lps control stress and emotional eating and losing weight. go to golo.com and see how golo can change your life. that's golo.com. ♪ ♪ heidi: i'm heidi stressant city and we are counting down the major market open. shery ahn: our top stories this hour, asian benchmark set to open from her after u.s. equity bounced off session lows. investors weighing more progress in the american vaccine rollout. in the fallout from the biggest margin call on rippling across

the financial industry with big banks rolling over their part. the nearly week long saga to dislodge the ship blocking this was canal -- the suez canal is over with traffic booming through the canal. haidi: we do have the sydney open right now. let's go to hong kong for what to watch. >> the staggered open in australia, about .1% after falling on monday. shares rising about 3% for atl -- agl. the company has plans for structural shift to create new energy firms under agl. we see energy names picking up the pace in sydney early in the session with api and prices stabilizing ahead of the open on april 1 putting oil on course for a fourth straight quarterly gain. let's keep a close eye on the turkish lira this morning under some pressure after the hippies

governor was fired by erdogan. more hedge funds in asia will be looking to see if there is any contagion risk and more block trades. we will see if that can be contained with futures very much pointing higher across the board after asia stocks eked out gains on monday including number a-shares. we had chinese stocks related to the block trade selloff like baidu. the csi 300 did rise for a second session. this is calling for a market bottom in china sitting around the 5000 level. and that stabilizes more with focusing on earnings this tuesday. the bank of china and air china has been a down report overall for chinese stocks. and taking a broader market look

, pulling up a chart on the terminal and the dollar has a turnaround story at the start of the year. this bar showing that it is set for the best three-month stretch in a year while currencies are set by three quarters. check out the green bar on this chart right here. the bond rout making for the first quarter since the 1980's for u.s. treasuries on global stocks headed for a fourth quarterly advance. haidi: the chief market strategist joins us live. a lot of people saying that this is a one-off and it is a market blip the way that it would happen with gamestop and the margin call episode we had earlier in the year. what are your concerns about the possibility of this being more systemic? that they leverage pressures and access to liquidity issues might spread across other markets in

the same situation? >> i think it reflects fighting the previous crisis. the previous major crisis looking through the covid market moves was the gse. it raised irrational fears at times, in my view, about what might happen to the market. it clearly allowed margin calls on histories bad news. but in the context of a $33 trillion market capitalization in the s&p 500, it is trivial. that is the fact of the matter. we are alert to contagion effects, but there is no evidence to support that. there is a lot of speculation. anyone that knows what really went on is probably prohibited from saying given privacy and insider trading concerns. so they are talking to people that do not have direct knowledge. but the conclusion is that a

fund got called out with long positions that were attacked by short-sellers. take that on the chin and the first cut is the cheapest. in fact, it took on leverage to try to defend their long position and squeeze the shorts like gamestop. but stocks like viacom and discovery are much larger and harder to achieve. when that squeezes filed, that person may have been called out. it was not direct knowledge, but a pretty good explanation for what went on and one of the reasons why most traders are not too concerned about the effects from the margin call. haidi: stocks have gone up a long way before coming down. i want to take a look at the implications for banks, maybe even the lowest here banks. look at what happened yesterday, having the worst day on record.

plunging by the most since 1974. the key to that is that we saw volumes of that selloff really surging. does this potentially make you reconsider within this rotation we have seen that maybe you take money away from banks and look elsewhere for more of a balance? >> i'm being very selective but we do look at gains for some of them, about 50% from their lows. i can understand why you might be taking profits because of that. the outlook at the banks remains leveraged to the global economy and they believe a big economic recovery is coming through had probably can't afford to step away. i would highlight that this is a fairly specialized area in finance and baking -- banking.

i am being very selective about it, but there could be a case to reduce and exposed to those banks running prime businesses. haidi: is there concerned the sec will not think of it that way? that we could see more regulatory pressure coming from congress, given what we have seen around gamestop as well? >> it is not a new idea. there is ongoing health tech. it is likely the amount of margin lending and stocks that will increase to about $840 billion to around 840 -- 830 billion last month. i think they have been in a good position to know rather than to have to ask questions about whether or not this is the systemic risk. the fact we haven't heard much

is probably a positive sign. if interest rates rose very sharply, it would be real cause for concern. but the reassuring noises coming from central banks and the fed is that it is not going to be the case. high levels of leverage are not likely to become a source for the markets anytime soon. haidi: the suez canal fiasco seems to be resolved. it will take time for the ships to pass through, but it seems like we are now seeing the fertility -- fragility of global supply chains. whether it is the suez canal, the pandemic, or trade tensions, is this something you have to consider? >> it is something to be aware of. it can and did have short-term effects on markets. particularly the oil market. the increase of volatility was not exactly rational for oil. i think the conclusion that most

came to is that what we saw was there is a lot of interest in maintaining global supply chains in good order and real effort will be brought. i think from a trading point of view, it will be something to be aware of. and i think we will continue to ride out the noise like this. haidi: let's get to vonnie quinn. vonnie: 19% of all u.s. adults will be eligible to get a covid-19 vaccine. he added that his administration will double the number of pharmacies where shots can be administered as it ramps up the pace of inoculations. but he warned against a resurgence of cases. prime minister boris johnson says the u.k. is on track to lift pandemic restrictions

entirely by late june. he is cautiously optimistic there will not be a need to impose lockdown measures again, adding that the infection rates are at the lowest in six months. but johnson warned about becoming too complacent. japan's vaccine chief says the country's rollout will be slow and won't ramp up until at least may. they want to major their systems are working properly. it is currently limited to health workers and those over 65 to begin in about two weeks. the slow vaccination pace is under increasing scrutiny as the tokyo olympics draws closer. steps to further reopen an economy, dropping to 14 day quarantine from 21 for people coming from high-risk areas. discussions over travel bubbles are said to resume. it is an incentive to try to boost the low vaccination rate. global news 24 hours a day on

air and powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: ships move again with the ever given finally freed. details on when operations are expected to return to normal, next. more chinese banks are reporting earnings with smaller lenders over the big four. this is bloomberg. ♪

