haidi: good morning. shery: welcome to "daybreak: asia." treasury yields closing on 2%. traders are assessing if economic growth can withstand rate hikes.

softbank starts the ipo roadshow for a chip arm. haidi: as we get into the staggered open, quite a few stocks to watch. a robust outlook for the broader economic conditions. we are seeing a flat start to trading. new zealand up by a 10th of 1%. chicago nikkei futures pairing some of the earlier gains. we saw oil slipping for a second day on the anticipation of progression in the iran nuclear talks. uncertainty over what the demand and supply momentum dynamic looks like. we will be watching the energy

players because energy stocks have confusion -- continued to hold onto the gains despite the pullback we see in crude prices. the 10 year yield and global yields remain in focus. tells us how much pressure there is on global yields. shery: treasury futures holding steady at the moment. we have seen the 10 year yield topping the 1.96 level. many are betting that the 10 year yield will be heading for 3% this year. we are seeing upside after the broad-based rally we saw in the new york session. cyclicals, small caps rallying. the s&p 500 closed near session highs. apple and microsoft, we will continue to see if we see this momentum into the asian session.

haidi: let's get more on the rising tide with our chief rates correspondent. when it comes to u.s. treasuries, it could be an interesting asian session. repatriation flows have been part of this. >> it is really concentrating on what's going on with long-term demand for treasuries. the selloff that have come as rate hikes ramp-up and also as yields move back into positive territory in europe and higher elsewhere, the money that is leaving the treasuries market will it come back in? that will tell us about whether treasuries can get toward the 3% yields some talk about perhaps a little bit prematurely seeing as how we are still struggling to break the 2% barrier for now. shery: with the global bonds and

the way the treasuries are going, it's not surprising we are also seeing yields toward the upper limit of the boj tolerance. will we finally see the bank of japan stepping in? >> the bank of japan probably will step in at some stage. it depends on how rapid the move is. if it's a gradual move, for every two or three basis points in treasuries, japanese yields are climbing half a basis point. eventually, they get .25 at a time when treasuries are well north of two. the boj could possibly not step in and either explicitly or implicitly send a message that this is part of the natural process global yields. in a lot of ways, you would almost think the bank of japan would welcome the opportunity to ease back from its seemingly

endless quantitative easing. it is kind of an admission that it hasn't managed to meet its targets despite so many years of bond buying. if the world is helping to push it toward a place where it would like to go, that might allow it to be a little more relaxed about yields reaching what it said is a tolerance level and it might even allow that tolerance level to rise slightly to acknowledge that the global inflation outlook is so hot. shery: our chief rates correspondent there talking to us about the rising yields. and we go from there to the rising chinese equities. >> according to our sources, we

will see whether this positive sentiment can last because as you know, it has not in a good year for chinese equities. they entered into a bear market, the csi 300 post lunar new year we have not seen sentiment turnaround despite the fact that we have seen policymakers shift into a progrowth stance. rate cuts did not do much for sentiment last year. is a lot of interest, what prompted this. the energy space saw a big used. financials, the brokerages had a field day. also the utilities as well. at the end, we saw some heavy selling. during the afternoon session, you saw the paring back of losses.

use of the sentiment continuing on with the nasdaq golden dragon china index of the u.s. listed chinese shares pounce back. that benchmark up poster for percent on tuesday. a lot of questions on whether this can last as well. there are plenty of reasons to sell. we saw things like a biologics company plummet 20% in hong kong, it was a record drop after they found out they were on this u.s. unverified list. the u.s. china tensions still simmering. we got headlines yesterday about the pboc calling some of these cross-border trading apps of board -- from brokers illegal. last year, a lot of these fintech have been on the decline since then. maybe we will see if the good vibes continue. the pboc talking about easing in

terms of rental homes. haidi: softbank's representative has confirmed going public in the u.s.. >> convinced that it is going to the golden age so we don't want to sell too much. that is my feeling. haidi: -- admitted that the storm has only gotten worse for the japanese company despite edging back into profitability. we talked about these developments at length yesterday. what did we hear from him in the earnings call and how does it indicate the role of the ipo and how crucial it is for the pace of this ongoing recovery? >> it was an interesting

earnings call. he typically's pens -- spends most of the time going through the is this units talking about their various successes for the quarter. now that they officially called off the deal with nvidia to sell arm, they are going to move this ipo. he said they prefer to do it in the united states and that they had high hopes for the public offering. he was in roadshow mode. he was talking about the potential for the business, how important their designs were to the technology industry, how quickly its technology was being adapted. he was talking up the prospects for the company. he also brought on the new ceo of the company to talk about how the business was going along with the seat fo. -- the cfo. they were pitching the arm

story. shery: is there any chance that they will get to that similar valuation through an ipo? >> that's good question. the nvidia acquisition was valued at $40 billion when it was first announced 2020. in that increased because a chunk of it was in stock. nvidia stock went on quite a run after that. right now, investment bankers are doing the math on what that valuation is likely to be as it goes public. it is still a few months away. as we have talked to analysts about this, it would be a stretch to get the same valuation for arm and also softbank is not going to be selling the entire thing. he wants to sell part of the company, but not the entire company. for them in terms of raising cash, it's probably not going to be as profitable as it would have been if they had been able to sell the business outright to nvidia.

shery: let's get vonnie quinn with the first word headlines. vonnie: russia is counting down to emmanuel macron's talks with vladimir putin. amanda micron said vladimir putin agreed to not take any more military initiatives in the region. the kremlin refused to make any comments saying russian troops were due to leave belarus later this month. >> he told me he would not be at the origin of escalation hurried that is important. vonnie: canadian lawmakers have expressed worry about protest. truckers protesting vaccine mandates have paralyzed traffic on a bridge which carries 25% of traffic in between the two countries.

