haidi: good morning. we are counting down to asia's major market opens. shery: welcome to "daybreak asia." the st. louis fed chair says he sees a rate hike by july. the cpi report says to put stocks and bonds in asia under

pressure. a fed rate hike bets also pushing to a two-year high. we are not only watching what is happening in the u.s., but also global central banks. peru has increased the reference rate to 3.5% as economists had expected. we are now seeing the seventh rate hike consecutively by peru. they have completely unwound the cuts from the pandemic. not surprising given that their inflation rate has more than doubled the midpoint of their target range. peru is expected hiking rates to 3.5%. following mexico earlier in the day hiking rates by half percentage point to 6% given that they are also reeling with very high levels of inflation.

haidi: let's get you straight to the market open in sydney. the adjusted fed expectations further flattening of the yield curve for treasuries. and it comes to the start of trading, you can call that mildly optimistic. the bigger interest is going on when it comes to the bond market. we are seeing aussie and kiwi bonds continuing to slump on the back of the hotter than inspected u.s. inflation. take a look at the three year in particular jumping as much as 16 basis points this morning. pricing now signaling a 90% that the rba will hike in may.

we heard they are saying there's a risk to the labor market from raising rates to early. there is a buffer for the rba to wait and see. given that inflation ratings in australia have been softer than in the u.s.. we are watching crude as well seeing gains when it comes to the oil market. shery: traders are crowding commodities. not surprising will receive the move and asian sovereign yields. the 10 year surpassing the 2% level for the first time since 2019. the two year yield was also above 1.6%. we have already seen a challenging session given the cpi numbers. then we got comments from jim bullard.

let's delvinto what he said. he was calling for the fed to get much more aggressive in his fight to stop the worst inflation and 40 years. kathleen hays is here to join us. >> i have to add, after peru raises its key rate, not even anywhere near above target is the u.s., i think what jim bullard is trying to do with what he said today in the exclusive interview with bloomberg news when he said yes, we have the highest inflation in four years, we have to be far more reactive to data.

100 basis points, what that would mean is 50 basis points in march than 25 in may and 25 in june, that gets you the full 100 basis points by the middle of the year at which time he says we can sit back because then the fed will have started winding down the balance sheet. he says this is not shocking on. this is a sensible response to a search we did not expect. he says he will let jay powell talk to see if they get the 50 point hike in march. it but this is the direction he is pushing the fomc in. the ecb, they are having a debate about how they have to react to inflation a record 5% year-over-year.

christine lagarde seemed to open the door for rate hikes. today in an interview, she said if the ecb acts too fast now, the recovery in the economy could weaken, it could be slower than we want to see. yes, it is going to be high but it's going to fall over the course of the year. we were talking about an exclusive story from bloomberg that officials the ecb are starting to doubt the staff economists forecast. for right now, she is pulling away from the kind of path that bullard is getting the fed on. it's interesting if the boj would pull back. it's a push pull between the major central banks. shery: a big divergence from

asia to the west. kathleen hays is here with the latest. let's bring in our guest who is forecasting 50 point faces pipe -- hike. the chief economist at citigroup. to have you with us. was this all about the cpi numbers today? >> it really was. when we saw the cpi number come out, my first thought was somebody is looking for inflation to slow down over the course of this year. this is exactly what you did not want to see. he saw inflation that is not only strong in shelter with shelter prices accelerating. then you look at o services and wage pressure is starting to bubble up, starting to come through. it's looking like there's a lot more momentum behind the higher inflation readings that can

continue. that's what president bullard is reacting to. shery: you are expecting 50 basis points in march. then for more 25 point basis points through the year. >> that's the issue the fed is facing here. when you're overshooting the 2% target by the amount that we are and you think about raising rates 100 basis points, that sounds like a lot of rise but remember have inflation that is running 6% 7% depending on how you measure it. if you are something like 400 basis points above target, the idea that you would have nominal rates something like 100 basis points, to subtract the rate from that, you get very negative real rates. to get to 100 basis points quickly make sense in this scenario.

you are still not moving into restrictive territory until you get significantly higher from their. i don't know that it has a lot of effect in terms of bringing inflation down, at least it's moving in the direction of where you might have some effect. haidi: what is the urgency in timing that would have the best effect given the lag when it comes to transmission? should would be talking about the idea of not having to stick to the program when it comes to the tag -- timing of rate? >> we heard about them being flexible or nimble and we have seen that to some extent. when you look at where we were three or six month ago, there was a large -- you had to get through. all of those things have happened faster than we expected.

here we are at the beginning of 2022 planning a rate rise in march. base case is the 150 basis points of hike over 2022. if you go out to the end of 2022, we are still running at least 3.5% for pce inflation even as we end the year. that would imply to me that if there is even further upside risk, it's not my base case but it could happen. haidi: given the dislocations from the pandemic, the unusual nature of the recovery, how do we approach the flattening of the yield curve? does it portend doom and groom -- newman gloom? >> you always worry when you see a flattening of the yield curve.

markets still have a belief that the fed will act to get inflation down. to some extent, it is an endorsement the fed will do what it takes to take out the higher inflation scenarios. on the other hand if you think about what really brings down inflation, slowing down the economy. what the fed would like to achieve is a soft landing. you have to build in a probability of scenarios where inflation stays higher, the fed x more aggressively, and it may be that the best case scenario is you end up with a mild recession. that's not a scenario that anyone wants to see happening. it's not with the fed is trying to engineer, but even that inflation is overshooting, that probability -- >> i understand there effort

economies, different political backdrops. what are some other things the fed should watch out for right now? >> what the fed wants to watch out for is are we getting further momentum between prices and wages? you can basically say you're on your or a monthly annualized basis, we are writing somewhere between 4% and 7% annualized wage inflation and price inflation. both of these metrics are above the target level of 2%. what you want to avoid is further momentum where workers are seeing higher prices than the ask for higher wages.