>> it is probably more than what we expected. at the ship had been stuck on both ends and they had been able to move it. but it is a little bit too early to see when it will be cleared. it is one thing to reflow the ship and another thing to completely clear the canal for traffic. >> it is going to affect rates

going forward, but we had a week of no trade. ships are routing down past south africa. that is adding a week or so onto the journey. this ripple through the supply chain they will feel for some time to come. shery: ship started moving to the canal after being freed. how long will they pay for traffic to move normally -- will it take for traffic to move normally? >> the suez canal authority says clearing the backlog will take about 2.5 days and canal traffic should return to normal in about four days. we are seeing 12 vessels entering the northern end of the canal. we see some progress, slowly but surely. if you think about it, the longer-term impact of disclosure is small. but some vessels will be

rerouted and are traveling around africa which typically adds about two weeks to the journey between europe and asia. we can expect delays in shipments and sort of lingering impact on global supply chains. so many ships have been thrown off schedule and we could see cargo delays for several weeks. shery: in terms of oil, are the farms focused on the opec meeting -- firms focused on the opec meeting? >> we are looking forward to the opec producer plus meeting which is where the traders are really focused. we are looking at if producers will continue to agree restraining supply into may. because of the concerns over oil demand and parts of europe facing renewed lockdowns, there is the expectation that opec will continue to enact production policies that support the markets and oil prices. that gives oil strength right now.

haidi: we appreciate that, jessica summers. the suez canal situation becoming a little more positive. we will get more reaction to the reopening of the vital ship route. our guest will be joining us later. take a look at the vaccine rollout. in the u.s., cdc studies suggest the pfizer modernity shot not only productively -- effectively prevents illness, but infection. this seems like a real game changer discovery. >> it absolutely should change the trajectory of the outbreak. now that we know that vaccinations not only protected the individual from getting severely ill, perhaps needing hospitalization or dying, but it reduces the chance that they are going to contract the virus at all. it means we are breaking transmission. if they are not contracting the

virus, they can't pass it to the next person. the virus itself will no longer be circulating at high levels. shery: and is coming at a time when we see infections rising in the u.s.? >> we see infections rising and we are seeing hospitalizations increasing in more than half of the states. we saw the director of the cdc get emotional talking about this today. especially now, we know these variance are cycling. the concern is that we are so close that we will get people vaccinated and protect them against contracting the virus, getting severely ill, getting hospitalized and dying. it is such heartbreak where people will be getting severely ill just in this outbreak.

haidi: what is the latest we are hearing from the who? >> the report is coming out officially tomorrow and we have seen an early copy of it. the indication is that the experts believe the most likely source of the outbreak is, indeed, bats. it's possible bats could have transmitted the virus directly to humans but more than likely it came through an intermediary source. this is what we saw with sars in the early 2000's. that came through bats. this could be a link like penguins or other animals. there is a possibility still that this could have been a laboratory accident or some kind of cold storage chain, frozen food, that type of possibility,

into china. at this point, we don't have definitive answers. but we have a roadmap of the research we should be doing from here on out. haidi: we have breaking news, an executive assessing the cause of the potential loss. it is hard to say when they can determine the loss amounts. remember numerous shares tumbled by a record 16% in tokyo. we will be watching the open there. they said the estimated amount of the claim against an unnamed u.s. client was about $2 billion and that client, we know the lender. they are racing to contain the fallout after margin calls last week. we have seen numerous and other companies take a hit like credit suisse which plunged more than 15% in respective markets. they say it is hard to say when they can determine the loss amount.we will be talking aboutr

bank. deutsche bank giving the ceo another five years at the helm. we will have details ahead. this is bloomberg. ♪

haidi: a quick check of the latest business flash headlines. australia's largest retailer a geo energy -- agl energy is restructuring separation. it will be the biggest multiproduct energy retailer and pimco will be the largest country electricity generator. the aim to implement operations by the end of the 2021 financial year. chinese automaker fa w's potential bid for a truck owned by the billionaire and an industrialist is said to be progressing according to sources

familiar with the plan. they have been in talks since last year, but the big crash and the impact on the eu remains a sticking point. it could attract criticism for selling a historic european asset. the chinese electric vehicle maker profit doubled last year thanks to recovery in demand in the world's biggest car market. the warren buffett backing -- back company says income surged 22% in 2020 and profits could rise 166% in the first quarter. momentum has been aided by government incentives and china has rebounded the worst of the pandemic. to deutsche bank, the savings contract for another five years, the lender has also rebounded management boards. our bloomberg reporter has the latest on this. what are the biggest news coming out of this reshuffle?

