicans have suggested a plan that would cost about $600 billion and would strip out what they say are extraneous measures . they say this focuses on coronavirus stimulus and not other elements like raising the minimum wage. they have asked for a meeting with president biden. with the 10 republican votes, and some democrats to go along with this, you would have the 60 votes needed to pass the bipartisan package.
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it could be something. it remains to be seen. we will hear more on monday. haidi: when it comes to the virus, we are getting mixed signals. some optimism but at the same time, we continue to be worried about the new variants. >> right now, it is a race between the vaccine and the variants. there has been a distinct decline in cases and in the u.s. as a whole, cases are down -- it is sometimes hard to get a sense but cases in the u.s. are down 40% from their peak earlier this month. hospitalizations are also down about 24%. deaths are taking longer to trail off. there are a lot of positive metrics around.
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but a virus advisor warning about variants. that is where we find ourselves today. as it is so often, it is two steps forward and a step back. shery: the eu has received a lot of criticism over its vaccine plan and having to walk back the new vaccine controls. the telegraph reporting that britain will prioritize ireland in vaccine sharing. what do we know? >> it is amazing to think about the geopolitical world in europe. the coronavirus and brexit and how they have collided over the past few days. it seems that the european union has backtracked over a plan to
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withhold vaccines from northern ireland which caused a huge uproar on friday. some suggested it could break the peace accords. and could be very dangerous. we see astrazeneca agreeing to deliver 9 million additional doses to the eu. hopefully, everyone will have enough to go around. continental europe is lagging. it seems this particular issue has been settled for now. haidi: what do we know about the countries and other areas that seem to be giving the good news stories about the vaccine? >> paul captured a lot of the back and forth in his statements about how perth, which has not had a case in months, has gone
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into a five-day lockdown after one case. in new york, we find that rather extraordinary. it does seem that gains are being made. haidi: roz krasny there. johnson & johnson expected to begin delivering its vaccine in the u.s. by march following an emergency use authorization. johnson and johnson's chief scientific officer told bloomberg that they have already -- that they have also begun work on the other virus strains. >> they will take over in the race. towards the end of february, we will have an advisory panel. we will see about getting emergency use of approval and in march, we can start delivering vaccine.
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before the virus is out of the world, it will take some time. and it might easily be 2-4 years. hopefully not but it does not look good at the moment with a huge amount of virus circulating in the world. when we saw the south african strain, we started a ready doing a next vaccine in the lab. the basic research work is happening and early upscaling is happening. haidi: johnson & johnson chief scientific officer paul. talks between the australian treasurer and facebook's mark zuckerberg. we will get an update next. this is bloomberg. ♪ so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet.
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has said talks with mark zuckerberg have been constructive but did not resolve based land off. -- but did not resolve a standoff. constructive talks? zuckerberg reached out what australia is not backing down. >> that is right. the australian treasurer appeared on august trillion broadcasting corporation yesterday and said mark zuckerberg had reached out to talk. this is a proposed law in australia forcing facebook and google to pay local publishers for news. the treasures said that mark zuckerberg did not convince him to back down which is the response you would expect from a politician. there is no capital gained by backing down if you are in his position. it is interesting that it has gotten to this level that the ceo of facebook is reaching out
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to the australian treasurer about a law in a fairly minor market for facebook. it is less than a drop in the ocean for facebook. but it is a reflection of the seriousness of this proposed legislation. mark zuckerberg is reaching out in person. haidi: what is the timeline for that legislation is specially as talks with google seem to be continuing as well? >> that is right. they are still in talks with facebook and google but the timeline is not set in stone. the australian parliament resumes sitting tomorrow and the legislation is still being discussed by the houses in australia. it is being discussed by a committee which is due to report on the 11th of february. it still has time to implement changes.