demonstrators say they won't leave until all covid mandates are lifted. the u.s. department of justice says it seized $3.6 billion of bitcoin stolen during a hack in 2016. officials have arrested two people in connection to the incident. the doj says it's largest financial seizure ever and prove cryptocurrency is not a safe haven for criminals. hong kong has announced the strictest covid rules since covid began. authorities say they don't plan to go door-to-door to check. public gatherings are being limited to two people. a list of venues requiring vaccines has been expanded. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg.

haidi: let's get you a check of some of the movers we are watching. bank of australia is the big one. australia's biggest lender reporting a healthy first-half profit. beating expectations with positive commentary from the cfo. mineral resources, we are watching there as well. it is trading lower by 710's of 1% after its results or 7% which is better than session lows. still ahead, a take on softbank's latest earnings.

there barely edging into rough ability but all focuses on the road ahead for the arm ipo. up next, ahead of strategy sharing her global macro outlook whether she thinks risks to tightening have already been priced in. she will be joining us next. this is bloomberg. ♪

shery: let's look at sovereign bonds. we continue to see the global bond rout. the 10 year reached a new six-year high. we are waiting to see whether or not we might be -- an unscheduled operation by the bank of japan. we continue to see yields rallying. we have seen the 10 year yield jumping to the highest since march 2020. the same for the kiwi 10 year yield. we are now seeing treasury futures staying unchanged at the moment holding steady after the 10 year yield surpassed 1.96 level. some investors are betting that it is heading for a 3% level this year. haidi: let's get more analysis.

our guest is ahead of asia strategy. when it comes to what we continue to see with the global bond selloff, are we getting close to a point where the central bank risks are being priced in? >> that is difficult to say, because right now aside from the fact that the u.s. treasury bonds are being sold off, the stress is spilling onto the high-yield bond market. this is not something that happened last year. previously, even though the 10 year government bond yields would rise, the high-yield bond market continues to remain resilient. considering that the market is now pricing in more and faster hikes by the fed, it is not the actual hikes, but the pace of the hikes. it looks like the pace of the expected hikes may be too much

for the corporate's to handle. the corporate's are going to be squeezed on both ends. first, the margins are want to tighten. and the cost of funding is also going to go up. that is a narrative that may just challenge the resilience of the risk assets. haidi: where would you see the opportunities across asia? >> our view is that you should just follow policy. even with the recent challenges of the chinese equities, the fact that the pds he -- pboc is clear on easing mode, there is more upside risk to the chinese and we remain of the view that the chinese a-shares have room to rise by 20%. if only it could ride through the current volatility. >> is that because you are expecting more easing on the monetary and fiscal front? >> indeed paul -- indeed.

they have really gotten more serious in their policy front. aside from the fact that the pboc has already cut the requirement ratio by 100 basis points since 2021, we still see a further 50 basis point cut in rrr and another cut in lung prime rate. -- loan prime rate. once the fed starts hiking, it may actually tighten parted the focus shift toward even more fiscal spending. shery: we have other central bank decisions across asia this week including and in asia, thailand, india. the expectations are not for much change aside from india. where are they going and how will that divergence with china play out? >> as far as the asian central

banks are concerned, first of all, i think bank of thailand is in a difficult place because even with the major central banks hiking, there isfor the bank of thailand hike at all. until there is a return of the tourists into the economy, there is really no chance for the economy to gain traction from here parted until then, it's going to be hobbled by the domestic demand. also, while there is an expectation that tourism would improve in 2022, the fact remains that as long as the chinese travelers are not traveling, the tourism will remain under stressed. the bank of thailand will not be able to raise interest rates even if the fed were to hike five times this year. >> it is always good to see you. the seb head of asia strategy.

we will have more economic alice -- analysis. a principal economist joins us in the next hour. this is bloomberg. ♪

shery: the u.s. seized bitcoin stolen during my 16 hack of a crypto exchange. two people have been arrested in the biggest financial seizure ever. how significant is this development? >> it is absolutely massive. $3.6 billion. this is made more so by the fact that bitcoin has risen so much since 2016. it was about $70 million at the

time of the hack. it is sending ripples through the cryptocurrency industry where it is just a reminder that investigators can go after these things. >> it tells us a lot about the traceability of crypto parted what does it tell us about the use of cryptocurrencies? >> this is one of those things, crypto is often discussed in terms of fraud and illegal activities that occur using it. there is this issue where if you use it for these activities, you can get in trouble and it is traceable. in terms of that, cash seems like it is still more anonymous. crypto used to be thought of as more anonymous and there are cryptocurrencies that are more private. something like bitcoin can be tracked down over time. >> what are the issues when it comes to regulation and trying to avoid these terminal activities from happening again?

-- to avoid these criminal activities happening again? >> regulators are looking at this to see what can we do to make things more secure? one company said it worked with investigators to make this happen. we still don't know who did the hack. that is one thing this case has been silent on. regulators will be looking at this to see how they can do more of these things in the future and try to keep the safe. -- to keep the space or safe. >> commonwealth bank has topped estimates thanks to the recovering economy. posting cash profit from continuing operations of 4.75 brilliant -- billion australian dollars. the bank plans a buyback of up to 2 billion australian dollars.

a company saw 19 million active writers in the quarter lower than expected by analysts. sales were boosted due to driver shortage and an increase in airport rights. -- rides. a company says it expects the business environment to remain challenging and volatile because of the pandemic, inflation, and softening consumer sentiment. coming up next, softbank has started the ipo roadshow for arm a year early. this is bloomberg. ♪

>> we have consumer confidence coming through for the month of february falling by 1.3% year on year. this after we have seen negative growth when it comes to consumer confidence in that rating for a couple of months. february coming in at 108 falling from 102.2 earlier. that month on month contraction of 1.3%. this despite the record high

when it comes to the final three months of 2021 when it comes to retail sales. we had relaxed virus restrictions, holiday shopping season for christmas and new year's. when it comes to the start of this year, that has been peppered by some of the big disruptions coming through from high covid numbers and the spread of omicron across major parts of australia. staying with the pandemic, hong kong limits gatherings and private homes for the first time since the pandemic began. this in an attempt to keep residents from socializing. authorities are turning to strict measures to contain outbreaks. it is seeing cases doubling every few days. yesterday, we talked about the length that other cities and had to go to to get cases down from the level that hong kong is at the moment. what are the measures we are seeing?