i am looking at a lot of the data. what we are hearing from corporate in their earnings calls. are they talking about further wage rises, price rises, and passing it through to the broader economy. we are hearing that right now, so i think another reason that the fed should be looking at the consolation of data of these anecdotes and saying yes there is still the potential for inflation to slow over the course of the year, but relative to what was a few months ago you should be a lot more concerned about higher inflation in the year. >> really great. let's get more on the asia market. we already see the reaction when it comes to the bond markets in this part of the world. what are your expectations and what is interesting about what we are seeing in the market at the moment? >> australian and new zealand

bonds sold off strongly this morning. yields have since stabilized and even moved down a little bit. even while there are bigger bets on rate hikes as early as may for the rba here in australia and some potential for 50 basis point hike in new zealand in about a week and a half, there is still a sense that yields here are not moving at the same sort of pace as they were in the u.s.. globally he started to get an understanding that the fed is going to move faster than anyone else. move faster and move further because the u.s. was here and the ecb is here and australia is here. the markets have not shown a huge amount of differentiation between yields and pricing for rate hikes.

we're starting to see some gaps as the u.s. is seen as pulling ahead. shery: what assets do we need to keep an eye on in the asian session? >> i think the longer-term rates, those are really key. those have moved up a little bit less than elsewhere. always got her treasury futures, the australian 10 year yields, those will really set rings -- set the table for what sort of reaction we get in europe. also like i said, we want to keep an eye on those on whatever trading goes on in the fed.

perhaps there are some cooler heads and realization that the fed president bullard is a renowned hawk. it's not a huge surprise that he would come up with the set of statements. there is that expectation i have already seen one note come out from rbc saying you should fade the aggressive fed pricing. that this looks like the markets have gone too far too fast. whereas up until recently, the sense was that markets were right and the fed needed to catch up to markets. shery: our chief rates correspondent there with the latest. coming up next, men are twice as likely to be well paid than women in australia. we discuss why the push for parity is making little

headwind. plus, how a supersized fed hike will impact investment strategies. this is bloomberg. ♪

vonnie: china wants its biggest bad debt managers to help rein in financial risk. regulators studied numbers earlier this week.

they are asking them to -- measures including buying sold products and loans. researchers in hong kong say covid deaths in the city could reach 1000 june. the study found that mitigation measures are needed to cut transmissions by 85%. university of hong kong professionals are urging officials to study the feasibility of a full lock down. novavax says it will ask global regulators to clear the first protein-based covid vaccine for use in teens. a late stage trial involving more than 2200 adolescence shows the shot was 80% effective against the virus. the drugmaker says there was no significant safety concerns. novavax follows a two shot

regiment three weeks apart. 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: the 10-year treasury yield rising above 2% for the first time since 2019. this chart is showing that the 10 year yield dropping for decades. the recent surge remains below the 40 year trendline suggesting the bull market could still be intact in the long-term. our next guest says the top u.s. strategy is short rates. good to have you with us. you are shorting u.s. rates but pairing them with asia. explain to us your position. >> thank you for having me. some of our key strategies have

been thinking about the market pricing for the likely fed past as well as what inflation outcomes will look like. it has been clear that the bond move we have been seeing including last night that it's the u.s. that has been leading the way in terms of the bearish moves we have been seeing on bond yields. not necessarily the same presence of inflation. what we have liked over the past two or three months has been savoring economies where momentum is going the opposite direction so for us that is most notably china where policies on top of self engineered property slowdown is weighing on growth. also on the asia region i heard

from your previous guests that the inflation outcomes that we have been seeing in australia are far different from the surges in cpi that we saw last night. coupling with a dovish rba, we were comfortable being long rates. versus being short in the u.s.. for us, some of that is changing. you are seeing with germany last week, obviously the u.s. last night. we think that these inflationary themes, what has been the driving force behind them are quite global. they are not that specific to the u.s.. the u.s. has its labor market for sure, but there is room to catch up in the rest of the world.

we are starting to ease off some of those positions. haidi: where do you see the opportunity for that divergence play? >> for the time being, i think that for us it is becoming clear that the trend near term is more just globally yield higher. read still want to maintain along in bonds, i would look more toward the asia regions where you have not had that same shock cpi. mainly i would say the reason is not as much in terms of the physical -- fiscal stimulus. >> i know don't really deal with chinese corporate bonds but what are your thoughts when it comes to the sector and all of those issues and how does that filter through calls?

parks would that the chinese economy has pivoted very strongly. property prices are going up when the proxy sector is booming. it makes consumers more willing to spend and it makes consumers have to spend because when you're buying new property, there's a lot of extra spending that goes along with it. that engineered slowdown in the property sector necessarily makes consumers much more cautious in terms of spending outlook. it also makes other activity slowdown which is a big part of why were so comfortable in asia. anything that the chinese government -- haidi: we are going to have to

leave it there. this is bloomberg. ♪

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shery: lawmakers are laying the groundwork for financial penalties on russia if it invades ukraine. discussions have hit an impasse. >> you could call it an impasse, they can't move forward on what to do about sanctions. the senate has been trying to come up with a program on sanctions including. --.

nordstream 2. one says they don't think they can get it done as one bill, they might have to have side-by-side legislation. a republican legislative approach and democratic legislative approach and that would require putting them together and all 100 senators to agree. these days, that is a long shot. one of the main sticking points has been the issue of whether this would apply to all russian banks or instead to certain kinds of financial institutions. all of this is for looking at what would happen if there was to be an invasion of ukraine russia. vladimir putin continues to say that he does not intend to do that. even though there's more than

100,000 troops that are amassed at the border. haidi: we are also seeing new u.k. regulations and possible sanctions. >> there has been a lot of talk in the u.k. about how serious they were going to be about the sanctions. the u.s. has been very clear. president biden said there would be swift severe consequences in terms of sanctions. the u.k. has been less direct, but some new rules that have been written now in the u.k. could apply and this seems to be a more serious attempt at the sanctions. we saw the german premier this week in town in washington discussing these things with president biden. again, wouldn't agree necessarily to the same kinds of sanctions that the u.s. has said they would impose, but president

biden says he feels confident that european allies would go ahead with tough sanctions if there was to be an invasion. it looks like the u.k. is moving closer to the u.s. stance. haidi: let's take a look at the markets. focusing on oil because we are seeing wti squeezing out the second day of gains. these rate hike fears -- how aggressively the fed could move. that's jolting the confidence across crude markets. they continue to watch the tight supplies of u.s. crude. aussie stocks are trading firmly to the downside. we heard from them saying they could wait to see flagging the