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but according to the draft anyway, this is what facebook and google have proposed. we are at a stalemate. haidi: bloomberg business reporter angus whitley. let's get a quick check of the headlines. silver is the latest focus for so-called reddit daytraders suggesting the frenzy of last week is still fizzing over into glasses. two companies say they have been unable to process orders because of an unprecedented demand for silver. melvin capital has lost more than 50% in january on the name stocks surge and other vets after being on the end of the esg short squeeze --reddit short squeeze. the fund said it had repositioned its portfolio and covered the gamestop short. up next, china's pmi kicks off a
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haidi: -- carino: i'm karina mitchell with first word headlines. opec and its outline say they produce 90%. they aim to withhold more than 7 billion barrels of oil a day for the market, about 7% of global supply. they agreed in december to raise production by half a million barrels per day. preliminary compliance data will be reviewed tuesday by the joint technical committee. the west australian capital birth is back in full locked down after a worker at a
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quarantine tested positive for code 19. the restriction -- covid-19. the restriction will last five days. the mandatory mask wearing is included. western australia has not reported a case of community transmission of the virus for about 10 months. over to india, announcing its latest budget later monday, a plan described by ministers as unprecedented as the government tries to revive a recover meant mired by recession and hit by covid-19. if history is any guide, the recent rough ride for stocks will continue. myanmar is facing a new political crisis just days before the opening of a new parliamentm amid rising tensions between the military and the nominally civilian government. the army is disputing november's election. the commander-in-chief has floated the idea of revoking the
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constitution with an army spokesman declining to rule out a coup. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm karina mitchell. this is bloomberg. shery: china's efforts to control the recent resurgence of covid-19 cases undercutting the recovery, which has been one of the bright spots in the global economy. official j that -- january data says economic activity expounded at a slower pace contend compared to december how much of a dent are we talking about to china's economic recovery? reporter: the indicators over the weekend show expansion for both manufacturing and nonmanufacturing, but there was a big hit to services and construction. the nonmanufacturing pmi, which went from 55.7% back in december to 52.4% in january.
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in terms of manufacturing pmi, we saw a move lower. there is a clear reason why services have been particularly badly affected. you have seen an outbreak of cases in beijing, and also in the province of hubei and the northeast of the country as well. officials have put an increasingly stringent measures, particularly on travel. this is an enormous time of year, massive travel, tens of millions traveling for the lunar new year. many people would have already started their trips. that is taking a hit -- that has taken a hit as has consumption. just one indicator over the weekend, 17 million trips on saturday, but that was a decline of 75% from 2019 levels and 2020 levels. on the bright side, production seems to hold up pretty well.
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we know there's export demand for chinese medical. . products and electronics remains strong. . there is a sense many companies will stay open over the lunar new year or ramp up production. the manufacturing side of things could continue to be relatively robust. nomura saying on the policy front, this could be positive for the markets because it could persuade officials here in beijing to go easy on any attempts to rein back easing monetary policy and fiscal stimulus given the numbers we saw over the weekend. haidi: we are also hearing china has given more details about its anti-monopoly drive. what do we know about this resolute commitment? reporter: indeed. we know this will be a policy priority that has been flagged over the last few months for officials here in beijing for 2021. we are slowly and gradually getting more details. we got more details over the weekend from the state council. they say they want to strengthen
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and improve law enforcement when it comes to monopolistic practices from companies. they also say there will be a focus on regulating consumer data and the use of data. you are seeing pictures of xi jinping. that is because he is coming out with an article to be published this morning and the mainland where he will call for a greater strengthening of intellectual property rights. he says this is part of a national strategy that is part of the opening up push, but also part of national security and ensuring there's quality development. we know intellectual property infringements are a key concern for companies operating in china, but increasingly, china's smaller private enterprises are concerned their own ip is being stolen by other companies here as well. there is a national reason as well as part of the opening up pressure. haidi: tom mackenzie in beijing. there is a full week of economic data coming up for us here in
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asia. we will see trade data from south korea later on monday. from australia on thursday, central-bank and focus. australia, thailand and india holding their first policy meetings. sarah hunter with us. let's start with australia. it is an interesting balancing act as we continue to watch the labor market recovery and starting to see signs of heating when it comes to the property market as well as benefiting from the chinese economic recovery. >> that's right. those are certainly some positives coming through the economy right now, a lot of stimulus getting into the property market and from the rba, but also the federal and state governments as well in the former homebuilder scheme encouraging residential construction. .
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the property market is definitely a positive, but we also still have parts of the economy that are struggling. travel, tourism, hospitality in general. hopefully it is not a big derailment of activity but it does highlight the ongoing uncertainty and challenges with covid. until we got a sustainable solution, it's hard to see how the economy can fully recover because we are all essentially living with a threat of restrictions being reimposed. haidi: how much of a strong currency is a real conundrum for the rba this week? >> it is certainly challenging. a few things to note, at least some of the moves we've seen is more a reflection of u.s. dollar general weakness.