>> we have tightened social restrictions because the government is doubling down on its dynamic zero covid policies. they will do whatever it takes to essentially quash the fifth wave. some epidemiologists and advisors to the hong kong government say this current wave as it is projecting right now with 620 five cases yesterday and another 500 preliminary positive cases tuesday, monday there were 607 cases. over the weekend, there were combined nearly 700 cases. you add that up, the trajectory looks like this could be a serious problem that will put further strain on an already overburdened system. you can see from the projections, one advisor to the hong kong government is saying that we could be seeing 10,000 cases per day if people do not stay at home or he did the

government's advice within a couple of weeks, we could have 10,000 cases per day. another advisor is saying that this current wave will likely not subside for another eight to 12 weeks. we are talking about two to three months more potentially of these restrictions. the new restrictions include public gatherings reduced from a maximum of four people down to two people. that doesn't sound like a gathering, it sounds like two people taking a stroll down the street in the world's most densely public -- populated neighborhoods. also public gatherings will be reduced to two families. how will that be policed and enforced? there are still a lot of questions about whether there's going to be even further restrictions if this outbreak continues. will there be total lockdowns like what we have seen in mainland china? still questions to be answered. shery: stephen will be back

later to discuss the covid regime. for now, let's get to vonnie quinn. vonnie: china has eased a year-long cap on loans to public rental housing. it is a sign that lawmakers are easing a clamp down parted banks had previously been required to trim their loan exposure, but as of late they have been encouraged to longmore. -- loan more. the wti has sided with korea concerning u.s. levees on exports of washing machines. the tariffs were proposed by the trump administration. the wti says the u.s. violated international trade regulations.

the indian prime minister party is rolling out campaign pledges ahead of an important midterm test in the country's most populous state. if it returns to power, it will offer free electricity to farmers and enact stricter punishments on forced interreligious marriages. ballots will be counted on march 10. the power of the dog has gained oscar nominations. warner bros. movie dune follows close behind with 10 nominations. the oscars will air on march 27. global news 24 hours a day on air and on bloomberg quicktake.

powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: let's turn to softbank. the leader says he is planning an ipo of arm in the ups. for more on this and the latest earnings from softbank, let's bring in the senior equity research analyst. always great having you with us. we saw him in roadshow mode when he was giving the earnings call. what do you make of these plans to ipo? >> to begin with, we expected the nvidia merger unlikely to materialize. he was making, you are right he was making it more like a roadshow highlighting that this is the ideal situation for him. even though had he been able to

sell it, the merged entity would have been and more powerful and the valuation would have been much easier. now in an ipo process, it's went be tricky. this is still a company which has lost money in the last three or four years. in current market situation, trying to get decent valuation for such assets would be tricky. we have to wait and watch, because we will need to wait and see what new businesses arm has developed. originally, when it was acquired in 2016, arm was primarily into smartphone chips. they license the chips. that market is more or less saturated. in recent past, they have managed to penetrate the market for service. we are waiting to see. >> it has also been a tricky situation for their overall business. their return to profitability,

but barely. he was your assessment of what you saw. >> this is an investment holding company and what matters are these assets including alibaba and others. what we found most shocking in those results were that softbank booked about $70 billion of losses on the public listed book. at the same time, it booked about $11 billion unrealized gains on private book. gains in private book and losses in public book. probably even more losses after december 31. what is exposing is a very big diversion's between private markets and public markets. on the private market side, it seems like nobody's doing that.

when we asked these questions, he basically said -- that was the most shocking thing that came out. the other thing that stood out was that alibaba, there were concerns beforehand two or three days back when -- [indiscernible] they were not involved in that kind of planning to sell stake in alibaba. >> is that the best way forward in terms of selling that alibaba stake? >> they are not selling all of it anyway. just a tiny part.

>> going forward, what other options remain? he talked about being within the middle of this blizzard. there is so much pressure for the arm ipo to go through. what kind of assessment needs to go through about the types of investments being raised? >> that's a good question. the bizarre thing is that between 2017 and 2020, softbank made a total of 150 investments. in 2021, they made 239 investments. so the number of investments has increased dramatically. the size of investments has gone down a fair bit. we wish they were a bit more careful in terms of the size and number of investments they are making. secondly, they do talk about ai all the time. some of these are ai.

some of them are simple technology investments. if you are investing in over or die -- -- doordash, something that inequities people have done for decades, that doesn't make it an ai. how do we define ai? we have to make it careful. we do have a buy rating for now. we hope they do invest carefully. >> great to have you with us. you can watch us live always, catch up on past interviews on tv . you can also dive into securities or functions that we talk about plus become part of the conversation by sending us instant messages during our shows. this is for bloomberg

subscribers only. check it out. this is bloomberg. ♪

>> we are tracking the fallout of the global supply chain crunch. protesters blocking traffic between the u.s. and canada to oppose a vaccine rules are further stretching and auto supply chain as it disrupts

movement through a key quarter with detroit. the situation could get worse within days. restaurant chain to polite has sided -- chipotle has sided the -- they warned that they might continue to have to increase prices. nhk reporting that the japanese government has decided to divert some lng to europe in the event that the ukraine crisis leads to supply disruption. >> aluminum which has surged to its highest since 2008. it is nearing an all-time record high as prices of the raw materials needed for refrigerators, cars, window frames, and plumbing show no signs of abating parted.