>> our colleague in germany had broken a lot of this news even before kind of the fuller picture had come out. one of the surprising moves we had seen was the ceo -- the coo was planning to leave the company is part of the rebound. and remember this revamp is one of the biggest. the reason it was interesting to see is that frank was really a confidant who work in japan. he had a nickname, frank the tank, because of how rigorous he was with cost-cutting efforts and improving controls for deutsche bank. he was somebody that was really critical in the last couple of years, but it is a new era for deutsche bank. the other major move is fabricio compeli that was associated with the arm of deutsche bank and

will be leading the investment bank and the corporate inking unit. -- banking unit. it is a job that he is separating from his role as ceo so that it can be more in the hands of somebody else. they can oversee it and watch the deputies build up and be competitive in the business of trading and investment banking. shery: this is meant to cover kind of renewed razor focus on profitability. what other restructuring means do we expect to see given that we have already had so many job cuts? >> that is exactly right. when focusing on profitability, there are two sides to that coin. in the last couple of years, you see a lot of restructuring and shaping that can get rid of a lot of the non-core assets there. most notably today, a lot of that brokerage business help to them not really get caught up in

this debacle that had to deal with this set of margin calls on wall street. so it is a win for deutsche bank to be away from the worst of it. but that second part of profitability and growing that revenue, the deutsche bank fixed income business is one of the biggest on wall street. and there is a place that you can see them really compete with the big u.s. investment banks. and in the u.s. as well, they are known for their business of helping firms raise debt and working with private equity firms. especially the leverage loan markets that have been coming back. they are expected to come back in a much bigger way. it is about execution, watching them do their job, when deals, and become much more competitive at a global scale. haidi: and we managed to see deutsche bank significantly diminishing exposure without

incurring any loss. is this a systemic concern across wall street banks or some of the regional lenders in terms of the leverage pressures and access to liquidity that we see arising from this episode? >> a great question because systemic is a scary word. nobody wants to call it systemic unless it will bring the whole system down. and we are not seeing that in this instance. we see a major amount of pressure on some firms. we are still calculating how much that will be. but beyond that, it is pretty contained to a number of specific equities, which is giving a lot of the hedge fund community relief and a lot of the banking community relief. >> of course, some of the concerns for the banking sector overall as a result of these

block trades. investment banks facing significant losses from the fallout of this margin call story. this is bloomberg. ♪

>> we are getting some new market data out of japan. the ratio is 1.0 nine, coming in exactly as expected, just a touch lower than the january jobless rate. staying the same as in january, but lower than expectations. it is difficult, as we see, to really monitor the state of

emergency on businesses. companies are putting a priority on job security overpay. that is the take away when it comes to any indication of wage growth. a bit of weakness in the labor market situation. >> let's take a look at the day ahead in japan. the rate of covid inoculations likely won't pick up until may. japan is lagging behind other developed nations. we are also watching the maura. it plunged in trading -- nomura. it plunged in trading. in south korea, a cabinet meeting at 10 a.m. local time

yesterday, vowing to take strict measures against property speculation by civil servants. south korea also saying that astrazeneca vaccine delivery scheduled for march 31 will be delayed to the third week of april. haidi: let's turn back, sherry, to our top story, the fallout from archegos capital and the events that transpired leading to the blowup of the capital fund. agreement proves elusive. for more on this story, let's bring in sally bakewell. talk us through the sequence of events that unfolded in the most dramatic developments. sally: hi there, yes, what happened is, individuals were

allowed to lever up on the same names. in just a few days, they were giants in a small group of stocks using derivatives that had been exposed. they may not have been aware they were all doing the same thing for this individual, but it became a serious issue around last wednesday or thursday when it became clear that archegos was burning through limits that the brokerages had set. credit suisse, we understand, tried to reach some sort of temporary standstill to figure out how not to cause panic in the market. there was a scramble for some sort of a truce, but that seemed elusive. around thursday night, some

banks had already defaulted and try to call back some of the collateral. they were trying to stave off some potential losses. by friday, everyone was out for themselves trying to avoid losses. >> credit suisse plunging more than 15%. what should we be watching for next? >> we don't think this is done yet and there may still be blocks. there is something to look for their. thanks like -- banks like goldman sachs have managed to emerge without losses. those banks that probably don't fare well, we know they may have

to re-examine themselves. we also know that the u.s. security and exchange commission is monitoring the holdings. there were more than $20 billion in holdings. we expected there might not be too much widespread panic because it was confined to just nine names. haidi: you can read more about the saga in today's edition of daybreak bloomberg. it's on your terminal and available mobile -- on your mobile in the bloomberg app. we are half an hour from trading in japan. >> markets are taking concerns in stride. clawing back monday's losses.

most indexes are in the green. we are seeing some gold miners and iron ore names under pressure. the yen is trading at a one year low. there could be more things related to fundamentals. the lira at 8.26 this morning. a morgan stanley banker was appointed to replace the banker at the central bank. the -- the deputy governor at the central bank. there has been some calm amid the bond rout globally.

yields are above 3% on the china tenure. it was expected to draw tens of billions of dollars in inflows earlier this month. haidi: coming up, we take a look at bank earnings season continuing in china. this is bloomberg.

>> president joe biden will unveil his massive infrastructure plan on monday. it focuses heavily on plans to rebuild bridges, roads, and waterways. the administration is looking to spend three trillion dollars altogether on infrastructure investment but expects tomorrow's numbers to be smaller. the white house has not commented. the head of the cdc has issued her strongest plea yet for americans to wear masks and take covid-19 mitigation measures as cases and deaths are on the rise again. she is warning that the u.s. does not have the luxury of inaction. the average is now 60,000, up

10% from the prior week. >> i have to reflect on the current feeling i have of impending doom. we have so much promise and potential where we are and so much reason for hope, but we are not yet there. >> the u.s. is suspending trade with myanmar, condemning the violence against civilians. the move comes after 100 14 protesters were killed over the weekend -- 114 protesters were killed over the weekend. the national union says about 10,000 residents live along the border. ships have begun moving again through the suez canal after the giant container ship blocking the waterway was finally freed.