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so they will not be so concerned about all of that, but having said that, the as -- ozzie has outperformed in the last few months, not surprising when you look at the trend in key commodities including iron ore. it will be somewhat concerning to the rba. we could get hints the quantitative easing could get extended. i think we won't get any change in the second, but there's a signal they are considering it given where the currency fits. the only thing i would trump out on the currency as we could think of it as having an impact on other parts of manufacturing and products. the last degree will be feeling the impact but beastly services, it isn't what is important. what's important is the fact that the international border is
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closed. shery: what should the rba keep in mind as it heads towards that purchase? >> i think they are cognizant of the balancing act from the economy doing well and responding to the stimulus. i think this will be a general issue of challenge for both the federal government and the rba this year, that the stimulus that has been put in place has not been very successful. the question is, can the economy adjust and have people, labor and other production, move from areas challenged by covid and likely to remain for quite some
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time, travel and tourism, can move into the areas doing well more domestically oriented. that tension we will see this year and how that plays through the labor market to gdp, through activity will be what's all economists will be watching through the year. shery: and very important to the australian economy is what happens in china. manufacturing and nonmanufacturing pmi under a little bit of pressure, decelerating. what is the outlook for china? >> i do think we will see some slowing. still positive, i would stress. some parts will be impacted by restrictions put in place, but generally positive growth.
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undoubtedly slower. part of that i think is a reflection of an initial burst of activity through the rebound. and i think it partly reflects that the authorities have the authorities gone and there looking to overheat the economy. when a calendar year will look spectacular because last year was so weak, but if we are looking month-to-month, it is likely to slow and that will put something of a drag on export volumes coming out of australia. role -- rural folks will be looking at what's happening to supply and what's coming out of brazil for example, creating additional challenges for australian producers as suppliers can move into the market. slower growth environment for
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exports. shery: our economics chief best really -- oxford economics chief australia economist. later, we hear from bca research, jp morgan and morgan stanley throughout the day. we do have breaking news. we are getting a little more guidance when it comes to robinhood's trading live bits -- limits. robinhood now saying they are updating purchasing limits list to eight companies. remember, last week we had an upheaval on the trading limitations, forcing eight companies, then 20 three companies, than 50 was the last update. now we are getting robinhood updating purchasing limits list to eight companies. this of course coming after a
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week of very dramatic moves in some of these stocks. so the eight companies where we will see purchasing limits by robinhood includes blackberry, express, gamestop, genius brands and mc. for the moment, earnings seasons showing a big profit rebound thanks to a well-managed virus response and a boom in household spending. a full preview next. this is bloomberg. ♪
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shery: time for morning calls ahead of the trading day with sophie kamaruddin in hong kong. last week, we had a big blow to shorts dollars -- short-sellers with rallies for gamestop and amc and others. analysts at berkeley see a full-blown contagion from the is. sophie: evaluations that goldman and others are seeing this as just a technical tumble. barclays, short interest just too small to have sizable bearings on the markets and short sales just about 2% of the total u.s. equity. earnings are pretty narrow even after the squeeze spread beyond
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gamestop. barclays staying optimistic in the short-term remaining localized. supermarkets are on watch with open targeting by reddit traders. retail trading sites say we could see trading at $29 an ounce for silver today. haidi: right. what opportunities are you seeing people talking about in the asian credit space? sophie: at ubs, still long asian high-yield debt. a position that has been held since june. globally, ubs says it's the best opportunity this year with spreads that 80 basis points in the first half and some of that outlook is echoed in the latest bank of america survey on asian credit. that was the most bullish since march 2010 and in the service -- survey, high-yield are favored over investment grades.