risk of moving too quickly to hawkish late when it comes to damaging the job market recovery. the three year yield at 1.65%. a big beat when it comes to u.s. cpi coming through but the bond selloff has come down a little bit when it comes to this part of the world. kiwi stocks are trading in negative territory this friday morning. shery: much of the inflationary concerns stemming from the fallout of the global supply chain crunch. six auto plants near the u.s. canada border have cut output as the impact from the trucker protest ripples through both economies. toyota, gm, and ford are among those idling production. california port authorities are saying container ships in long beach is at the lowest level since november. it is down from a peak of month ago. the number of days takes to move

goods from asia to north america remains near hi, the last stage of the process remains lower than in november. hong kong supply of vegetables from china returned to above 90% of the level seen during the same time last year. the government says the border is now operating normally and traffic is smooth. haidi: taking a look at the demand for container ships, tight capacity soaring profitability for shipping lines led to a near hi for new container vessels in 2021. that is according to shipping consultant. orders last year were almost equal to the last five years combined. one noted there is a risk of overcapacity by 2023. bloomberg terminal users can read more about the stories in our newsletter supply lines.

>> siemens is now saying it is managed to cite major disruptions from a supply chain issue. it shifts to higher-margin software projects. >> we had a very successful starting. on the bottom line, we have net income as well as earnings-per-share increasing 20%. our cash flow which comes in with 1.1 billion above the previous quarter. that is a very successful start. on top of that, we have announced that we divested two non-core businesses. that is a step forward toward our strategy of being a focused technology company.

since we are not that clear on when the net gain will materialize for one of these divestments, we cap are guidance going forward where it is. >> we will get to those divestments in a moment. i want to look at the hit you are taking to covid and supply chain pressures. in the past, you said you saw that easing in 2022. do you have clarification on when you might see a return to normalcy? >> we can confirm that we think easing will not come for the second half of the calendar year. some of them we already see that by drag on until 23. it's different types of supplies. is all about semi conductors. so far, we came across quite well. we have fiat running our manufacturing on a load due to shortages of supply. we are also not able to produce

the right mix of products. we have some delay for our customers, but overall, we are managing through the crisis the supply chain crisis quite well. with a strong team of strong supply chain management, it is also the siemens power behind it which gives us more leverage. overall, i believe if we manage that ok, it will go on for a while. >> it's an interesting time because you are looking. presumably, some of these businesses are industrial related. that fuels the pressure from these crunches. how difficult is it to offload these types of assets given the environment we are in and get the valuations you want? >> it was not that difficult. we're talking about number one the postal and partial -- parcel is nest. this is benefiting from a tailwind in the market.

we found an international technology company, a good owner which fits nicely with their business. we finally divested our 50% stake in a joint venture on electric propulsion systems for cars. again, this is a growing market. >> these are growing markets. why get rid of them? >> we are gearing up for automation digitalization as well as sustainability. the business for example is more hardware driven. it is kind of a small project solution business which doesn't fit quite well so we found a better owner. we are automating the lines, we are not delivering products into the car so this is a split.

>> many had believed that the portfolio printing was behind you. can we take it from this flurry of activity that it is back and you are looking at shedding more assets to come? >> we are sticking to what we said. we are re-bundling all of the non-core businesses and from that perspective, nothing new. >> that was the siemens ceo earlier. coming up next, a report from australia showing men are twice as likely to be well-paid than women. to the agency behind that report and what they have done to bring about change in equality and boardrooms across the country. this is bloomberg. ♪

we are seeing u.s. futures accelerating losses right now with s&p futures down a quarter of a percent. u.s. stocks sank in the new york session after two sessions of gains. the market was a little bit challenged already given the hot inflation print we got. then we had the st. louis fed president calling for lifting rates by a full percentage point and that pressured markets even further. treasury futures at the moment

not doing much. we saw yield sort in the new york session. vonnie: the st. louis fed president supports raising rates by a full percentage point by the end of july. he says it requires a big response to inflation. traders are pricing in six hikes this year with 50% chance that rates will be raised 50 basis points next month. there are signs that pressures are easing and he is optimistic about the economy. cpi rose to a four decade high reflecting broad increases in costs for food, literacy, and housing. inflation has become a major political headache with republicans blaming his relief bill for fueling price gains. the u.k. has published new

regulations which strengthens the government's power to impose sanctions on russia if it were to invade ukraine. in the u.s., russian sanction talks have come to an impasse in the senate. opec says the recovery in global oil demand could surpass its forecast this year. in its latest report, the cartel says global fuel use could grow by more than the 4.2 million barrels per day that it currently projecting this year. any additional bump in oil demand could strain opec many members already struggling to meet targets. 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: we are looking at gender

inequality across australian businesses. a new report from the countries gender equality agency showing that while improvements have been made, men are twice as likely to be well-paid than women. our guest joins us from melbourne. if we are tired about dutch of talking about this, i'm sure you are. what is preventing progress? it feels like we take one step forward, two steps back. >> we are seeing small incremental improvement year on year, but it's not fast enough. we know that it's going to take at least 25 years to close the gender pay gap at the rate we are going. what we need is companies to be doing pay gap audits. we need to be reporting the results to the boards and the boards need to make targets and

commit to delivering. haidi: one of the more interesting findings as to the sectors? we know that there are worse industries and professions that others when it comes to being able to close the gap. >> interestingly, the construction sector increased gender pay gap not only in the last year, but the last eight years has gone up. it is one of only two industries that has. health care and social assistance is the other industry. that has increased gender pay gap. we have seen some signs of hope. the financial services industry has decreased their gender pay gap over the last eight years by more than 9%. they have had a persistent focus on making sure that they do the pay gap audits and that they put in place policies and practices

that change the dynamics that lead to so many men being in those high paid positions. financial services industry still has a pay gap over 29% but the trajectory is in the right direction. we also see that male-dominated industries tend to have some high gender pay gap. mining is another area. men are taking significant action that is taken the pay gap down significantly. our solutions there if the companies and the leadership is committed to doing the work and taking action to change what is happening. shery: how much are you expecting the labor shortage to help in giving bargaining power to women in order to close the gap? >> we think that is very important. we see companies taking significant steps on policy areas like flexibility.

