the pboc shifts toward easing, with the downturn hitting growth. evergrande on the brink of default. plus, omicron fears subside, global stocks rise and the s&p 500 erases last week's drop. treasury yields at higher. how long will the risk on narrative indoor -- endure? i remember we used to wait until the letter arrived, it was so important in setting the tone. he is ready to shave risk and this is what he said, a bear market is required at this point. i think over the course of the next year, and he or she that loses the least, maybe they are the winners. there is the tone from dennis gartman. dani: good morning. he also says avoid the tech. maybe it is an easy call to make because it's already in a bear market. the goldman-s. -- the goldman sachs indexes already: 20% from the peak. manus: against this morning said the aware galactic tech and galactic tech evaluations. you can have accidents and they can be messy. dani: we can see if buy the dip will still work, even though we saw some yesterday, we saw outperformance from the equity market and t

david, what can we see from the pboc? david: people are talking about the pboc easing, but i think the signal is already there. i want to say that we cannot expect aggressive easing from the pboc. the central bank has been cautious the past several quarters, as we have seen. we expect more easing from the pboc in the next year, including a rate cut. but again, it's going to be cautious easing. it reflects many of the fundamental and technical reasons behind the move, including we have seen the economy slowing, and in our view, the pboc is trying to offset the dollar hike, which means when the fed is tapering, there could be potential tightening in dollar liquidity. it could spill over to the hong kong market so that the pboc is trying to move the dollar cycle. rishaad: you see the spreads getting wider here having an effect that well -- as well. they would want to get cheaper money, wouldn't they? stephen: stocks are up on news of the greater policy support. country garden is up 5%, even kaiser up 4.5%. evergrande was up

and the monetary policy for the pboc.we get the latest from china's travel copy developers.t heir stockings -- their stocks are near a five-year low. this is bloomberg. ♪ >> you have to decide whether the rules in the place is a place you're comfortable with. they will set the rules, and you go in and you decide if you're going to be part of them as a good citizen or you are not. and then, but you do not jump in and out. china's a strategic like. you're not going to jump in and out. and the amount that you are in should be that with which you are comfortable. it is is same as an investor. it is not smart to sell on the break. david: ray dalio saying that china is a long-term strategic play. of course, one of many western financial players looking to expand in the world's second biggest economy. bridgewater actually manages about $5 billion of chinese -- making china one of its biggest clients by assets. it takes us to the crux of the recent market issue or one of the centers of gravity of property stocks. five year lows o

let me get to egon, the pboc governor. he said evergrande issued a market event and should be dealt with in a market oriented way, and principles of rule of law. he went on to say, the rights and interest of creditors and shareholders will be fully respected in accordance to their legal seniority. that tells me there will be some people who get preferential treatment and a lot of offshore creditors think they might be the low man on the total pole. yi on was speaking in a pre-video mesh -- message to top level officials on the future of hong kong international finance center. yesterday, i spoke with hong kong's market regulator. the ceo of the ffc, the financial -- excuse me, the securities of futures commission. he told me that this is not going to be a lehman moment. >> it is a significant event. you can't possibly underplay it. basically, it is not by category of event for the system. stephen: you believe it is ring fenced? >> yes. stephen: but's ashley alder speaking to me yesterday. . the one last thing i yi gang yi g

the pboc would like to have a strong r&b policy. david: you see all the inflows coming in and the equity inflows. if we can make the assumption the worst is behind us, can we extend the exception -- the assumption to property credit? it seems to be on paper the trade of a lifetime. >> on paper. yes. we do think the high-yield bond is a good opportunity for longer-term investors as long as the investors have a diversified basket. it doesn't make sense to pick up bonds and to have the idiosyncratic exposures. if you do now by a basket of chinese property high-yield bond , that is more than 20%. and then you sell, you have to get that return through work through, look out, some you will get through market recovery. you should have a pretty good market return. david: eyes to see you. have a great holiday. -- nice to see you. have a great holiday. let's get over to new york. vonnie: indonesia's finance chief is cutting estimates for the budget deficit this year and next. a fresh round of tax hikes set to bolster the government's earnings