bloomberg terminal users can read more about those stories in our newsletter supply lines. i spoke to the former ibm ceo who now chairs the center for global enterprise about his outlook for supply chains this year. what role china plays in alleviating global constraints. >> most of the outlooks this year, 2022 will be much like 2021 as far as supply chain constraints. the wildcard is china. china is the world's factory. it has adjusted production based on covid, energy targets, and the olympics. if you think back to the summer games, then they cut back production dramatically so they could have less pollution for

blue skies. that is what's happening with the winter olympics. when the olympics are over, will it be like previous years on production jumped back or will it be different? that is the wildcard because if production comes in from china, will have stresses in other portions of the system just ticks and shipping. but we will begin to see some relief as far as the supply side. on digitalization, you can see the models that have worked successfully. the classic is basically the amazon model. or apple or a proprietary system that is totally digitized. they have been able to balance supply and demand. earnings have been good. fundamentally, they did this in a proprietary weight. they have the resources, money, technical capability. it is a proprietary approach. that is what's good to change over time, but that is the model

that other companies in the supply chain should understand and study. >> on china, how is there covid zero strategy go into affect what happens in the supply chain system after the olympics? >> you nailed it because that is the challenge. because of their zero covid policy, they have cut back labor and production capability. on top of that, what you don't see reported is that the government has set stringent energy requirements based on the production facilities. you take zero covid plus energy targets and that has been the issue as far as their ability to ramp up production. will that change? we will all see. the government can change their position on these things and take up production which will alleviate some of the supply issues. >> when we have spoken about china and the past, we always talk about the geopolitical tensions with the u.s.. have you seen that the coupling

between the u.s. and china on the supply chain? >> not yet. that doesn't mean it won't occur. i really don't think -- take political dialogue or rhetoric out of the conversation. will these two economies really decouple? i don't think so. it's $600 billion in trade to the u.s.. i don't think it's in anyone's interest to decouple the u.s. and china economically. i do believe there will be decoupling occurring, but not on a macroeconomic perspective. i think it's more in the future technologies where there's went to be more tension and perhaps them decoupling. i don't think it's went with the overall economy, but segments of the economy like the technology sector. >> nissan has weathered the chip shortage on the back of stronger demand.

the automaker boosted its profit outlook to $1.8 billion for the fiscal year. let's bring in our japan transport reporter. >> nissan had bright figures it announced yesterday. it boosted profit forecast above analyst estimates and that came off the back of a strong third-quarter. this picture we got from nissan yesterday really hints at where the auto market and where automakers are at this point in time. interestingly on the demand side, everything was really strong. strong sales, high prices on cars. that is leading nissan tuned -- to take more profit back on every car that it sells. that in addition to weaker yen

helped nissan boost profit forecast. that being said on the production side, it suffered in the recent quarter. in october through december, it cut output by double digits from a year earlier as it faces chip shortage is. the coo had an interesting, yesterday. basically going forward, nissan's growth is entirely dictated by its production. the more chips they get, the more it can grow. that provides a snapshot of where the market is right now. shery: we are expecting results from toyota and honda as well. it was the forecast there? -- what is the forecast there? >> we have those earnings coming out later today. given nissan's earnings, that cast a brighter mood toward

japanese automakers. especially given that honda and toyota have been stronger than nissan in continuing to produce cars especially toyota in the recently ended quarter was producing record numbers of cars . even though they have faced their own production pair backs due to shortages, they have been pretty sturdy on the production side. then on the demand side, they are witnessing the same kind of conditions that nissan is with strong sales especially in the u.s. and high car prices. we are expecting pretty bright forecast today. especially zooming in on toyota. the highest ever offering profit was in 2016 for ¥2.89 trillion. the forecast toyota gave in november was 2.8 trillion yen. we will expect those numbers out later today.

shery: we will be looking as well. we have plenty more to come. this is bloomberg. ♪

>> a quick check of the business flash headlines.

saudi aramco has revised discussions to build a complex in china. we are told that the early negotiations with partners including aramco. credit suisse is said to be cutting its bonus pool i 10%. the lender was forced to reverse plans to boost their pay after regulators asked it consider significant cuts. the reduction comes after fallout from scandals. shares in a cybersecurity firm surged on reports that it has an acquisition target of -- it is an acquisition target of microsoft. the deal would add to microsoft's range of products

for responding to threats. >> here are some of the stocks we are watching. in japan, toyota and honda are automakers we are watching given that they have earnings later today. coming off the back of nissan with the chip shortage and rising demand in car prices, we will see if that is translated to the rest of the japanese car market. we are watching samsung after the wto cited with south korea over trumps tariffs. we have also seen a few earnings resorts -- results out of south korea. we will be watching all of those names. coming up, we will speak to a top advisor to a hong kong chief executive about the restrictions and impact of the so-called

dynamic zero covid regime. we will also talk about the risk of policy mistakes and how that might impact the market outlook. market opens in tokyo and seoul, korea our next. this is bloomberg. ♪

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♪ shery: welcome to daybreak asia. haidi: asia's markets have just opened for trade. our top story, asian stocks sets to track wall street gains while 10 year treasuries close in. traders assessing if economic growth can -- fed rate hikes. china -- stepped in to save --

investors stressing over weak consumer trends. hong kong imposes its strictest covid rules yet. we ask our top adviser to the city if there is any end in sight. shery: japanese markets coming online. information, tech and consumer discretionary leading while -- is up .7%. one stock is nissan, set to rise after boosting their four year operating view. the japanese yen holding at the 115 yet will that she the level -- lab all. relation of policy tightening.

shery: the korean yuan also higher against the u.s. dollar. we are watching korean bonds as well because they did tumble in the previous session. not only given the --, but talk of a bigger budget stoking fears. we have earnings out of south korea. where are watching sk telecom and kcal gains. haidi: the global bond is front and center as the u.s. ten-year, 2% the level we are looking at near term. potentially that could get pushed in the asia trading session giving -- given most of the losses we saw yesterday. hard to tell if this is repatriation flows from japanese sellers. we will watch that as we see it holding steady at the moment. australian bonds dropping again after the fourth day of declines.