tides finally loosened the ship from deep inside the sandbanks. operations should resume normally within a few days. global news 24 hours a day powered by more than 27 hundred journalists and analysts in 120 countries. i'm vonnie quinn. this is bloomberg. shery: unexpected gains were boosted by rising demand for credit and loan pressure. the china construction bank and bank of communications all posted gains. in many cases, more than 40%. later on tuesday, we are keeping an ion earnings from the agricultural bank of china, bank of china, and industrial bank. let's bring a senior research analyst and. jason, thank you for your time today. i guess the question is, how sustainable is this earnings

rebound? jason: what you saw was a one-off. i think it was a combination of rebound and profitability that began in the second half. this is in line with the rapid rebound we signed the chinese economy as well. this is -- we saw in the chinese economy as well. going forward, we would expect to see profitability stabilize. shery: does that go for the stock rally we saw? jason: i think the stock rally has been quite prescient for the chinese bank. also the asian market and hong kong bancshares. i think at some point, this is part of the whole global rally driven by liquidity.i am a credk more at bond prices. but it's good that prices are at

this level because it allows banks to plan if capital is required. haidi: given the priority has been reestablishing the economic trajectory after the pandemic and the issue hasn't really been deleveraging as a policy priority, how concerned are you about levels of npl's at the moment in particular among regional and smaller lenders? jason: i think in china, there are a few levels to the banks. the large banks are doing ok. the risk is in the regional, smaller banks. they are less profitable. for the big banks we are talking about today, i think generally, the quality level has mostly increased quite a bit.

there are some levels of delayed recognition. i think asset quality is one thing to look at for 2021, especially as easing measures start to be written off by governments. that said, i think the capital buffers the large banks have put up over the years are kind of a backstop against potential credit losses and we don't see any major asset quality issues. shery: what kind of quality outlook would be expected to boost the earnings outlook? jason: i think generally is the economy recovers, monetary policy and fiscal policy have

become less supportive of degenerate easing. i think monetary normalization is a good thing for the banks because as we have seen already in 2021, rates have been rising and this will likely push up asset yields. i think what pboc might do is because of this whole renewed focus on combating financial risks after the economy is more stable, there might be potential rate hikes, perhaps later this year in the second half, in the next few months. that is something i am definitely watching for, when monetary conditions tighten further. haidi: what are you seeing in terms of the measures we saw

from authorities to take the bulk of burden, really keeping afloat pandemic hit firms. are we going to see more easing of those requirements? jason: those are undercut. even though there are two sections easing in march, there was still some guidance for banks to continue lowering financing costs. i think this regulatory pressure has eased somewhat, and i think the focus will be for the banks to recalibrate their support. this is done through a requirement called inclusive lending, which the big banks are required to grow this year. that is a target of a segment of the economy, not so broad-based.

haidi: always great to have you with us. jason 10 from creditsights on chinese banks -- tan from creditsights on chinese banks. let's get you a check of the latest business headlines. the activist investor had hoped to find a private company by the end of the first quarter, but in a letter to investors, he said he would not be in a position to. he held talks with airbnb about taking the company public. last week, regulatory filings removed ownership caps and added

language. this indicates major changes for would fund. -- wood's fund. talks are not in the best interest of the company, says chubb. shery: wall street banks have been summoned by regulators after the forced block trades and blowups we saw in the market. an investment firm spent monday briefing u.s. regulators. washington is now starting to dig into one of the biggest fund blowups in years. the sec summoned the banks for a hasty meeting according to people with knowledge of the matter. this is bloomberg.

shery: breaking out of japan, we are getting february retail sales. they showed growth of 3.1% after a two month contraction. it's a smaller contraction the unexpected of one point 5%, a contraction for a third consecutive month. but the numbers look more

positive than expected despite that extension of the state of emergency in japan since february. companies around the world are grappling with a shortage of the crucial technology we rely on every day. the semi conductor business can be lucrative. china and the u.s. compete for market dominance. executive editor for asia technology explains how we got here. peter: why is the world short of computer chips? makers are having to close factories in asia, europe, the united states. even giants like samsung are warning about severe shortage. here's what you need to know. this really all began at the start of the coronavirus pandemic.

automakers anticipated demand was going to fall pretty sharply, so many began cutting their forecast for the year ahead. that led them to close down some orders they had planned and scale back their own production until their suppliers we don't need as many parts as they had originally anticipated. the thing was, there was actually a tremendous boom in demand for many of these products as people were stuck at home, working from home, needing more screens, wanting better smartphones. they began to buy a lot of this technology. automakers were surprised people decided they wanted to drive more. they wanted to be on the road so they were more protected. the trouble was, after they had told suppliers they didn't need as many parts, they had to go back online to get more chips. why can't we make more chips? well, the tricky part about the semiconductor industry as it takes a very long time to scale up production.

a fabrication facility can take years to build and tens of millions of dollars to invest, and then you have to refine the manufacturing system so you get a high yield of chips. it's very challenging to do and it takes chipmakers a long time. they may be able to bring more capacity online for quite a while. the other issue is they don't want to scale up now for demand they are seeing now in case that demand is temporary. in the future, they get their facilities online in a year, two years, three years down the line and the demand has disappeared. who are the best players in this space? there are a number of big chipmakers that contribute different kinds of components. intel, of course, makes many processors that go into laptops. samsung makes memory chips that go into smartphones and a number of different things. one of the key areas is

manufacturers that make chips for other manufacturers. samsung is the second busiest -- second biggest. they designed for qualcomm, apple, nvidia, and a manufacturer those chips. right now, it is hard to get extra capacity at the high-end of the market. samsung in particular is in short supply. they are to ramp up production to meet the surge in demand. there is also a huge surge in demand in different areas of the supply chain. for example, you have something called a display driver, which is not a high end chip. it's a very inexpensive piece that costs about one dollar to help illuminate an lcd display. it's hard to get enough display drivers in the companies that make those kinds of display drivers have not been able to ramp up capacity given how

suddenly the increase in demand has come on. why does all of this matter? one of the questions that has come up because of the semi conductor shortages is whether countries need to have domestic supply chips to be able to protect their own economies. you see this question being asked in the united states, europe, and china in particular. the biden ministration has gun to examine policies related to manufacturing in the united states. china is determined to build its own domestic chip industry. the challenge is it takes years of planning to build this kind of capacity even if you have the right technology and they are not going to be able to address the current shortages any time soon. the big question is how long the shortages are going to last. it will be different times for different parts of the supply chain. but we are hearing from companies and executives that they anticipate this will last for several quarters and may

spill into next year. we had a couple interruptions recently that have aggravated the situation. there was a fire at a japanese company called renaissance that makes chips for the automotive industry. there was also a winter storm in texas that knocked out a lot of capacity for chipmakers there including -- i am peter elstrom with bloomberg news in tokyo. shery: we continue to see the impact of the global chip shortage on automakers. we are keeping an eye on share sales of a company planning to buy a u.s. developer. names are shortlisted.