the pboc told banks to hold more fx in reserve.t move effectively reduces the supply of dollars and other currencies on shore and is putting pressure on the yuan to weaken. we did see the on and offshore still rising against the dollar. more broadly, it's been a session of risk off across asian markets. after that solid three-day rally, that has paired the weekly gain to a wound 1.3%. the other big story we are watching in asia is the china evergrande group officially defaulting on their dollar debt. evergrande at restricted after the missed coupon payments. dani: thank you so much. in the u.s., cases and hospital admissions are rising as families gather for the holiday season. most victims shun vaccines. the overwhelming majority of infections, hospitalizations, and deaths are among the unvaccinated. let's bring in rachel chang. what does this mean in terms of the outlook for christmas? rachel: the u.s. is experiencing a winter surge just like other countries right now. people are indoors, spreading much quicker. last winter was d

>> the praise has not been -- the price has not been a top priority for the pboc. the top priority in growth. the data does not change the big picture that price is still less a concern then growth for the central banks. we expect more easing coming next year. after the recent rrr cut. juliette: let's take a look at the broader market picture with mark cranfield. a third session of gains. it does seem that the fears of omicron easing somewhat helping sentiment as well. >> it is true. we're certainly seeing a reasonable day. chinese stocks are relieved inflation data was not as bad as they expected so that is helping the improvement in the csi 300. what you are seeing is a lot of shadowboxing before next week's federal reserve meeting. volumes are not that high and a lot of people are uncertain as to what to expect. we had this opinion piece suggesting it could be a hawkish surprise from the fed next week about the rate hikes could come through much quicker than people anticipate. you have a lot of people sitting on the sidelines not prepared to make a big decision

also want to mention that the pboc boosted its daily liquidity injections and set the record straight for the yuan at 6.28. the u.s. dollar is slightly weaker than yesterday. this kept liquidity stable. the offshore yuan is trading. five years yielding 2.5%. meanwhile, the chinese central bank has repeated that the yuan exchange rate would be more flexible in 2022 while staying basically stable. hong kong just coming online. this is after a record session. this is bloomberg. ♪ david: this is my kitchen table and also my filing system. over much of the past three decades i have been an investor. the highest calling of mankind i have often thought was private equity and then i started interviewing. >> i asked him how much he wanted. he said to 50. i did not negotiate with him. >> you don't feel inadequate now? being the second wealthiest man in the world, right? i met a man named stephen breyer who was a law professor at harvard. i thought that he would be an academic arrest of his life but he became a justice of the supreme court and has been in that role for 27 years. i recently had a

the pboc likely more supportive and other central banks.han: i wonder, after a year of very fickle year for chinese assets, how that sets us up going into 2022. kailey: we can talk about that more with zach griffiths of wells fargo. talk to us about the policy divergence from china on the one hand and the fed on the other. how quickly do you check the fed to move? zach: we think marches technically live in the sense that asset purchases should wrap up by then, but we do not expect them to begin hiking that quickly. perhaps june is more likely. but we think such a quick shift between ending asset purchases and the first half of the month to hiking rates is that meeting in the middle of the month, and that is too soon and inconsistent with a lot of the communication we have heard much of this year. the fed has certainly gotten more hawkish recently, but we think it is too soon and want something towards the middle of the year, perhaps second half of the year, more likely. kailey: obviously hikes are not the only cards on the table. when we ta

you see the move out of the pboc yesterday. don't really see the other bits, that extra leg higher in terms of right after the fix, but basically i think we are looking at other things, too, in terms of the equity markets and researchers pointing out we are headed into the equity lunch break, and that it is roughly a glide lower across your equity markets this friday. this is bloomberg. ♪ hey, angie! you forgot your phone! hey lou! angie forget her phone again? yep. lou! mom said she could save up to $400 on her wireless bill by switching to xfinity internet and mobile. with nationwide 5g at no extra cost. and lou! on the most reliable network, lou! smart kid, bill. oh oh so true. and now, the moon christmas special. gotta go! take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes switching fast and easy this holiday season. david: midmorning here in hong kong. 10:30 in shanghai and singapore, 10: 29 -- 9:29, my mistake, on the east coast of the u.s. in new york.