would it comes to australian bonds, equity markets looking ok. about .5% higher. we have seen gains across financials, the robo on earnings out of the country's biggest lender helping things along. we are seeing a big pullback with energy stocks trading in australia. 1.7% lower, the worst sector after a second day of decline for crude. new york's crude bouncing back a little bit. shery: our next guest says the risk of monetary policy mistakes have risen significantly since the latest round of central bank decisions read less discuss with daniel jarrard, senior market strategist at seyfried global strategies. we continue to see this global bond row, what does this mean for valuations and have your views on allocation changed since we have seen yields continuing to surge? >> it is starting to change a little bit. for the first time, i am getting

a little nervous about parts of the growth trade. not because i think that yields are going much higher this point. the problem we are having is that the risk of policy mistake is rising. the reason i say that is because typically we have divergent voices in policymaking committees and fomc commit etc. it seems like from the last presser we had following the s 1-c meeting there is widening divergence about what the problem actually is. if you don't know what the problem is, it is harder to address. are we at full employment or not? is inflation structural? is it something else? because we do not know what the issue is, it is going to resort to something where the fed goes after what they know best, raising rates to address inflation. if that is not the issue, we are

going to get a dripping in of higher rate expectations until we push the economy into recession. that is the fear and i fear other monetary stories are going to try to get ahead of the fed and. the passenger. shery: we do know the symptom is rising prices. >> i think that is what you should do at this point. even the way think the drivers of inflation right now are not traditional monetary drivers, it doesn't really matter in the end. this inflation sensitivity is going to be a theme for some time. right now, finding opportunities to come back into oil stocks and industrial metals, that works. i wouldn't go all in in every cyclical rate centric trade. i'm concerned about financials,

there is potentially a growth issue and a profit it to -- profit issue. it is not all in on rate sensitivities, but rather on inflation sensitivity. haidi: the inflation outlook carrying through just to the extraordinary sustained exuberance across not just crude markets but every commodity you can name. does that mean you are still positive on some of these companies to be able to extend more gains? >> i think that is what we have seen. through this earnings season, we have seen that where companies have a plan to address inflation, where they can -- prices, even if they have a challenged outlook and they are -- guidance on how they can address it, the market has been fine with that. this is an environment where if you just guide down and say you are a passenger to inflation, you have been punished a bit.

that is the divergence. earnings season has been great at a top and bottom line perspective. as we have seen from some market reaction, it is not enough you're like it has been for the past few quarters. investors want to see a plan. shery: daniel gerard to make always great to have you. how -- we heard from the earnings call edging back into profitability. so much focus on the plan ahead. -- really moving up that timeline that will happen at some point this year. he is talking about the appeal when he comes to that, essentially turning it into an ipo roadshow. we are seeing in budging about 2% despite the initial shock of nvidia abandoning their deal. also watching automakers, nissan raising their profit outlook on higher car prices as well as the

impact of the weaker yen. the company boosting -- forecast as a result of some of these factors. managing a web of supply chain disruptions as well. we see similar positivity in other automakers, toyota and honda getting a lift. let's get you to vonnie quinn. vonnie: french president emmanuel macro -- after a five hour meeting with the russian leader, macron said boudin agreed not to take any new initiatives and withdraw with -- withdrawal russian troops from belarus. the kremlin declined to comment on any assurances, saying russian troops were already do to leave this month. the u.s. department of justice says it seized $3.6 billion of bitcoin stolen during a hack in 2016. officials have arrested two

people in connection and -- nearly 12,000 bitcoin. the doj says this is the largest financial seizure ever and proof that cryptocurrency is not a safe haven for criminals. canadian lawmakers have expressed worry about the economic impact of protests that have locked countries -- block to the country's link to the u.s.. truckers protesting vaccine mandates have paralyzed the bridge which carries 25% of trade between the countries. justin trudeau warned the demonstrators are hobbling the economy. demonstrators say they won't leave until covid mandates are lifted. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: coming up, the asian developing bank gives us its view on regional integration amid the pandemic. economist jong woo kang joins us later. a big interview coming out,

stephen engle speaks exclusively to a top adviser to hong kong chief executive sherry lam. we are seeing a virus curve coming to affect. >> hong kong doubly down -- doubling down on its zero covid approach. six to five new cases plus 500 per limiter a new positive cases reported tuesday on top of 607 on monday and nearly 700 over the weekend. was next in store for hong kong? we get the answers, hopefully, from one of carrie lam's top advisor on her executive council, bernard chan. this is bloomberg. ♪

>> welcome black -- welcome back. we go to our next exclusive guest, convene or of the

executive council in hong kong, which is essentially the chief executive of carrie lam's cabinet, bernard chan. is also high up on the hong kong -thailand business council. he has a broad purview and broad view of the situation in hong kong, facing its fifth wave of covid. guard chan, thank you for joining us on bloomberg television. let's get right to it. take me inside the executive council meeting yesterday when carrie lam was soliciting opinions from all her top advisers on what restrictions are coming next. was this just a stopgap effort, or worry -- are we in store for potentially stricker -- stricter lockdown? bernard: good morning. thank you, stephen. you were right, this is our

fifth wave. for the past two weeks, we have probably cumulatively 3000 new cases. predominantly of omicron. obviously, the announcement yesterday was unprecedented. we are stepping up the efforts to contain the virus. part of the reason i think, the viewers have to understand that, taking out those -- take out those under age 12, we still have 1.3 million people still unvaccinated. almost 56% of those, something like 800,000 people above the age of 60. to be exact, for those groups of over 80, the vaccination rate is only 22%. we've still got a problem.

the last time on the show with you, this was still the main issue. how to get the most vulnerable groups in our city vaccinated? if we start to open up, as we should, this group will be very vulnerable. stephen: how are you going to do it? you keep making more restrictions for the rest of us who have gotten vaccinated. those between ages 40-49, the key taxpayers, they are all vaccinated up to 92%. some of the fringe elements of society, the elderly, have not. how much more resources can you pump in come and can you just mandate? let's get right to it, mandate vaccinations? bernard: you are right on. i am with you. the so-called 80% of hong kong

vaccinated already feel it is unfair to them. they have done everything they can commit yet they are being penalized. you are right, the amount spent -- amounts -- bernard: by the end of the month, by the 24th, most places will require a vaccine pass. this is nothing new. singapore has done this for quite a while. by this month we will require a vaccine pass to enter restaurants, shopping malls, and a lot of other places. that will be the final drive to push this group of people, the last group of people, ticket vaccinated. of course, we have to still work on the elderly homes. some of those 80 and above may not go out as often. still, we are going to push this final bid because we cannot afford it.