shares plunged on monday. the bank may not be able to recover. jp morgan cut the stock. we are watching the open in tokyo. this is bloomberg.

shery: welcome to daybreak: asia from bloomberg's world headquarters in new york. haidi: asia's major markets have just open for trait, set for gains after bouncing off session -- for trade. they are set for gains after bouncing off session lows. the biggest margin call on

record is rippling across the financial industry. big banks have been summoned by regulators over their part in the chaos. and several big names are ready to report earnings. they include big banks as well as china's largest airlines. a lawyer says he faced vicious blowback over an internal probe. we have that report coming up. shery: breaking news. we are getting in email statement from archegos saying all plans are being discussed for the path forward. this is the company at the center of the forced block trades that forced them to sell $20 billion at archegos capital management. this may be the largest margin call in history. we are getting comments on the email saying all plans are being

discussed for the path forward. of course, we have seen wall street unraveling with this forced block sale. the banks will be taking meetings this week as well. we are going to be watching markets for repercussions. chinese apr's are at the center of the drama. they were under pressure during the u.s. session. let's turn to sophie for the south korea and japan opens. sophie: focused on numerous shares, which are heading lower. -- namura shares, which are heading lower. the stock trading the lowest since february 5. jp morgan coming through with the downgrade for the stock given that it may not be able to recover from losses.

the nikkei just holding as we digest some economic data. we saw a retail sales falling in february by less than expected. the open in south korea this morning, speculation and housing , and we are also watching him cook tire -- tonka tire -- hankook tire. the covert shipment of the estrogenic a -- astrazeneca -- covert shipment of the astrazeneca vaccine will be the third. taking a look at how shares are faring so far, upgrades are on the horizon for australian stocks, trading above 5800,

clawing back the losses we saw on monday. gaining some ground after seeing prices stabilize ahead of the opec meeting. the yuan on course for a week quarter against the dollar -- weak quarter against the dollar. we have seen an appetite for chinese paper to cup peeled yields -- pick up. yields are looking attractive. bonds have been a draw for investors. overall, when it comes to potential inflows, you can see inflows up to 150 $6 billion for

chinese bonds since september. haidi: we are going to stay with emerging markets. our next guest says emerging markets are a springboard. he joins us now. nader naeimi, we have seen currencies at their lowest since november as stocks go to havens. at what point, does the u.s. dollar become an impediment for equities? >> one of the promises of 2021 was a synchronized global growth of the u.s. dollar the benefits emerging markets. at the start of the year, there was a lot of pessimism for the u.s. dollar and a lot of optimism on the emerging-market front.

i think we have seen that. i don't think a higher u.s. dollar would become an impediment to the beijing market , but i think when we have the context of synchronized global recovery and the pandemic and a fed rate hike is years away, it's unlikely we will see the u.s. dollar appreciating anymore . historically, a stronger u.s. dollar needs a higher rate and that's what we don't have right now. haidi: in terms of selective opportunities that you see in emerging markets, where do you see the bargain-hunting to be had, given that we have seen this moderate correction? >> when you look at em equities as a group, they have unwound the gains of 2021 and are flat

now. when you look at 2018, 2015 rates, that is a cause for nervousness. even in strengthening commodities, it makes a huge difference. i prefer commodity exporters. obviously, covid has hampered numbers. the impact has been a kind of headwind. it's accelerated in the u.s., the u.k., and emerging markets. even china had a massive

correction. as a group, i like the emerging markets. shery: what about individual countries that have already started hiking rates like brazil? do you still find opportunities in parts of those markets? >> it's a good point. we could also call them diverging markets. some are seeing rate hikes. some for good reason. some for bad reasons. they don't have a commodity group, the central bank is under pressure and raising rates. in brazil, a commodity exporter, they are raising rates in response to better conditions and may be. it's not a bad thing, very different from the past when they had to raise rates to protect the currency.

for those countries with commodity exposure, i'm staying away from turkey. >> speaking of commodity exposure, do you see any breakout opportunities in the australian market? >> commodities have had a decent gain. i call it the commodity group two. the first we saw was china industrializing. while the semi's and copper from solar panels, what have you.

it's a commodities boom we've been going through. a number of mining companies in australia benefit from that. apart from that, the financial part, in a world where it's hard to get any yield, there is some opportunity to get high yield gains from banks. positive leverage in banks and dividends on borrowing costs. shery: we always appreciate your thoughts. nader naeimi. we do have breaking news, the market falling to its lowest level in two months following a plunge in the previous session after they estimated the amount

of a claim against an unnamed u.s. client is about $2 billion. the client is archegos. we just got a statement from them that this is a challenging time and all plans are being discussed for the best path forward. for the latest statement coming from archegos capital which has been suffering from forced sellings around $20 billion in a group of stocks. let's get to vonnie quinn with the first word headlines. vonnie: ships are once again moving through the suez canal after the giant container ship blocking the waterway was finally tugged free. high tides helped listen the ship -- loosen the ship from the sandy banks. hundreds of affected vehicles are ready to make their way through.