yvonne: you had the fed and pboc heading different directions.he currency is still uncertain. consensus is still 650 for next year. so perhaps this rally could be slowing down next year, but not quite yet as we are down to the end of 2021. rishaad: it may depend on what we talk about next. yvonne: when it comes to omicron. for the latest on it, a south african study found pfizer's vaccine does provide some protection to the omicron variant, but less than a dozen other variants. research indicated a third booster shot is probably needed. rishaad: a covid-19 vaccine from canada's -- demonstrating 71% efficacy against multiple variants, including delta. omicron was not circulating at the time of that trial. a study showing the antibody treatment is effective against this new very. yvonne: by about 2%. i'd we did speak with -- from the johns hopkins center for health security about the latest variant and vaccine mandate. >> it would be great if it tilts toward being a cold. i don't think we can say it with certainty. there is a possibility it might b

then the pboc was out with statements about assessing their handling of all this.rities regulator also out with a statement. you can tell the government is concerned by this when so many different regulatory bodies and agencies of the chinese government are commenting after the weekend. the csrc saying the spillover effect on the capital markets is manageable is what the securities regulator said here we go. could there be missed coupon payments today? very likely. they have not had a default yet. and the founder has been selling assets has not been able to meet obligations. but now we are entering this debt restructuring process, we will have to see how it goes. the sunshine 100, mark was talking about smaller developers. $179 million missed payment yesterday. again, this is another missed payment by this valve are defaulting. yvonne: there are a lot of questions about whether they can -- whether beijing can manage this restructuring without upending the sector. stephen: they are hoping so and that is why the csrc came out with that statement. and other comments a

dani: we did talk a moment ago about divergence between the pboc and the fed.r if we don't confront a future are necessarily china and the u.s. are diverging in terms of economic growth, at some point we see china's growth slowing down, will the u.s. economy start to look similar? will the u.s. have a similar growth project -- growth trajectory as china? lucy: the structural growth is unlikely to be quite the same because you are still in china. there is a lot of catch up with income and the consumer. it is still emerging from that point of view. but at the moment, the growth rate is more similar because of the recovery you are seeing in the u.s. from the downturn. but the part of interest rates are going different ways. that's why i think to look at malaysia. dani: if we look at the u.s., michael hartman at bank of america is still bearish on u.s. equities, he doesn't want to invest more until we see a capitulation. are you in the same camp that we are likely to see a capitulation here and that serves as an entry point? lucy: it is always nice. the u.s. has be

it seems like the pboc is doing what it can, will it succeed?robably not doing all they can, even though the fixings send a strong signal. what they could do is intervene aggressively to buy dollars. we have very thin markets towards the end of the year, so any intervention would have an outside impact. another thing they could do is make an official announcement that they have reintroduced this countercyclical factor to counter the renminbi fixing, which they have been using in a defective sense -- de facto since, and also why would be useful to stop appreciation of the currency. rishaad: why is it the path of least resistance forward to strengthen at the moment? we often talk about bond inflows, but there are a lot of that is a lot of counter information to that. >> you are right. ultimately, it is about the gigantic trade surplus. that is the dominant cause of yuan strength. you are seeing $70 billion and $80 billion, so even though there are counter arguments like the reduced interest rate differentials with the u.s., the decline in fortunes

a pivot toward a more hawkish stance and the easing pboc.ing relative tightness on monetary policies in the u.s. we could start to see some depreciating pressure on the chinese currency relative to the dollar. a lot of that will ultimately depend on the pace of tightening the fed pushes through, with the pboc going through with easier policy. looking at the longer-term part of the bond market, it seems that traders think that while the fed will move quickly, hikes will be shallow. take a look at what some are saying about that behavior. at the lower end, it will constrain how far the fed goes as they won't want risk inverted -- want to risk and inverted curve. it could result in excessive tightening of financial conditions. so again, that is top of mind it comes to risk. we will be hearing from the cio of a leading australian investment manager on why the current economy is favorable for equities, particularly travel and recreational services. this is bloomberg. ♪ haidi: australia's economy poised to power into 2022, strong numbers when it c