they had to through the pandemic with lockdowns. much more likelihood that both men and women will get flexible work approved. increases in availability of paid parental leave. having that available to men and women not just women. these are the policies as well as the job and the pay. they can be terminate factors for where people choose to work. companies can differentiate themselves in this area to attract talent. shery: one of the reasons we haven't seen that much progress in women advancing their careers is because they are not actually placed in the right roles that lead to leading the organization. how much progress have we seen on that front? >> there's still a lot of work to be done. in the moment, men fill 80% of

the rules from which 90% of the appointments are dropped from. they are the chief financial officer. we need to be making sure and this is an medium-term investment that companies make that women aren't getting into, developing their skills and capabilities so they can take the step up to the leadership role. another thing to highlight is 75% of boards still have the vast majority of members are meant. 22% of boards only have men as their membership. we know from our research once again that where there's women represented on boards, that translates through two different policies and practices and rater gender equality in the workforce as well. haidi: it has been an

extraordinary week you look at the addresses. how crucial is it to ensure safety in the workplace for women in order to be able to start achieving some of the elements of equality unpaid we talk about? >> is absolutely fundamental. no doubt the national debate that we have had led by brittany higgins and others has been really important to focus. the fabless work -- fabulous work to push and ensure safety in the workplace so that women and men can all be confident of that where they were. we on the collect a small amount of data on sexual harassment and abuse in the workplace that we will be expanding our reach to get a greater understanding of what is happening and what steps companies are taking to address

it. 50% of companies are offering domestic -- paid domestic violence leave for their workforce. this is up from 35%. a dramatic increase. a reflection of the national debate and a commitment for employers that they have a role in ensuring support for their workforce not only to do their work and manage their family responsibility, but also in their personal circumstances. shery: it was good having you want. -- having you on. if you missed any of this, you can go to tv . this is for berg subscribers only. -- bloomberg subscribers only. this is bloomberg. ♪

haidi: affirm holdings fumbled after earnings missed estimates. shares have surged hours earlier when it reported second-quarter revenue that was stronger in an accidental report that was later deleted. a chinese chipmaker rose 1.58

billion dollars. the company is expecting to build capacity in 2022 and sees revenue rising. bloomberg intelligence says that could suggest it is apparent to rise prices as china's chip supply remains tight. and asset management shares jumped on better than expected fourth-quarter results and users considering spinning off a division. the value of a separate company could be as much as $100 billion. the move could allow it to capitalize on investor demand for specialized sectors such as real estate and rabbit credit. china's crystal cruises is shutting down its u.s. office. that comes after two of its

luxury liners were seized. it is working with provisional liquidators to restructure the group. let's look at how markets are trading. the asx 200 is lower with technology. we are seeing energy gaining ground. wti above $90 per barrel. we have seen traders pouring into commodities as an inflation hedge. not to mention we have tight supply with u.s. stock files to the lowest since 2018. all of this is being felt across the energy space. we have korea coming online. kiwi stocks are falling more than 1% continuing to lose ground for a third contive session. stay with us for a lineup of interviews to come. frustrations around hong kong's covid response.

china's market outlook. don't miss our exclusive conversation. this is bloomberg. ♪

shery: welcome to daybreak: asia. haidi: asia's major markets have just opened for trade. our top stories this hour, calls for a supersized rate hike. the singer was fed president sees four-point raised by july. this as a cti reports to put stocks and bonds in asia under pressure.

the two year yield posting its biggest one-day surge since 2009. and rate hike bets are also pushing gold to a near two week high. oil is slowing. traders seeking refuge in commodities. shery: we are following the japanese yen, which continues to weaken against the u.s. dollar, the weakest against the greenback since the beginning of january or so. the next level down would take us to the lowest since 2017. we are watching nikkei futures pointing to the downside, given the significant pressure we have seen on wall street as well with u.s. stocks seeking and treasury yields rising. perhaps a breather when it comes to jgb yields. the 10 year yield was already at a six-year high. the kospi down more than 0.6% right now. the korean won is also under pressure. it did rise with stocks in the previous session, but we are

continuing to see pressure across markets right now, given what we saw in the new york session. haidi: when you take a look at how it is playing out in this part of the world, markets that have been trading for the past hour or so, you see the pullback. trading in sydney broadly lower, but you take a look at the two sectors that are higher, materials and energy, where we have seen an attempt to hedge against inflation, pushing commodity prices higher, reversing, though, the three days of gains we have seen when it comes to trading in australia. in the bond space, we have been watching kiwi as well as aussie bonds. we saw the selloff. it is a slump when it comes to bonds in both jurisdictions, as we saw the u.s. cpi beating estimates. we have seen a pullback in stabilization. the two week climbing to the highest since 2017. shery: that's talk about what is happening in the monetary policy

space. st. louis fed president jim bullard calling much more aggressive policy steps to stop worse inflation surge in 40 years, starting with a 50 basis point rate hike as soon as march. kathleen hays joins us with more. what exactly is it saying right now? kathleen: he is saying the fed is going to have to move faster and more aggressively. it has to do with the inflation print we had today, the highest since 1980, higher than the forecast of 7.2. it is accelerating up to 6%. this is something that that has to stop, and jim bullard is saying we have to work harder to get it done. let's read what he said in this exclusive interview. the highest inflation rate in 40 years. we are going to have to be more nimble and reactive to data. nimble, i guess, means more creative.