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investments have moved down the credit curves on better yields. over the next three month, investors expect flows to continue, although there are concerns around china's potential credit tightening and higher rates globally. more than a third of respondents expect a bond connect could be launched this year to provide technical support. haidi: sophie kamaruddin with your morning calls in hong kong. profits in australia expected to rebound this earnings season that could revive markets after a slow start to 2021. bloomberg's asia equity markets reporter jackie edwards is here with ap free -- a preview. about six month ago we were looking at the worst profit earnings season in about 10 years. things are expected to show pretty big improvement. reporter: that's right. we are likely to see an earnings rebound in general across the market. part of this is because of
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australia's management of covid-19, but also, as you mention, how much profits fell in the last earnings season in august. that was one of the worst reporting seasons in more than a decade. the economy has picked up substantially since then. one area that might really shine is consumer facing companies, particularly the retailers. australia's retailers are set to benefit from a boom in household spending and a research in the property markets. and this comes as analysts and investors have said earnings forecasts in the retailing sector have been too low as people stock up on home goods during the pandemic. we've also seen strong recovery days. that has been working to support the retailers. shery: what can we see in terms of pressure? we do have western a straley again going under lockdown, not to mention a strong aussie
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dollar. reporter: that'sreporter: right. even though the outlook in general this season is pretty positive, there are a couple things that could dampen results. the strength of the australian dollar, the currency had a big rally last year and has been elevated so far in 2021. that surge in the australian dollar has a potential to hurt companies that have substantial offshore earnings. for example, a lot of health firms in australia have significant overseas revenue. that is something to watch for in that sector. another area that could affect how investors size up the results is the fact that valuation across the australian markets are quite high at the moment. the benchmarks for price ratio are passed pre-pandemic levels and just shy of the all-time high so those higher valuations might invite more investors who -- in this earnings season. haidi: australia had a pretty slow start of course to bringing on the vaccine on board, but we are expecting those shots to begin this month.
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how does not plan to the overall corporate narratives? reporter: are straley is expected to begin rolling out vaccines in february, and it will be among the most critical factors to watch. but analysts appear quite split at the moment on whether to encourage for -- forms to shy away from it. some have said companies that refrain from providing outlook commentary last year. may restart again in february, but other firms might be reluctant to provide outlook guidance given how uncertain the global outlook is no for the lobo recovery -- covid recovery. shery: be sure to tune into bloomberg radio to hear more from the days big newsmakers and get in-depth analysis from the daybreak team now broadcasting from our studio in hong kong.
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mergers. dow jones says the chevron ceo and deron williams of exxon talked after covid-19 took hold and slashed global demand for energy. the talks were preliminary and are not continuing, but may be revived in the future. hedge fund veteran download managed -- dan loeb managed to make some money despite the turmoil by retail traders. the offshore fund gained nearly 2% last month according to an investor. investment firms like b-1 capital partners and .72 have been hit hard after shares of companies they bet against were driven out by frenzied trading. the billionaire founder of point 72 and new york mets owner steve cohen has closed his twitter account after saying his family received threats. performance reportedly plunged 10% to 15% this month. he has complained about what he
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calls the rough crowd on twitter after his firms short bet on gamestop. haidi: we have the update a few minutes ago. robinhood now narrowing the trading restrictions that it has on a number of stocks to just now eight companies. as of the end of trading friday, that list was as long as 50 that were affected. still, some of the usual names you would imagine, amc, gamestop, along with blackberry express, naked brands and some of these names restricted. when it comes to gamestop, you can still just buy one stock in gamestop according to the latest rounds of restrictions. it is essentially telling clients how many shares they can buy pertaining to any particular security. gamestop still pretty heavily
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restricted, just one share up to five options come strict -- contracts. let's look at the australian open coming up at the top of the hour. what are you watching? sophie: we are watching silver related stocks. miners in sydney. this was a metal that fished up to menton physical markets that are already tight. with etf's likely to wade into the stock market, that would add to seeing silver prices popped $29 announce. even so, a retail driven rally might be limited. supply and demand will win over. othe stocks on watch, ibo. bhp on the radar as well.
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the joint mine in brazil is set to be prepping a debt restructuring plan. big dates to be watching for moves in commodities resource players in sydney this morning. be tmi reading from australia, picking up higher to 55.3% for december. looking at the board, head of the market open in australia, aussie futures under pressure while kiwi stocks are resuming. the aussie dollar also under pressure. this is also assessing the reading on china's pmi numbers which came out sunday. that indicated a slowdown in the recovery over the winter months as the virus curbs are seeing an impact. the aussie dollar opening in western australia, ensuring a lockdown amid resurgent virus worries. we will be kicking off on all of these, about to open in sydney
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haidi:haidi: good morning. i'm haidi stroud-watts in sydney. we are counting down to asia's major market opens. shery: i'm shery ahn in new york. welcome to "bloomberg daybreak: asia." with the ongoing reddit gamestop upheaval, see -- silver is the latest focus. china's efforts to control new virus infections arend
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