we also heard from the pboc.oining us now, when we see and hear china say they will take steps to stabilize the economy, could that be supported for equities longer-term? >> yes, definitely. our expectations for china next year are quite bullish. the reflationary overhang is the main challenge to the region and we see that particularly affecting the real estate sector, but also technology, as well. we have heard some of the manufacturing numbers being quite strong. that is going to continue to drive the economy. actually, we are quite bullish on the china region, particularly given current valuations. francine: i know it is early days to understand what omicron is and what it means for supply chains and the economy, but our markets underestimating the disruptive effect as we get into the holiday season? >> i think it is definitely having an impact. we saw big selloffs, big moves to that risk on when it was announced. there was a lot of uncertainty at that point. we are still seeing quite a lot of uncertainty and

consumer inflation could jump to percent, but that gives the pboc some room to increase stimulus?hleen: that sets us up for the main event, november u.s. cpi data. consumer prices are expected to show the largest advance in decades, keeping pressure on the fed to deliver tightening. that comes after chair powell ditched the transitory tag last week, along with a mixed bag jobs report. >> much better than a headline would suggest. >> the headline number was softer than expected. >> job growth was disappointed. >> looks like seasonality and the impact of seasonal flows. >> it is the type of report the fed wants to see. >> the fed has a window to move and obviously they will take advantage of it. >> they have to start moving. >> they have to move. >> our base case is for the first hike in june. >> they have to make up the lost ground. maybe that means faster hiking of rates. >> if you go faster than you want to go, you are wasting something. >> the fed is looking at racing rates. we think they will have a hard time doing that. >> the fed is going to have to be very smart, both in wha

the pboc has boosted its daily liquid using seven-day reverse repo.arlier, the chinese central bank repeated the exchange rate will be more flexible in 2022. although, it will stay basically stable. the pboc 2022 conference promised a focus on property finance to better meet the needs of homebuyers. former president donald trump is seeking dismissal of a suit accusing him of sparking the capitol riot. speakers at political rallies don't have a legally enforceable duty of care to adversaries. that is a direct quote. let's get you some of the market action as more of these around the world come online and volume begins the pickup slightly. down .1%. jp morgan saying there's no selloff insight. we are seeing the rally brought her into january. 0.7.41. the bloomberg dollar index gets a marginal lift, prompting the g10 fx relatively quiet. the brent crude contract at $78.66 a barrel. let me flesh out the asian highlights. the msci pacific index a tale of positive and negative. net positive by .5%. the hang seng with a little bit of downside, back online af

because is the pboc behind the curve?d no change in the loan facility and people say perhaps next week we will not see the loan primary change either. if those two don't happen, does it indicate perhaps that they are being a little bit reticent? taimur: it is extraordinary. in the case of the u.s. we talked about behind the curve in terms of not tightening soon enough. in the case of china we are talking exactly the opposite, being too late in easing policy. i think they find the external part of the economy fairly strong, notwithstanding the supply chain constraints, and therefore there is some degree of balance in the economy. that they can orchestrate some slowdown, some course correction on the domestic part of the economy, while relying on the external engine to fire and not head towards a sub 4% growth. so from that perspective, where china wants growth to be, where they think investment and lending ought to be, i would not say they are behind the curve but the clock is ticking. haslinda: hang tight. taimur baig is

the pboc is trying to play this down. there is more rate cuts for economics as well. we expect 50-100 basis points in that rrr next year. led by the president, he is saying today we are going to now take our steps to stabilize the economy and get it on track, keep it on track. going to support housing by building more subsidized housing, easing some of these pressures, talking about healthy development in the property industry. they said houses are for living in, not speculating. that is no longer the statement. what i think it's interesting to me is this is a mission implicitly by the government that this decision to crack down on this overheated sector, crackdown on property developers who were overextended have gone a little bit too far. they can blame evergrande, but in the end, the government is actually saying it by taking these steps, they're taking their own steps to help correct it. shery: we are going to stick with the property and speaking with haidi:. --evergrande. what have we learned here? >> what we learned on friday is when the evergrande said they wer

the pboc is 2020 to work promises to focus on property finance. this meets the needs of the virus.