get more aggressive as the data keeps rising. he also noted this very interesting conversation that in past times, with inflation like this, the fed right now would be having a meeting and doing a 25 basis point hike, which he did not say, but you could sort of hear it implied that the fed is reluctant. i a lot of democrats in congress have not wanted them to fight too hard against inflation. he also said this is not shock and, he said it is a response to a big inflation surprise. the original question you asked, is it enough? citigroup's chief u.s. economist talked to us in the last hour. he thinks it is a good start, but maybe there is going to be more that has to be done. >> getting something up -- getting rates up to something

like 100 basis points up quickly makes sense in this scenario. you are still not moving to restricted territory until you get significant higher. i don't know if it has a lot of effect in terms of bringing inflation down, but at least it is moving in the direction where you might have some affect. kathleen: if you get the rate up to -- you move 125 basis points or up to 1.5% and inflation is running over 7%, that is not what the fed wants. right now the market is pricing in 75 basis points of hikes by june, so probably 50 in march, then another 25 the next three meetings. that gets you to what looks like six hikes by september, but they get there partly by doing the 50 basis point hike. i think with jim bullard pushing the edge at the fed, no one is going to be surprised if this happens, and markets are clearly pricing in the 50 basis point

hike in the middle of march. shery: for more analysis, let's bring in rajeev de mello with gama asset management. it is good to have you back. give us your take on what the implications are for asia when it comes to this very hot u.s. inflation print, not to mention the accelerated expectation for the fed rate hikes. rajeev: i think what i learned last night was the fact that inflation is still not moderating, that the market is priced at a terminal rate, the highest rate of the cycle is going to be higher than was thought before. until recently, it was more about adjusting and bringing rate hikes forward. now it is about not only bringing them forward, but also increasing them by more than expected. that is a shock for the rest of the world. until now, adjusting is manageable, but we could expect

asia to start growing much faster now that the omicron variant is somewhat subsiding. in an environment of higher growth, it should -- if the fed is going to go with a very aggressive tightening and look to slow the u.s. economy beyond the neutral weight -- neutral rate, that is a much more worrisome risk asset across the world. despite growth recovery i am expecting in the next couple of quarters. shery: do you like asia so far given the expectations of growth, especially anchored around china, or are you a little more cautious given what they said about risk assets? rajeev: i am cautious about risk assets generally, but with in them, i like asia.

it seems cheap. we are seeing inflation coming out of china as well, and we are seeing asia come out of the pandemic. it has suffered a lot from it on different fronts -- supply-chain shutdowns, tourism declining. all those things are starting to reverse. where do you put your risk? i would start and am starting to shift it towards asia. haidi: do you write off tech completely in a rising rate environment? rajeev: not completely. i think one has to separate tech into the different types of tech. the nonprofitable tech, i think, yes, completely out. there are the big tech names, the ones that announced share buybacks last week. those are the ones to keep. but lots of tech depends on low rates and is very sensitive to

higher rates, so they are much more exposed. haidi: i have to take you to our question of the day. i don't know if you have a crystal ball and can tell us this, but the question asks how much further will treasury yields go. the second part of the question, given the unusual nature of the pandemic and what it has done to balance sheets and fiscal situations and global central banks, does the flattening yield curve necessarily mean that we will see recession rate conditions? rajeev: first, to your question on the 10-year treasury yield, i think we can go up to 2.25, 2.50. that is the level i am expecting. but we would see further flattening of the yield curve with the front end moving more. does that mean automatically a recession? would not think of it as automatic, but now that the fed is going to have to tighten a bit more aggressively to slow

down this inflation -- inflation is becoming a real priority -- i think it does increase the recession risk. shery: how do you hedge for inflation, because all of a sudden we are seeing a huge crowding of commodities, assets, given that they could act as a hedge, not to mention talk about cryptocurrencies, about hedging price pressures? rajeev: i think that now, the situation we are in now and the reaction you mentioned from mr. bullard is really what is the fed going to react. you look at the difference between -- it shows that all the long-term investors are quite sanguine. they think the fed is going to manage this. the 10 year has gone up a little bit, really very little, around 2.5%.

i think there is no reason to really hedge against inflation, because the fed is doing it for us. they are tightening actively. if they want, i would look for hedges and see if commodities are one of them. haidi: great to have you with us. rasheed demello with gama asset management. >> president biden says inflation is creating real stress for american families, but there are signs price pressures are easing, and he is optimistic about the economy. biden issued the statement after the u.s. cpi rose to a four decade hi, reflecting broad increases in costs for food, electricity, and housing. inflation has become a political headache for biden, with his relief bill being blamed for fueling price gains. the bank of australia plans to remain patient on policy until they are confident inflation is

sustainably within the 2% to 3% target band. the governor said there are risks with moving too early, including sulking unemployment. in much of the developed world, policymakers are signaling plans to raise rates or are already doing so. the united kingdom has published new regulations which strengthen the government's powers to impose sanctions on russia if it invades ukraine. the new rules take effect later today, allowing ministers to punish russian businesses and individuals in a wide range of sectors. russian talks have hit an impasse in the senate in the u.s., raising the possibility that democrats and republicans could vote on competing measures next week. researchers in hong kong say daily covid deaths in the city could near 1000 by mid june if more aggressive strategies are not taken. their study found mitigation measures are needed to cut transmission by 85%.

university of hong kong officials are urging a full lockdown of the city. it has not been peer-reviewed or published. rajeev: -- global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: still ahead, hong kong restaurant group black sheep tells us how they are being affected by the strictest measures implement it at the beginning of the pandemic. yet managers are moving into support cash-strapped real estate developers at the request of beijing authorities. this is bloomberg. ♪

shery: shery: here are a couple companies losing big and korean trading right now. craft sinking 13.1% after recording fourth-quarter profit significantly below estimates. the company citing most seasonal traffic to its game products for the week. kakao also seeing its worst again in about two weeks, operating profit for the fourth quarter missed estimates. still, most companies have very positive calls when it comes to missed estimates. 31 buys, zero sales for kakao. haidi: let's get back to the

latest development in the property story for china. debt managers have been said to have given the green light for regulators to support the cash-strapped real estate developers we have been covering, another indication of the central governments's effort to contain this fallout from a string of defaults we have seen from this heavily indebted properly set -- property sector. let's bring in david ingle, who joins us out of hong kong. is it the bad debt managers being allowed to come to the rescue now? david: that kind of makes sense. that is what they were set up to do in the first place. asset management companies that handle the bad debt of china were set up in the aftermath of the asian financial crisis to take the bad debt, bad assets off the balance sheet ahead of their ipos.