the u.s. is suspending all trade dealings with myanmar until the democratic government is restored, condemning the violence against civilians. the move comes after at least 114 protesters were killed over the weekend. fears of the civil war are rising after military airstrikes against one of the largest ethnic rebel groups killed three people. the korea national union says about 10,000 residents are on the type order. japan says the vaccine rollout will be slow and won't ramp up until may to ensure they are working properly. vaccinations for those over 65 will begin in about two weeks. less than 1% of the population of japan has received a single dose. hong kong is taking steps to further reopen its economy, raising the mandatory quarantine

from 14 days to 21. discussions over travel bubbles with several countries are set to resume, using travel as an incentive to boost the low vaccination rate. global news 24 hours a day on air and on bloomberg's quicktake powered by more than 2700 journalists and 120 countries. this is bloomberg. haidi: still ahead, chinese airlines are some of the earnings on deck. coming up next, the fallout from the biggest margin call on record continues to route wall street. we take a look at derivatives at the heart of it all. this is bloomberg.

>> incidents like this can shatter confidence. >> it will take some time for

the bodies to float to the surface. these things percolate through the system. >> it is very specific and related to one set of positions. >> we are just not seeing the kind of crazy activity we saw on friday. >> these events have happened before. this shouldn't be noon use. quite -- new news. >> there were some pretty good buys to be made on friday, so try to take advantage of that. >> we should take a page out of their book. >> keep an eye en if there is more of this to come. >> it's way too early to give the all clear. shery: wall street banks are also grappling with the fallout from the implosion. sources saying the sec summoned -- sec summoned the banks for a hasty meeting on mondays after -- on monday after one of the biggest blowups in years.

it has drawn attention to the financial instrument used. it seems like everybody is talking about this. it's not surprising the sec has jumped into action. >> anytime you see these kinds of things in the financial system pop up in the news, regulators are going to take an interest. there are a couple of avenues they can pursue. one of the interesting things is how archegos was using derivatives to build exposure to a single -- a bunch of single stock names. it allowed it to make these big, leveraged bets on the direction of the stock, but of course, when the stock starts going the wrong way, it sort of collapses and there are margin calls and

the brokerage is affected. you can see the sec taking an interest in the derivative strategy, taking an interest in the fact that a fund would be able to build up huge exposure that nobody knows about through derivatives. the fund usually has to file for ownership of an individual stock. the other thing of interest for regulators and prime brokers is is it normal to have six or seven prime brokers providing a maximum amount of financing and leverage and seemingly not knowing what you're are doing with that financing? haidi: hindsight is always 2020 when it comes to market explosions, but this has happened before, back in 1998. should banks have known better? should regulators have done more? tracy: that's always a good question to be asking. should the banks have done

better? there are shades of lcb, and thus. you have -- lcb, and this. they were supposed to agree not to sell or work out a way of exposing the collateral to minimize losses for everyone. that doesn't seem to have happened. one or two banks rushed to get out ahead of everyone else. there are also shades of lehman brothers in this and i don't mean to imply it's as systemic and issue is lehman brothers, because it's not, but if you remember, lehman brothers try to conceal the true financial health of the balance sheet. you can see a parallel here in the way archegos was using derivatives. the final parallel has to be with gamestop. we saw a bunch of retail

investors pile into single stocks using a derivatives contract to try to move the underlying price by getting a bunch of dealers to hedge out there exposer, and it seems like archegos was doing something similar. it had big exposure to single stocks. when things started to go wrong, it fueled the downward movement in the price. if you think regulators were taking a look at gamestop and how hedge funds were involved in that saga, you can bet they will be taking a similar look at what archegos is doing. shery: stay tuned for the next developments. tracy alloway with the latest. you can learn more about the archegos saga at the online edition of daybreak. coming up, the bond index adding

chinese credit for the first time. this is bloomberg.

haidi: a quick check of the latest business flash headlines. agl energy is planning to split into a structural categorization. new agl will be a retailer while primeco will be an electricity generator. agl will address the move with shareholders and regulators and expects to complete the move by the end of the 2021 financial year. he chinese automakers potential bid for a truck and bus company is said to be progressing according to sources familiar with the plan. if a w and cnh have been in talks -- faw and cnh have been

in talks but the price remains the sticking point. the australian family has been criticized for selling an historic asset to a foreign buyer. profits more than doubled last year for a warren buffett back company. they expect profits to rise as much as 166% in the fourth quarter aided by government incentives and china's rebound from the worst of the pandemic. haidi: the ftse russell will begin adding a government bond index in october. at the same time, the index is adding india to the watch list for potential reclassification, downgrading malaysia as well.

let's catch up with china. a disappointing year for assets like the yuan. we have seen foreign interest swapping into chinese bonds as a haven. >> chinese bond inflows have called for the renminbi. the inclusion is kind of disappointing and against market expectations for about twice the pace. this reduces my calculated pace of inflows to about .3% of gdp or something closer -- from something closer to .7. so it's slightly disappointing. haidi: what about malaysia? >> a number of investors expected malaysia to be kept on the watchlist for reduced market accessibility. the fact is probably slightly

positive. it's mitigated by the fact that malaysia has enjoyed strong inflow since the recovery from the covid shock. the margin is quite positive news for malaysia. shery: our bloomberg emerging markets reporter there. let's get a quick check of markets. we are seeing the nikkei up by .1% as we continue to see pressure for the japanese yen. it's at its weakest in about a year. we did get some solid numbers when it comes to eco-data and retail sales beating expectations and the unemployment rate coming in at 2.9%. the kospi is higher by .6%.