regulators along with the pboc tried to dispel contagion fears. july's -- jimmy ally -- it marks the end of a once influential media empire brought down by china's crackdown on hong kong's pro-democracy movement the taiwanese unit will run out of funds in december and stop publishing. saudi arabia has raised oil prices for buyers in asia and the u.s. signaling it sees demand staying strong despite the spread of the omicron variant. the move comes days after that decided to boost output should saudi aramco increase january's prices. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. vonnie quinn. this is bloomberg. kathleen: rising omicron cases in the u.s. are guaranteed in the coming days as the highly muted variant spreads. that is according to president biden's top medical advisor, anthony fauci. >> we are getting more and more information on two fronts. one is what the profile of people who are getting infected. we are trying to find out if there is any d

some of the stories we are tracking today, the pboc has boosted his daily liquidity injection to 200 billion yuan. that is about $31.4 billion. the chinese central bank repeated that the exchange rate will be more flexible in 2022, although it will stay a sickly stable. the pboc 2022 were conference promise to focus on property finance to meet the needs of homebuyers. evergrande sharers are rising as the company faces an interest payment deadline on tuesday for a coupon ado on a 2023 bond and 2025 no. the developer has a 30 day grace period. separately, the company says it has resumed construction on more than 90% of its housing projects, also giving shares a boost. china has reported 209 covid-19 infections, including 182 local cases. most in the western -- a western city, where 13 million residents are in lockdown. authorities have told people to stay home as they disinfect the entire city. they are carrying out a fourth round of mask testing. this is posing a challenge to beijing's covid zero policy. and macau casino stocks falling after the city reported its first case of omicron

james: the implication is the pboc is going to -- there will be more easing measures from the pboc.ek as well, the government talking about increased fiscal spending, increased investment by the local government, finding vehicles and provinces as well. there seems to be an indication that not only will there be more monetary easing but more fiscal stimulus next year. the expectation is there will either be further rrr cuts, further rate cuts, or further cuts to the opr in the new year. the expectation is this is just the beginning of something. rishaad: ok, that is monetary. what are they doing to support things? we heard the latest reports that they will be concentrating more on economic growth on the regulatory side of things than this year. stabilization is the key word, is it not? james: that's right. you've seen more talk about fiscal stimulus, the government announced last week they are allowing local governments to start selling bonds quicker in the new year. but there hasn't been a massive change yet in the direction of policy. we are seeing some monetary policy loosening an

the pboc cut its rate. joining us is damian sassower.ke we were all looking for the rrr. damian: the yuan is not just appreciating relative to the daughter, it is appreciating -- relative to the dollar, it is appreciating versus the euro. causing the pboc a bit of alarm. evergrande, chai soup has a deep millions -- we will see. the verdict is still out on how things are handled. guy: the implications of that are what for foreign holders? for foreign -- damian: for foreign creditors are big losses but we have already encountered those losses. high-yield unchanged over the better part of last month. if you look at yield on evergrande, the bonds are down $.10 on the dollar overnight. i think the market has been pricing for the bit of, perhaps they would avoid this and stretch it out. that is not the case anymore. alix: what is the implication feeding through? is this how china is handling the debt default as well as rrr? what is the readthrough for europe and germany and the u.s.? damian: it is amazing. john is the only economy on the plane

is that the pboc getting really uncomfortable with a stronger you want -- stronger yuan?e mentioned this the other day, that we deftly don't want to see that. you're right, we are still at 0.25% year-to-date versus the dollar. that means china relative to all of its trading partners were up 8.5% year-to-date, so it has been a very big move. they certainly want to bring it back a bit. think what you want to look at his china credit default swaps. we've gone from 54 to 44 in not even a week. certainly, credit market surprising and let's credit whisk -- credit risk, and that is something to take note of. jonathan: earlier this morning we heard from bank of america's mark cabana about balance sheet reduction at the federal reserve. this just dropped from citi, likely to drift higher next week. this may not come as a hawkish surprise to markets already pricing hikes next year. more hawkish would be discussion of the potential for an earlier move towards balance sheet reduction. not their base case, but this is the second time in the last hour that point has come up. lisa: the