now there is a similar role for them. bloomberg news reported last month that they were involved in talks with sure mouth and its debt issues. also, another one of the big debt managers, state backed, said to be part of the restructuring proposal for evergrande. why wrong -- huarong had their own issues. they have been run through the ringer regulatory, disposing of assets with a firm hand by the government on these private companies like evergrande, who has become kind of the poster child for debt running a mock. what we are hearing -- running amok what we are hearing from sources is the green light has been given to bad debt managers to come in and purchase distressed assets that have not been able to be sold on the

private market and repackage them. i will run through some of the details sources have told bloomberg news. the big four amc's have been given the green light to participate in the restructuring of these weaker developers. they can acquire the properties that have not been able to be sold to raise a much needed cash in the sector, and they can buy the severed loans. we civilly do not know what this means -- we simply do not know what this means for creditors down the pipe. how much of a haircut will the dollar bondholders and domestic bondholders have to take through this process? essentially they have been given the green light to pay above market prices for developer debt, and that regulators are in early stage discussions, perhaps to increase these bad debt managers' buying power. that would mean more state funds could come in and help solidify this industry.

however, because of what we saw with huarong, they got into serious trouble with their over leverage as well. the transactions in the secondary is said to be a secondary concern. that does not mean this cannot necessarily be profitable for these listed companies like huar ong, listed in hong kong. a distressed asset is a distressed asset, and they usually go at fire sale prices when the sector is under pressure, and these property developers are under pressure. they could be having severe bargaining power with these developers. haidi: if you can see the distressed -- shery: if you can see the distressed assets, that is the issue. there are concerns there are hidden debt. stephen: this is the whole

issue. evergrande is kind of the poster child. the 312 plus billion dollars in outstanding liability, but that you start going down the chain, looking at companies like logan. some of these other ones which were once considered healthy property developers. logan was considered very healthy in the sector, considered to be financially pretty stable. stock code is 3380 if you want to bring it up. this week, they downgraded this company and cited recent closure of a private debt arrangement that is off-balance-sheet. that is the problem, how much hidden debt and hidden guarantees by these developers is out there. shery: stephen engle with the latest on the property sector in china. next, twitter's cfo shares his views on the metaverse and explain why the company is accelerating its $4 billion buyback plan. ♪

shery: twitter has ushered in a new chapter with it cfo. he is promising to push projects through faster, but told investors to not expect major changes after the social media for a -- the social media platform gave a lackluster forecast. the company says it is on track to meet all of its goals. >> we are seeing 35% growth year-over-year in sign-ups on twitter in the fourth quarter. we have seen 25% growth for sign-ups plus reaction. that means we have more people going to the front door of twitter, which gives us more opportunity to convert people to dau over time.

those early indicators give us confidence we can accelerate dau growth in the united states and internationally over the course of the year, and that we can be on track for those goals by the end of next year. emily: over 45% by two years. >> i think you are compounding it. it is 20% more growth compounded over this year and next year. emily: let's talk about rebooting. i know you talked about dormant accounts, people coming back to the platform. what is different about rebooting then in 2019, when some of these users may have taken a pause? >> so much has changed on twitter. think about the onboarding process. 20% were created using single sign-on. people used their apple or google ids. they did not abandon the sign in process while they were in process. second, we are asking people about the interests they care about when they go through that process of creating an account. if we know what you care about,

we can make much better recommendations to you then and over time. we can turn them into a loyal audience member because we show them right away how useful twitter can be. there are other things that have improved. emily: the $4 billion buyback, what is the rationale? >> we left last year with 6.5 billion dollars of cash on our balance sheet. we added another billion dollars early in january. $7 billion of cash. we felt like we could, one, commit to buying back shares over time and $2 billion in the very near term, and continue to execute on our plans. we are going to increase our headcount over 20% this year. we will continue to bring talent to our company and bring the infrastructure we need to deliver twitter. emily: everyone has a view, whether it is overhyped or not, on the metaverse. what is twitter's view on the metaverse? how do you define it?

do you have a strategy? >> twitter is about what people are talking about right now. if there is a topic you care about, want to share about, or want to learn from others, we want to make sure the tweets are available to you wherever you are. emily: do you expect this to happen in the metaverse? do you expect metaverse to be a thing? does twitter need to be a part but of building it? >> there are going to be different ways people experience events. other times they will -- sometimes they will be there, other times they will have goggles on. we want tweets to be a part of the conversation. the super bowl is a good example. so many use twitter as a companion, whether they are at the event or watching on tv. the internet and march madness are other great examples of it as well. haidi: her ceo ned siegel speaking with italy chain. patients on tightening is about reprice monetary policy after the u.s. cpi print.

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shery: this is a picture across trading in asia. japan away on holidays, but we are seeing nikkei futures to the downside. the japanese yen pretty weak, around the 1.16 level, which would be the weakest since the beginning of january. the next leg lower would be the weakest since 2017, so we are watching for that. the kospi is down at the moment, its worst in two weeks. the asx 200 led lower by real

estate. kiwi stocks are losing ground for a third consecutive session. asian stocks are one of the few sectors gaining ground since we had seen an upside and prices in the new york session. many traders pouring into commodities as an inflation hedge. haidi: yeah, that u.s. inflation print really accelerating the selloff across the markets. let's get more from our chief rates correspondent garvey reynolds. across the board, gold at a two-week high, oil also pushing through with more gains, and we are seeing crop prices, food prices with further inflationary pressures. are we just sifting through to see who the winners and losers will be from the accelerated inflation and presumably accelerated move from the fed? >> there is a bit of a feedback loop building in those commodities, with the possible exception of gold. but oil and crop prices have

been driven high partly on demand optimism, a growing global economy with supply shocks included. that means higher prices for those. at the same time, that drives up inflation. and then people buy them because they say it is inflation hedge because the other assets, stocks and bonds, are crashing as inflation brings forward fresh rate hikes. we could probably see fresh gains for all the commodities you are mentioning, especially oil, which also has the geopolitical triggers of what is going on in the middle east and russia, you reign, that such -- russia, ukraine, that situation. shery: does that mean global yield has further up to go from here? >> global yields are going to be led further up by the fed and what that is doing to u.s. treasuries. there are definite signs in the action recently, including this

morning with australian yields, where u.s. yields are starting to break away to the top side, especially pricing for u.s. rate hikes. the fed and u.s. treasury complex are going to lead the rest of the globe higher. u.s. yields can grow a lot higher relative to others. the two year treasury yield is about 100 basis points above the average for the rest of the g7. that sound like a lot, but that takes us back to the end of 2019, which was when the fed was cutting rates, not when it was about to hike. we can see treasury yields go a lot higher, and that is going to drag other yields up, even if we see relative outperformance by places like europe and also australia, where central bankers are signaling they can be more patient than the fed, especially people like mr. bullard. shery: our chief rates correspondent garfield reynolds. we are also hearing from the richmond pad president, comment