we are seeing the korean won under a little bit of pressure. we do have economic data later this week including export numbers that could come out stronger. consumer discretionary and financials are leading the gains on the kospi. haidi: let's take a look at fx trading. we have repercussions from the strong dollar story. the yen at its weakest level in about a year against the greenback. global economic outlook continues to support the dollar. the dollar is something of a haven currency. we are also seeing a bit of moderation when it comes to the aussie dollar. consumer sentiment numbers came in a little better than expected , a rise over the previous week. coming up next, the bank of

china among the slew of earnings coming out of china. this is bloomberg.

bonnie: this is daybreak asia, this is first word headlines. saying the virus -- vaccination from moderna and pfizer was effective. this as to evidence that technology help reduce the spread of the virus in the real world conditions. and the strongest plea yet for americans to wear masks and

stick with covid-19 mitigation measures. the cdc director's warning that the u.s. does not have the luxury of an action. the seven day average for daily cases is now almost 60 -- 60,000, up 10% from the prior week. >> we have so much to look forward to, so much promise and potential and so much reason for hope, but right now i'm scared. bonnie: the prime minister of england said they are on track to lift restrictions by june. saying the country's infection rates are the lowest in six months. however, he warned against becoming too complacent. >> i don't see anything in the data right now that would cause us to deviate from the roadmap.

we've got to remain humble and we've got to be prepared to do whatever it takes to protect the british public, which is been our goal throughout. >> 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 vonnie quinn. this is bloomberg. haidi: earlier of course we had erroneously said that malaysia had a downgrade and we receive clarification that that is not accurate. it was removed from an exclusion watchlist, giving a bit of respite to the nation's debt market, but it did remove it from the watchlist of possible exclusion. malaysian policymakers have made progress when it comes to a lot of the reforms to get us to this

point. let's take a look at what you're seeing on the markets. lots of action as we continue to process the fallout from the trade drama. >> modest move to the upside and downside for asian stocks, the aussie share price is now heading lower with bhp, rio and fortescue. that's get to number of, that stock -- nomura extending stocks . stock was downgraded at j.p. morgan, officer singh will be impossible for shareholder returns by fiscal 2020, so nomura is the drag on asian stocks. a check on currencies, tuesday

set for the best quarter in a year for the greenback. following the change of the turkish central bank deputy governor this morning, as compared to when the central bank governor was ousted. and the offshore yuan trading at a four month low, the worst month of the year for the currency. china's 10 year yield, after we learned they plan to include chinese bonds on the global index. shery: and were headed toward the chinese open, and extremely busy day on the earnings front. for a preview of what's coming up, let's go to david ingles. anything in particular that we should be focusing on?

david: when we look at this set of earnings, it will be a reminder, just being objective here, that if we look at 10% cell growth, 10 point 5% across margin, 92%. the reason i bring that up is, the conversation around the company is not so much whether it's a significant company, but sentiment for chinese market. there's a great piece today, when you look at whether or not chinese stocks are looking to find the floor, this is obviously a stock to watch. is the heaviest weighted stock on the csi 300. it's now related to the index itself, so essentially where this goes, that's probably the general direction of the index. it would be a reminder that it's still a dominant company within its own space.

haidi: you got the big players when it comes to the banking sector, you are more interested in -- david: we were speaking with one analyst last week, she brought up one thing. new look at china merchants bank, and i ask why this was one of his favors. he basically said because it's a bank that's a good example of how technologies being used to transform the business. it's now china's third biggest bank by market value, now larger than bank of china and act bank. it has really allowed technology to improve things by customer acquisition cost.

it is a great thing to watch, particularly with the big to lenders coming up. it might also be good to watch the smaller and more private banks. haidi: anything else when it comes to those that you mentioned? david: there was a beat on friday on construction bank. saying that a lot of the beats and something else to watch is nonperforming loans in low loss provisions, much less than what we had in the second and third quarter of last year. that's contributed to the bottom line and another metric we will be tracking later today. haidi: david ingles there with

the look at the earnings day had on mainland china. lots more including the big airlines. we will preview those results, next. this is bloomberg. ♪

shery: some of china's top

airlines are due to release results tuesday and will likely give investors a better picture of how the sector's position for the next couple of years. we have seen chinese airlines do better than others because i have a mainland market to rely on. what are some of the themes you will be watching out for this time around? >> i think what we are most interested in seeing, especially this financial cycle, is exactly how the airlines are positioned, essentially how healthy they are, how much cash they have, etc. one of the biggest catalyst coming up is how they will meet demand globally. how they will take advantage of a lot of the opportunities and expanding in a post-pandemic world because we do know that a lot of airlines won't be a strong and well-positioned as the chinese airlines. so what we really want to see is that they actually do have that

capability. shery: you have china southern as your top pick. is that because of their higher mastic market exposure? luya: we do think because of their domestic exposure, it's the strongest of the key three airlines. one of the things we've been looking at that we think is really interesting is the fact that china southern don't have the alliance ties because they left their previous alliance. we think this means that basically in that kind of post-pandemic market, they will be able to have a lot of cooperation and strike up a lot of new ties with the top-tier for the biggest brand in the aviation world. that actually is something that might be a major advantage to them, but like the other airlines, we still have to see if they really do have basically the cash on hand, the liquidity to do those things as well. haidi: what are the factors you

are looking at going into continued performance? with the idea of potentially taxing passports being implemented. luya: vaccine take-out is basically the biggest, most important number we are looking at right now because it is a direct indication of how quickly we can see the full recover -- recovery of the domestic and global market. the vaccine passport is also very important because even if we don't get to herd immunity for a certain level of vaccinations, with the vaccine passport we can still see a certain level of recurring outbound demand, of international demand. if it happens earlier than expected, that would be a major boost for the chinese airlines as well. those hinge on some things that are completely unprecedented in history but those are key to watch. if we -- if there are major