futures have started trading, s&p futures are pointing to a higher open after the pboc pledge and holiday spending comes in quite a bit higher than expected according to mastercard. 8.3%. japanese futures a bit more muted. bitcoin, trading above $51,000. more to come. this is bloomberg. ♪ >> everybody seems to be making money. the returns are high. can they get any better than this and are you worried about this being a bubble? >> you always worry about the markets getting overinflated. i do think that there is some risk within the general market of this. technology is accelerating the transformation of all industries. artificial intelligence can do all industries, that is of the leading edge of software. things happening with ar and vr and crypto and fintech. i think it is very much accelerating into the future. that is why the venture industry has been so good. technology is important in redefining many key industries. >> silicon valley is not the only place in the united states where there is technology investment. the silicon valley companies tend to be the most valuable and that is w

whether it is the pboc or others.ur cast-iron stomach ready, it is going to be alka-seltzer time. juliette: have the alka-seltzer ready. thank you, chief north asia correspondent stephen engle with us. he mentioned that stay defensive call from goldman, but also you have to have a bit of a cast-iron stomach at the moment with a number of assets in china, not just property. we are seeing tech hit, too. at the same time it is expected stimulus from the pboc. how do you view china, david? >> there has been so much pessimism on china's economy, and markets especially over the past two to three quarters. i think the macro backdrop appears to be improving somewhat in the recent comments from the central economic workers conference. we are going to see a pivot in terms of policy makers becoming more accommodative on the monetary policy side and instituting more fiscal stimulus. there are reissues that are already sprouting. juliette: when you look at these property stocks down by 10% or so, is that an attractive level to get

we just saw the pboc raise the reserve requirements for foreign currency, and that tempt down -- thatd down the rally. what was your take on that? damian: what we were talking about is if you look at euro-yuan, euro is up -- yuan is up 10.2% today relative to the euro. that differential is huge, and that is causing people to make compare and says -- make comparisons between now and 2015. i don't think we are there yet. certainly, stability is very important to the pboc, and they will do every thing they can to maintain that. what we saw overnight, allowing banks to hold more foreign currency reserves, they are doing every thing they can to try to weaken the yuan in the face of what is happening here. the rrr cut going to go a long way. but we are in the early stages of that in lieu of the defaults by evergrande and kaisa . mark: i think that is an interesting point because it is your kind of global macro covid backdrop, which is all about capital flows, all about current account dynamics. one of the things that is interesting is china has not been able to recycle all of the ethics flo

the pboc said they will be more proactive and targeted use of policy tools. policymakers have taken a restrained approach to stimulus but there are growing expectations they will take more steps in the new year to encourage growth. average to ensure delivery of 39 thousand -- in a meeting sunday, the company's chairman said the embattled developer would -- to meet targets. he says evergrande would resume sale operations and pay off debt. more than 80% of material suppliers have resumed cooperation with the company. spider-man: no way home has crossed the $1 billion market the box office making it the top grossing film of 2021 globally. the latest installment of the franchise coproduced by stony and disney, already shattered pandemic era records. it has its second biggest debut ever, beaten only by 2019's avengers: endgame. >> investors watching out for key economic reports, japan will release retail data. china's industrial figures -- we will bring you two as we get them. to say, trade numbers out of hong kong. the focus will be on wednesday with hotel rates.

the pboc governor says china's financial system is stable overall with controllable risk. in an interview he says market expectations on property companies are improving. he did not name any specific developers. apple has awarded unusual and significant stock bonuses to some engineers. sources tell us they found out last week about the out of cycle bonuses worth up to 180,000 dollars, issued as restricted stock units over four years. elon musk sold $1 billion in tesla shares, taking him close to the target of reducing his stake in the carmaker. he has been offloading stocks and asking his followers since november if he should sell. he has a net worth around $279 billion. jimmy cain, who led bear stearns during its rise, has died at age 87. he was a college dropout who became a bond broker on wall street. he ceded the job to alex schwartz. it is another record high for european stocks. one hour into cash equity trading for european equities. that is surpassing the record set in mid-november. it is the santa rally. light volumes today led by ftse 100 stocks. those are at the

the pboc governor says china's financial system is stable overall. in an interview carried by state media, market expectations uncertain property needs are gradually improving. he did not name any specific developers. apple is said to have awarded unusual stock bonuses to some engineers in a bid to retain talent. sources tell us the staff found out last week about the out of cycle bonuses worth up to $180,000. the perk was presented by managers as a reward for high performers. let's get to the market action because quite a few have come back online after the long christmas weekend. it's still overall letter liquidity relative to a very their trading day. s&p .1% higher. technology selloff weighing on equities. data out as well, the richmond fed manufacturing survey rising in december which beat estimates. 57 billion dollar five-year sale on tuesday saw the firm demand the bloomberg dollar index is as flat as a pan take -- a pancake. to the asian session, a bit of an overview. this is the state of play on the asia-pacific index. tracking what we saw i