we have to open backup. we are short of mandating everyone, because we still give a choice, but that choice remains limited. stephen: we know many of the ovary 80 -- over 80, there have been some reports overseas that the chinese traditional vaccines are not as effective over -- omicron, what is the government's view? can you talk directly about this? is there lack of confidence in that, compared to the pfizer biontech that is also available in hong kong? bernard: i'm not a vaccine expert, but from what i was told, whether it is pfizer or china backs, they are all --

china novavax -- but sure, some are more effective than others. for less severe illnesses, but all vaccines that have been approved so far by hong kong government are effective enough to protect from death or major illness. the key is to get vaccinated first. that is the key, and probably get boosted as well. we all know for sure that the first and second shot is not enough, we need to get more than two. that is the next hurdle, to encourage -- i think we are getting only half the people so far getting booster shots. those who are qualified to get boosted, only about half get the vaccination so far. stephen: the health secretary told me there is this 90% benchmark target, that would

perhaps allow for further opening up. carrie lam commit chief executive also talked about a 90% target, but what is beyond that? you are a businessman, committees businessman -- she these businessmen need a plan. is there a soft target? what is beyond 90%? bernard: the 90% is still on the eligible population. that 90% is excluding ages 12 and under. i do not think we are going to touch that group yet. obviously 90% is a good number. that is the target we are looking at, but ideally the higher the better. i was not told there was a specific target yet beyond 90, but a think we can achieve 90. well, somewhat thanks to this

current fifth wave, it is spooked people who are nervous about the virus. i was told that we were getting about 60,000 vaccinations every day. so we can continue our trajectory and reach 90% in two or three months. stephen: obviously you are pursuing, and carrie lam said they will continue pursuing the zero covid policy. but, no mainland city has been able to eradicate outbreaks without total lockdowns, sealing off particular neighborhoods. is that on the table? is that going to happen if we get to where the productions -- epidemiologists saying 10,000 cases per day? is the total lockdown on the

table? bernard: to be clear, it took me some time to understand what is the dynamic of zero policy. it does not mean necessarily we need to go down to zero. the ada is not zero, because -- the idea is nonzero because that is impossible. but what zero means is we do everything we can. some policies overseas, they kind of gave up and lived with the virus. our policy is to continue to contain it. as soon as there is a new surge, we will do everything necessary. but so i'll lockdowns, i do not think we can ever do for lockdowns. we cannot do the same lockdown you have seen in mainland china.

we can contain it and bring the number down. but the objective is not zero forever. that is impossible. we are buying time enough to get the rest of hong kong, especially the most vulnerable vaccinated. until then, i do not think we can afford to overwhelm our health care system. look at singapore. i have been told the last three days they are reaching over 10,000 cases a day. because they have a higher vaccination rate, the hospitalization rate is very small. we need to achieve that as well because if we open up now, our entire health system will overwhelm. we can't afford that. stephen: what is the timeframe? when is enough enough?

we can't continue to go on like this. what happens when we hit 90%? are there steps in place we can bet on? bernard: there are two issues. i do not want just to blame everything on those who are unvaccinated. that is still our push, to reach 90%, but at the same time now that we have enough data collected from omicron and delta , we can try to mitigate the risks better too. many of us who travel complain of longhorn teen time because that is how we contain the virus coming in. this last -- pretty much was because of inbound returnees. we need to control and contain any inbound virus. most of the complaints -- i

mean, i get it hourly, this lengthy quarantine time. we recently dropped that from 21 to 14 days. i am just very hopeful as more data shows that omicron variant, the incubation period is actually much shorter. we can aim for a shorter quarantine time. that is probably the next objective. stephen: how about inbound travel? we need to see benchmarks on when you can allow inbound travel. there are flights completely banned from eight countries. if you hit that 90%, does that trigger a process where maybe we can start relaxing those numbers? sophia chan, the health secretary told me we can't open

a borders to international travel. we can't open that until those countries get their covid situation under control. those countries are living with covid. does that mean hong kong can still open if they hit a certain benchmark of vaccination, or is it all dependent on overseas? bernard: again, this is a moving target. shortly, yes -- shirley, yes, what is happening elsewhere is important. if omicron is being reported on the news, omicron increasingly now is less deadly. if things are calming down, we will definitely relax our inbound control. that is a factor, but that 90% is also important because we need to make sure -- prepare once we open up.

just another figure i have been reminded, even let's say for the last group of omicron cases we already have, almost 80% of those cases we found, even if fully vaccinated, the -- valley was very low. meaning they have a very high virus load. they are very contagious and that is the key difference. the rest of the world's are vaccinated, you can do anything. because we want to make sure we do not pass on to others, even if you are vaccinated we need to observe you for a period of time. i am hopeful maybe we can reduce that time to a manageable level, in the short term. this return to normal -- no, but hopefully by -- we can shorten the quarantine time to a

manageable level that business travel, at least, will return. those are all of the different targets we look forward now. stephen: will beijing ever allow hong kong to essentially live with the virus? is there ever going to be that opportunity? bernard: i am not sure this is an issue of hong kong. what about china? china cannot be unlocked on forever. they have to open up to the world as well. this is not just about hong kong, this is the entire country. i am sure they must also are looking at the same issues we are looking at. sooner or later, the world needs to figure out a way to end this pandemic. stephen: who is calling the shots? is beijing calling the shots on dynamic zero policy? is hong kong completely