-- richmond fed president, commenting online saying, i would like to see ongoing wage pressure that may be inflationary. he sees elevated goods prices easing at the supply chain improved. he hopes to get to pre-covid levels relatively quickly. also saying we do have the tools to get back to the 2% inflation target. these comments coming at a time when top federal reserve officials keep pushing for more aggressive rate hikes. banks in australia and the euro area, though, are moving in the opposite direction, looking for a more cautious approach. kathleen hays is here with the latest. it should be start with the rba governor? kathleen: absolutely. phil lowe has not really changed his tune, but he is trying to underscore that they have finished their quantitative easing, stopped the bond purchases. he has already saying that does not mean they are going to move to rate hikes. he said, number one, we are making good progress on jobs.

unemployment is the lowest since 2008. if we start moving toward rate hikes too early -- by the way, traders are looking for the first rate to come in may -- then we might risk hurting that. down to 4.1%. we've got a bloomberg chart that shows that, that it has made great progress. as i said, lowest in 13 years. the problem is, traders and investors are seeing the inflation is way above your band. look at this chart. it is at 3.5%. folks say, wait a minute, it is not that high. look at countries like the u.s. with inflation up five points it -- 5% year-over-year. we should not move against that. it is far too early. let's see what happens. christine lagarde, the president of the european central bank, is continuing, it seems, to dial back on her remarks made after the european central bank

meeting last week, when she opened the door to inflation staying higher longer than expected. people think maybe they are gearing up about a september or october rate hike. today, though, in an interview with a german newspaper, she said at the ecb asked too fast now, the recovery could be weaker. she echoes phil lowe. she said inflation could rise in the coming months, but she is confident it is going to fall back over the course of the year. by the way, euro area inflation has hit a record. the day the ecb met, 5.1% year-over-year. haidi: the bank of japan making it crystal clear it is still -- is that enough to cement your curve control? kathleen: i am sure it is, certainly for now. we will have to see what happens with the bond rout. the 2-year note in the u.s. up to percent. it is interesting that the bank of japan did not even wait until

traders were testing hard the 0.25% top of the band in which they have to keep the 10 year yields, the boj keeps it there, that is. they came in when it was trading just over 0.2%. this other chart shows you where the band is, where it is trading now. this is a clear sign from the boj do not even want it to get that far. they did not buy bonds on their regular day. on february 14, valentine's day in the u.s., they are going to buy enough bonds that they make sure it stays at or below 0.25%. governor kuroda not ready to back away from that either. haidi: kathleen hays with the latest. next, hong kong is tightening its already stringent covid containment measures amid a record rising infections. we take a look at how it is affecting the hospitality sector. the head of restaurant operator black sheep will be with us. ♪

vonnie: saint was fed president jim bullard supports raising interest rates by a full percentage point in the start of july. bullard says u.s. inflation running at its hottest in four decades requires a big response. however, he is undecided on the first hike in march.

traders are now pricing in six hikes this year with a more than 50% chance rates will be raised 50 basis points next month. opec says recovery in global oil demand could surpass the forecast this year, as the rebound in economic activity and travel gathers pace. the cartel says global fuel use could grow by more than 4.2 million barrels a day that it is currently projecting for 2022. any additional bumps in oil demand could strain opec, with several members struggling to meet current output targets. sources say the u.s. state department has approved the potential sale of fighter jets to indonesia. it could include up to 36 new boeing aircrafts at a cost of about $14 billion for the jets and related equipment. u.s. congress will review and probably approve the sale within 30 days, following which indonesia and boeing can negotiate a contract. china wants its biggest bad debt manager to help rain and

financial risks, especially as smaller banks. regulators studied the firms earlier this week. they are asking them to work with other companies to transform china's financial industry. officials also want amc's to support cash-strapped real estate developers, with measures including buying stalled projects. novavax says it will ask global regulators to clear the first protein based covid vaccine for use in teens aged 12 to 17. a late stage trial involving adolescence showed the shop was 80% effective against the virus, and it mainly faced the delta strain. the drugmaker says there were no sing of against safety concerns. novavax follows a two shot regimen three days apart. global news, 24 hours a day, global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi. haidi: hong kong is doubling down on its covid zero strategy,

threatening ask economic growth and jobs recovery. gatherings of more than two people in public are banned and no more than two households can mix in public. let's bring in ca it as seem hussein, the cofounder of the black sheep restaurants group -- let's bring it syed asim hussain , cofounder of the black sheep restaurants group. it looks like a grim continued outlook for your business. syed: good morning. it is good to be back on, albeit difficult circumstances in hong kong prevail. we continue to operate in very difficult conditions. it is a bit of a perfect storm of harsh restrictions, inflationary pressures, and a crippling supply chain issues. we have been here for two years in the pandemic, but we also have to remember the city had a really difficult year of social unrest.

haidi: where do you see an end -- light at the end of the tunnel? covid zero strategy is being pursued. there is no indication to whether hong kong can get to above 90% vaccination. there does not seem to be much of a plan that happens -- for what happens if and when they do. can the hospitality industry survive with the fact that we are also seeing borders close and an exodus when it comes to talent? syed: it feels like we are operating in no man's land right now. we do not have enough hours to do meaningful revenue, to do revenue that covers our costs, cost of rent, goods, payroll. we also do not have enough fiscal support to just shut down , hunker down and say we will be back when things are better. on bad days, it feels like the industry is being poisoned.