>> the pboc has surprised some because i believe from many there is more to come.he policies were not relevant because there were so many things that could be done on the fiscal tightening. they cut for very important reasons. we do have in china, a humongous sector. the real estate sector. it is to create the quiddity to avoid -- the liquidity. it is an issue of getting into additional leverage compared to gdp ratio. it will continue with liquidity injection, rather than a rate cut. if they cut rates, the situation they see is worse than the situation i see. this could happen because the numbers as we saw last week are really good. let us see. i hope that they will not cut rates. that will scare me quite a lot, actually. david: last week we spoke with someone and they flag the issue of the transmission effect of monetary policy. we want to play the soundbite out. >> over time, i think in order to stabilize the economy you will need a stabilization in property sales. you will need a stabilization in credit growth. both as though things will require monetary easing

the story has not been about the pboc criticizing stimulus in the western world.critical of qe and china has been trying to rein in the risk or leverage. that is why we are in the situation that we are in now. targeting those -- along the way , there will be some spillover. that is mostly coming -- it is about 20% of the overall economy. i should say, we also had some positive news. record shipping's once again from the rest of the world showing that the manufacturing story is going well. lisa: i do wonder when you talk about support for the housing market, how much of this hinges on evergrande's default? enda: there will be a big string. that has become clear now. they said they would engage with offshore creditors on a plan. there are a couple things going on. on one hand, it is clear that the government is not going to pay evergrande, and but neither are they going to allow them to fall over. we get something of a muddled middle. it will be complicated and it will take a long time. in the meantime, if you bought a flat in china, you will be made whole, but if y

kathleen: china, pboc, they are ready now.y made it clear they need to stabilize the economy to grow. what does that mean for these countries? what does it mean for the asian region? what does it mean for the world? >> simple questions, kathleen. clearly, we're in a period that is going to be choppy or -- choppier for markets because not everybody is doing the same thing at the same time. china has their own domestic issues. you have to expect that this is going to produce, for example, a tendency for further widening of trade imbalances between the u.s. and china, and let's see if that produces more policy friction, so lots of questions. >> thank you for giving us some answers there. we do have lots more to come here on "daybreak asia." this is bloomberg. ♪ >> we're about half an hour towards the japan open as the japanese yen is weaker against the dollar. this is bloomberg. ♪ >> we have had a lot of supply chain issues, a lot of demand, pent-up demand. but i think it depends on the product. but i think we will see some crest

manus: may the pboc wants to cause the traders to ouch. thanks to juliette saly. on to the u.k.. force johnson has tightened measures to curb the spread of omicron variant, advising people to work from home. let's bring in lizzie burden for more. u.k. government, the impact on the economy is the most important thing for our audience , what do we think? lizzy: goldman sachs says it is the nail in the coffin for bank of england december rate hike. bloomberg economics is a could shave 2 billion pounds off gdp per month because people will be returning to work from home. the introduction of vaccine passports will hit entertainment directly be because -- directly because they have deemed it so bad, it will hit consumer confidence which will wait on consumer spending, especially in consumer facing services. the other thing is, this could have less impact than previous waves because this is the fourth time burton has been through this. every time, people get more used to restrictions. there's likely to be people still going out and keeping economic reactive. they are more vaccinated. th