autonomous? bernard: there are two aspects. first, there is our own problem. in order to make sure our health system will not be overwhelmed, these measures we announced yesterday is largely a local issue we need to address on our own. in regards to the border relaxations to the mainland, sure, mainland will have to call the shots. just like for those who go to canada, in hong kong now we need to meet the canadian requirements. same thing. for us to enter to the mainland without quarantine, we need to make sure we meet that requirement. other than that, everything else is largely a hong kong domestic decision. stephen: i want to talk about the new restrictions, but before that, on mainland china, the

offer to help if hong kong needs it, what would that help be? what would be the trigger point to asking beijing for help? bernard: i think the mainland authorities have already been helping in terms of testing. it is key now for us to concentrate the virus through testing. we are talking about a lot of testing capacity needed. i think they have been supporting us. i have been told many of their technicians, they were here last year at one time, many of them are back again to help at our request. we do need that testing capacity to make sure that we can locate the virus in a timely manner. stephen: if you can encapsulate it, you told me a few minutes

ago that hong kong and china cannot stay in zero covid forever. what is going to be the trigger point where we say now we can move on? even dr. fauci in the united states says this is endemic, it is not going to be eradicated like smallpox. bernard: as i repeated earlier, the out point is to make sure our health care system will not be overloaded. that is the key. in order to do so, we need to make sure we have proper vaccinated population. because until -- stephen: under the new -- under the new restrictions that will include limiting private gatherings and people's homes to

just two families, how are you going to police this? how are you going to monitor and enforce this? bernard: we cannot enforce that, obviously. what we have been saying is if you ever got the virus and we can trace it through the fact that you have a gathering more than two households, you will be penalized because that would be illegal. there is no way we are going to do -- there's no such thing. at least we discourage you. all the measures we announced yesterday and before is to discourage you. short from a complete lockdown, the government trying to discourage overcrowding, in public places and the government has actually asked businesses to

reduce the flow. i was told many banks shut many of their branches. my bank is also reducing one third of their capacity. the idea is to limit the potential risk of the virus being transferred in the community. stephen: let me just ask you a final question on the potential collateral damage on these -- of these policies, cathay pacific. terry lambs exploring the possibility of legal action. we know there were breaches of policy by crewmembers. at what point do you say, we are killing ourselves. the government has us -- 6.1% stake in the airline, they pumped billions in, what is the

point of potentially punishing the pride of hong kong airlines? bernard: it is not just cathay pacific, businesses also suffer. tourism for one. hospitality suffers for -- suffers. i am with you. we all want to end this thing as soon as we can. i am hopeful, very hopeful of that in the next couple of months we can achieve all of those targets and hopefully we are better prepared to relax and open up. stephen: optimistic or pessimistic that this could open up within the next year? bernard: optimistic. if we have a fully vaccinated

community, as well as a better knowledge of how to deal with omicron and perhaps other variants, we can contain this thing. stephen: renard chan, executive council, cabinet of chief executive carrie lam. thank you for giving us your exclusive time here. heidi, back to you. haidi: great conversation there. stephen engle in hong kong. let's check the markets as we get into the asian trading day. to recap some of the gains we saw with the strong lead on wall street. we are continuing to watch the global bond rout. the nikkei, nice gains particularly when it comes to automakers. strong results out of the likes of nissan. they close the offer by half percent. in australia, a pullback on the energy sector with oil falling for a second day. despite that rebound when it comes to new york traded crude,

we are saying -- new zealand trading flat at the moment. the asia-pacific region strengthened its integration during the pandemic with -- more than 31% the first three quarters. this is according to a new report out today. that recovery was -- was that recovery fragile and uneven because of the pandemic? joining me is jong woo kang. we appreciate your time with us. talk us through some of the findings. what was surprising about the resilience of the region? >> [indiscernible]

-- in 2020, close to 58.5%, which is historically the highest number the region has posted so far. in terms of -- we also posted the highest number. the news that -- has been -- resilient under the pandemic crisis, and then based on some of the region's proactive members -- measures and promoting more free trade agreements including other -- haidi: there are lots of headwinds and risks ahead including the fed tightening cycle. the flows we see in oil prices and inflation. how do these factors weigh into your -- on how to recover? >> the prospect is wide.

definitely there is certain risk of -- for example, as more -- are getting out of the pandemic, many of them are trying to normalize their policy stance. in the case of -- u.s. fed, when it starts normalizing, there has been some kind of turbulence in terms of flows into emerging-market groups in asia and more tightening conditions and potential weakening of domestic currencies. but those are in the pocket. in the moment, i do not think those risks will prevail. i have seen -- for the region. haidi: it is interesting that

although some countries like the u.s. have seen accelerated inflation, that has not been the case when it comes to some asian economies. we have not seen such price pressures in other countries. how is the supply chain resilience helping? >> asia supply chain has been more resilient compared to those in -- countries because most of the -- countries rely heavily on domestic demand and the innovation countries are -- serving increasing -- from advanced economies. one of the disruptions of the supply chains -- easily but in the case of asia being provider of -- in particular, the region

has been largely safeguarded from the -- so far. i think the difference is supply chain disruption more related to the pandemic. when the report of china lock down, there was policy between the new report in the l.a. u.s. -- [indiscernible] many -- companies are producing the -- commode which is the key bonus of automobiles. -- countries are specialized in the midrange of semiconductors. those companies are under lockdown, many of the major

automotive companies had to curtail production plans. >> given of course now we have omicron and more restrictions, and china adhering to covid zero strategy, how does that mood for inflationary pressures from now on? >> we do not observe any widespread inflation pressures in the region. but there is some sporadic inflation pressures, for example food prices. some countries in -- sri lanka is facing -- prices. central banks have a -- so far to stand up to that kind of inflation pressure. the kinds of inflation pressures are not widespread. that is not the whole story because rising food prices tend to have --