half of people working hospitality in hong kong. another quarter of a million work for companies that support the hospitality industry. that is 10% of the city. hong kong has a really dynamic restaurant scene across the board, not just luxury dining. i am talking about everyday restaurants all the way up to three-star michelin dining. i feel we are at risk of losing some of that magic. when i talk to policymakers in hong kong, i implore them that we need to be a part of the city's comeback story, but i feel like that unfortunately is falling on deaf ears at the moment. shery: what are you getting from the government right now? what are they telling you about some of their plans? you said there has not been enough fiscal support, given there have been two years since

the pandemic. are there indications that might change? syed: i hate to continue to sound pessimistic. we are in the optimism business, the good times business, but the support from the government has been insulting. when the lockdown was announced earlier this year, approximately 40 days ago, the indications were that there was something we had to do to get back to a good place for the lunar new year. now it feels like we are going to stay in this place for much of the first quarter. the fiscal support for their demands is sort of insulting, embarrassing her restaurant -- insulting and embarrassing. for a restaurant team like black sheep, it works out to 300 u.s. dollars per employee. $300 per employee for an indefinite lockdown.

i was talking to someone yesterday, saying it was i can to someone -- akin to throwing a drowning man a sandwich. it does not help. it is insulting. shery: what are you hearing from the broader public, though? do diners want to come back? syed: the sentiment the last few weeks has been quite negative. people are scared, so demand has not been tremendous for in-store dining. but the good news is that hong kong has a really amazing community and really amazing culture of dining out. as soon as things stabilize, guests rush back to our dining rooms. we just need to get back to a stable place. it is the silver lining. as soon as we get back to a good place, domestic demand is enough.

we have strict quarantine rules. it is not enough to travel into and out of hong kong, but the good news is domestic demand is enough to sustain us for the rest of the year if the restrictions are loosened. haidi: i have lived in hong kong, and i remember the excitement of moving there. everybody wanted to live there. it is vibrant. it is energetic. it had an energy like few other cities in the world. are you worried that people are not going to want to go there, and therefore it is really going to shrink the talent pool? i want to throw out this chart that shows later signings from the american chamber of commerce, taking a look at how attitudes from people who want to stay and go to hong kong are very quickly being changed as a result of these restrictions. is this something that is going to be key for your group going forward? syed: i will speak for the industry probably. as i was saying earlier, the

restaurant scene has been through a bit of a renaissance over the last 10 or 15 years. we really have established ourselves as a world-class restaurant city. it is being compared to the best cities in the world, london, new york. i feel we are at risk of losing that. we have a lot of world-class talent here. chefs, somalia is -- sommaliers. we were able to import a lot of talent that works in conjunction with local workforce. it is becoming really difficult for us to not only attract talent, but retain talent. shery: hmm. it was really good to have you on. we had been times in hong kong. let's hope those days return soon. syed hussain, black sheep restaurants co-founder. later we will exclusively speak

to the chairman of one of india's leading diverse aside -- diversified conglomerates on his lookout, including plans for his real estate division. stay with us. ♪

haidi: it is friday, but this is

not a good news story, unfortunately. the koala officially listed as an endangered species in australia. a lot of concern over this being flagged over the past 10 years as a result of climate, destruction of habitat. we had the brush fires that took out thousands of koalas just a couple years ago. the government has not done enough to prioritize these animals. i do not know if you have ever held a co-wallah, but it is such a big draw for people coming to visit australia, tourists. shery, i am worried that if more is not done, this is going to be the closest that you get to be able to coddle -- cuddle with income allah -- a koala when you come to australia. shery: i really cannot believe the numbers have fallen that much. what is it, fewer than 500,000 left in the wild?

that is really unfortunate to hear. but yeah, i hope the government can do more and the environmental groups can really push for that change. let's turn to other business flash headlines. there is really no good way to segue out of this, but the ceo of twitter has promised to push projects through faster, but largely signaling he will maintain the status quo following jack dorsey's surprise exit that after fourth-quarter results came in mostly in line with expectations. average daily active users rose 13% on the year to 217 million. holding stumbled after a quarterly revenue forecast missed estimates and its net loss right and -- net loss widened. shares surged after reporting a strong second-quarter revenue and an accidental tweet that was deleted. the firm says results leaked earlier than the official

release time due to human area. broomfield asset management shares jumped on better-than-expected fourth-quarter results with news that they are considering spinning off the division that invests on behalf of institutions. the equity value of a second company could be as much as half a billion dollars, according to the ceo. the move could allow the unit to capitalize on investor demand for exposure to sectors such as real estate and private equity. haidi: let's take a look at how markets are faring. much volatility. traders getting whiplash to the huge u.s. cpi spread, the highest level of price inflation for consumers in about a generation. we are seeing a lot of market downside when it comes to futures expected when it comes to trading in japan. it is a market holiday today, but we are watching what that reopen could look like. the kospi up by 0.9%. we are seeing us trillion shares

snapping back to losses after three days of gains -- australian shares snapping back to losses after three days of gains. but there is positive sentiment as traders are looking at commodities to hedge inflation risk. kiwi stocks also low. we are seeing more of a stabilization when it comes to kiwi and aussie stocks after a spike in the morning on the back of flattening treasuries. what are we watching in terms of stock specific stories? shery: take a look at the companies we are following in hong kong and mainland china. it is all about the property sector. china's biggest bad debt managers looking to support cash-strapped real estate developers. we are also watching smic. they reported revenue for the fourth quarter that missed the average analyst estimate. in the last trading session, we had a gain of about 0.8%.

tencent has also increased didi ownership to 7.4% from 6.4 percent previously, and we saw didi gaining more than 8% on the thursday session. they can look at some futures we are watching, because u.s. futures are accelerating those losses to -- down about half a percent at the moment, after u.s. stocks sank in the work session -- the new york session, reversing gains we saw earlier in the week. we already had some pretty challenging market sentiment, given that we got the hottest inflation print in more than 40 years, but at the same time we have the st. louis fed president, out and call for rates to be hiked by a full percentage point by july. that did not really sit well with the equity markets. and we are seeing the offshore yuan holding, back to the 36 level, although japan is closed, we are watching the japanese

yen, because it is at the 1.16 level, week against the u.s. dollar. haidi: that is about it for daybreak: asia. architect continues. we are taking a look ahead at the start of trading in hong kong, shanghai and shenzhen. the china open is next. ♪

>> happy friday morning from the asia-pacific. 9:00 a.m. in hong kong, beijing, and shanghai. i'm david ingles with yvonne man. >> our top story, u.s. inflation hit a 40 year high, stoking calls for a supersize fed rate hike. stocks and bonds feeling the pressure. chinese banks extend the record amount of loans in january as pboc seeks to shore