movements, we anticipate share price going up noticeably. haidi: what about pressure from the volatility we see in oil markets? luya: fuel hedging is a big issue for chinese airways. fuel prices were very low. now we do see prices climbing up once again and knowing that the chinese airlines are resuming a lot of their operations potentially at full blast, full capacity, this year we know that fuel costs will be another thing to watch, and basically we are returning to 2019, 20 18 levels of fuel costs comprising one of the top segments. it's something we are looking at and something we hope investors will once again resume looking at us well after the brief break that we had in 2020. shery: how sustainable is the

run-up in chinese airlines stocks? luya: right now, we do see gains in recent weeks and months. we've seen the chinese airlines very much outperforming a lot of other comparables here. there is room for growth, because we know that they are a major catalyst, the vaccine uptake, the vaccine passport, expansion of the chinese airlines over their foreign peers. based on those things we think there's no room and that kind of growth hasn't met its absolute limit yet. we also want to remind people that airlines stocks tend to move very cyclically, after a strong run they tend to stress. but right now because of the special nature of the pandemic, we think airlines stocks for the big three have a lot of room to grow.

haidi: a preview of those airline earnings out of china. we do have some breaking news, bloomberg story saying trading is taking place on the secondary market, valuing the company at 250 going dollars or more. that valuation coming as a surge in recent weeks. investors getting confident in the business as well as hearing from the founder about an initial public offering. the last valuation, the last round of fundraising the company was valued at $140 billion. shares trading at roughly $200 billion valuation private transactions just a month ago. at that valuation, this is a

company that will be more valuable than exxon mobil or coca-cola. coming up, nissan's former top lawyer said he questioned the company's probe into carlos ghosn. this is bloomberg. ♪

>> a quick check of the latest business five headlines this hour. deutsche bank extending contracts for than nash for five years. to focus on revenue growth. saying the changes marked the next phase of a massive restructuring that began back in 2019 and included 18,000 job cuts. and allowing more assets in single securities and taking on more risk. regulatory filings added language and considered major -- major changes to prevent the firm from concentrating too much risk. and the investor hope to find a

private investor by the end of the first quarter. saying he would not be in a position to announce a deal. he held talks with airbnb. shery: nissan's former top lawyer after tech -- questioning the integrity of the encourager carlos ghosn's -- after writing a memo to the nissan board outlining topics of interest, he was frozen out. here is part of the report from quicktake storylines. >> within three days of me submitting that, the independent port -- board of directors, i was removed from the executive

contact planning. i was then told that i could not attend board meetings anymore. and up until that point, i'd attended every single board meeting. i was then also told that after eight years of being in japan, i would be going back to the u.k. >> so he was essentially being reassigned to get him as far away from the internal investigation as possible, and also to a certain extent, in retaliation to some of the issues that he brought up regarding the internal investigation. >> first of all, his immediate responsibilities were taken away from him. eventually he lost the coveted general counsel title. but it didn't stop there. toward the end of his stay in japan, rob and his wife are convinced that they were being followed. >> during that period, i had noticed that while driving my

car, i would have other cars following me. first time i noticed this was around mid march. i was driving and a gray van pulled out and just literally started to follow me. i noticed someone in the car taking pictures. lo and behold, we were actually being followed, either by people on foot or other individuals, two or three burly men in a car, different cars at different times, following us around. they were following the family as well. >> and this all culminated in rather dramatic events in the middle of 2020. where nissan had hired a legal team and had obtained an unusual court order from the district

court to basically do a search of his home and seizure of his corporate laptop and phone, and other documents. >> it was a pretty extreme way to treat someone who spent 16 years in the company. >> it was even more weird, because i had highlighted two directors that certain nissan executives were trying to recover this from the phone while i was still in japan. i was very concerned, because it had evidence on their related to misconduct and other forms of inappropriate conduct. it was just another form of intimidation, another form of harassment. forcing me almost to leave the company in the country.

because once they had retained -- obtained these items, we were still followed, which i just couldn't understand, what is the point of doing that? this is not a car company. this is not the kgb. haidi: in a statement, nissan said it is contesting the claims and saying it contains numerous uncharacterized allegations. let's get more on this from iron senior editor in tokyo. can you shed some light on why these? are important? >> senior vice president of nissan was also implicated in

some of the alleged crimes that carlos ghosn was said to have committed. he had struck a plea deal with prosecutors to agree to cooperate in exchange for immunity. he was also in charge of overseeing the investigation, and right there, you have an inherent conflict of interest, people looking into matters in which they were involved. emerging after they organized in 2019, that others had received conflated stock link compensation, and that became part of the investigation. ultimately what happens is that if you don't investigate the right way, the company itself is at risk because it is involved

in lawsuits around the world. so as a general counsel, highlighting those is what linked to a lot of the retaliation. haidi: the ongoing scandals have really hit nissan, the company. what is this that us of the firm and its reliance with mitsubishi motors? >> the turmoil that it triggered internally as well as the power struggle has really distracted from the bigger challenges facing the sun its alliance partners. there are big trends sweeping across the auto industry and autonomous dragging. it's just left to pretty much whatever we can understand.

shery: let's go back to sophie and get a check of what we are watching on the markets. sophie: the u.s. will begin seizing gloves produced by malaysians. rwandan chip stocks, and the chip supply crunch reportedly will last another two years. pulling up the chart and turning to china, some saying chinese stocks have hit a bottom. the s&p 500 with the biggest drop against goal. less than half the index members trading above 200. haidi: coming up, we will assess

the business climate in china in the future of e.u.-china relations. this is bloomberg. ♪

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>> it's 9:00 in shanghai. i'm paul mckenzie. david: counting down the deal, let's get to your top story today. ft etsy russell, will join the flagship index --ftse