[indiscernible] haidi: one of the difficulties and challenges has been the limited movement of people, the dislocations when it comes to labor markets. do you anticipate this improving given there is still so much challenge in being able to open borders for free movement of labor? >> in terms of mobility, we try to monitor the movement of people in terms of the migrant workers. as well as tourists. many of the regions are exporters of migrant workers, but many countries are recipients of tourism. tourism accounts for 50% of -- gdp, and many pacific country share of gdp is more than 50%. the pandemic took a toll. a significant toll.

but as the countries are trying to move out this pandemic crisis and for example, australia decided to open borders and -- having a discussion with the chinese government about potential travel troubles. the -- arrangement that will help the countries -- recoup some of the loss from the past. haidi: jong woo kang, good to have your insight. supply chain disruptions and inflationary pressures we continue to seep the pandemic highlighting those critical issues. i spoke earlier today with jean-paul mazzocco, chairman for the center of global enterprise, really studying supply chain

resiliency. he was telling me how important digitalization of the supply chain system is because we now continue to see this change in customer demand. take a listen. >> fundamentally, if you look at what has happened with covid, the consumer expectations have changed. people get instantaneous delivery from certain providers overnight, or the next day. that is true around the world, not just north america. the expectation has changed. the ability to contact and be in touch with that consumer as the supplier of that product, or the brand manager, let's say nike shoes, it is very important. shery: this is an important conversation because basically -- was telling me not everybody can be the apple of the world. so, they can't really try to own the entire supply chain. but, folks can have this constellation of firms where they connect manufacturing,

distribution, logistics, shipping and they work in partnership with each other in order to change that old traditional supply chain idea and change it to something more customer centric. haidi: that is kind of tying in with what our previous guest was really getting to. how important it is the idea of integration. integration within industries, to be able to fill the customer need. that everybody can be an amazon, not everybody can be delivering things within the hour to someone's home. the problem is the consumer mindset has shifted to expect that, even if you are dealing with just a smaller business. shery: especially given that post-pandemic we are facing a more technologically advanced and connected world. up next, discussing china. easing caps on bank loans to fund low-cost housing projects.

we assess what that means for beijing's efforts to crack down on --. this is bloomberg. ♪

shery: china eased a year-long caps on loans for the real estate sector to fund public housing. the move seen as one of the clearest signs yet china -- china policymakers easing up real estate clampdown. let's bring in rebecca -- >> the fact that we are seeing investment links on those specifically targeted at public housing or affordable housing means there will be some kind of influx of cash that will support the properties sector to some extent. for many stressed developers, this is not going to move the needle. rather than just being a sign of easing, the important signal here is the common prosperity goal, the aim to make housing

cheaper and more available for all is going to remain central to beijing policy, particularly as we see this fine tuning of the clampdown. take a look at the securities. one page commentary this morning saying affordable housing, this investment in public housing is actually going to be a key driver to growth in the properties sector. that represents a significant shift from the way we have seen growth in the properties sector appear over the last decade. haidi: is this going to be enough to ease sector woes? we see with the selloff -- trying to stem the negative sentiment. part of that for still concern about the properties sector. >> absolutely. the short answer is probably not. we have seen very little reaction from the credit side.

and the equities side in response to this. it is really because this is likely going to benefit the state owned part of the property market, where generally they are investing in this part of the sector. many of these property firms -- this isn't really going to be much of a direct help. many of these -- invest in luxury hotels and clearly the signal is those firms already under stress are going to enjoy reprieve from regulatory easing. haidi: also not getting reprieve is the global bond market. we continue to watch whether we see treasuries breach the 2% yield. part of that is what we are seeing from repatriation funds out of japan.

speaking of japan, the yield of the 10 year japanese bond rising to 1.215%. at the same time, we are seeing australian bonds as well following for the fourth day in a row. that tenure aussie yield also 1.25 at the year. -- set to focus bond operations. that focus on the purchase operations from the department of justice as we continue to see whether the governor can step up to the task of persuading markets that he won't pivot against the backdrop of just about every other major central bank. up next, the market opens in hong kong. we saw the national team swooping in, seemingly to help chinese folks stage recovery after the biggest intraday

decline since august of last year. can the sentiment hold? we get a preview next. this is bloomberg. ♪

♪ >> sources tell us saudi aramco has risen -- revived discussions to build a multimillion dollar

refining and petrochemical complex in china. negotiations will lead to a fulfillment of the northeastern province with -- including the wrinkle. talks over what was meant to be a $10 billion venture were suspended in 2020. -- china says its business was significantly affected by covert outbreaks and restrictions as it recorded fourth-quarter revenue below estimates. the company says it expects the 2022 business environment to remain challenging and volatile because of the pandemic, inflation and softening consumer sentiment. haidi: let's get a look at the market opens in china and hong kong that happens in just under 30 minutes. this so-called national team making a return to markets, reportedly on tuesday. how do we think market participants feel about the intervention and the reduction of volatility as a result? >> i like the -- could mean a

bottom for chinese stocks. basically people think the bottom for chinese stocks may be here. [indiscernible] history shows the markets were likely -- before it stabilizes. on average, stock continues to decline, but at a slower pace according to data from our -- in new york. [indiscernible] -- fell by 2.3%. near-term pessimism may still linger. > tell us about that pessimism because the expectation right now is for more easing. whether it is monetary or fiscal. why are we seeing this #-- downside? >> easing has prompted many --

calls on chinese equities. but the properties sector, as early we were talking about is about a quarter of china's gdp. it is still a huge drag. we are seeing distressed developers -- stimulus provided to the sector. it is not boding well while stocks don't show confidence. travel spending was down. lots of traders are looking ahead to the national -- in march. >> -- with her take on the chinese markets. that is it for daybreak asia. markets coverage continues as we look ahead to market opening in syngenta.

we have a mixed picture right now, but slight upside when it comes to the asia-pacific. china open. this is bloomberg. ♪

>> welcome, good morning from hong kong and shanghai. welcome to the china open. yvonne: our top stories this morning, adrs jump on news of a so-called national team coming to the rescue. and funding low-cost allows --