the offshore yuan bang, the fixing was set at a weaker than expected level, the pboc also selling 100,000,000,001 of reverse repose at 2.2%. the hang seng also higher today. meituan is up. jd.com is also up. the nikkei is down fractionally. let's look at southeast asia markets. philippines is back online today. the straits times index, fractionally lower. the philippines as you can see, is up, two thirds of 1%. fractionally higher for malaysia and indonesia. hong kong, shares still rising for sensetime. this is bloomberg. ♪ ♪ david: this is my kitchen table and also my filing system. over much of the past three decades, i've been an investor. the highest calling of mankind, i've often thought, was private equity. [laughter] then i started interviewing. i watched your interviews, so i know how to do some interviewing. [laughter] i've learned from doing my interviews how leaders make it to the top. >> i asked how much he wanted, he said $250, i did not negotiate and i did no due diligence. david: i have something i would like to sell. [laughter] and how they stay there. you don't feel inadequate no

we have the pboc setting its reference rate at a weaker than expected left -- level, perhaps a signalis striking a balance between slowing a surgeon the yuan and permitting aggressive intervention. there are signs perhaps the chinese authorities are ready to start supporting the economy more. we had seen pressure for the british pound as well, it dropped along with guild yields. we continue to see more virus restrictions in that country, not to mention the boe rate decision is coming up thursday. we are watching the cad, broadly lower at the 1.2 eight level after the bank of canada said they are committed to bringing inflation to 2%, the target rate. we continue to watch what is happening with the turkish lira. we have seen a bit of a rebound, but after the tumble of 40% since the september rate cut, we are seeing no signs from policymakers in turkey that they will hike rates again despite the fact that we are below the level in the turkish lira when they acted before. come our exclusive interview with a ceo about his plans for singapore, the u.k. and the need for broader regulation o

a combination of chinese easing hopes that we saw from the pboc yesterday, as well as the idea that investors are banking on that, supporting growth and omicron not being such a negative for growth combining to lift the currency over there. my colleagues and equities pointing out that if you are an investor in the u.s. versus and europe, it is going to make such a big difference whether or not you hedged your currency exposure. that is interesting to me because it speaks to the divergence we are seeing, powering currency markets. we are seeing the fed indicating , the ecb falling a little bit behind in the process. francine: where are we with the ecb? we have had a couple governing council members speaking lately. kristine: they are keen to emphasize that they are also an the process of normalization, albeit not as fast as the fed. we heard them saying it is not warranted to add stimulus if omicron proves to be a surprisingly negative factor for growth, which they don't think it is at the moment. i think we have seen the ecb numbers recently emphasizing the state of their bond buying program

inflation starts to moderate, that may be the time to add commodities, because then you might see pbocmore aggressively to support the economy. tom: interesting and solid insights, as ever. emmanuel cau has joined us on set london, head of european equity strategy, on the opportunities around industrials, are those in china. coming up, 99 tory rebels voted against their embattled prime minister in a vote on covid curbs. we will dig into the details, implications for bojo next. this is bloomberg. ♪ hey, angie! you forgot your phone! hey lou! angie forget her phone again? yep. lou! mom said she could save up to $400 on her wireless bill by switching to xfinity internet and mobile. with nationwide 5g at no extra cost. and lou! on the most reliable network, lou! smart kid, bill. oh oh so true. and now, the moon christmas special. gotta go! take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes switching fast and easy this holiday season. tom: welcome back to the open. 30 minutes into the european trading day and hear are the

paul: perhaps though the most striking area of divergence is the pboc.hat has already started to ease as the property market downturns threatens to hamper growth. data from wednesday -- data on wednesday. kathleen: let's bring in ben emons, managing director of global macro strategy at medley global advisors. inflation trend at 6.8%, the highest and fastest since june of 1982 with basically -- which has basically been shrugged off by the market. do you have any idea why? ben: it is interesting why it did shrug it off because at 6.8% , that is really high and if you believe the consumer surveys it may go even higher. consumers have been right about inflation as opposed to the economists. i think the markets took it as accelerating more than the consensus expected but at the same time, there may be a view that we will be peaking at the inflation at some point because the supply chain problems are slowly being resolved. i come from a camp that inflation looks much stickier. i think if you look at rate developments at the moment -- there are pressures respon

still got the strong onshore yuan even though we had a weaker than expected we once again from the, pboc manus, trying to curtail some of the strength we've been seeing in the currency. manus: jules, thank you very much. the prime minister, boris johnson, is warning the u.k. faces a tidal wave of omicron cases this winter, running forward the timeline of people to get out and get their booster. laura wright has been tracking this story. so, this is johnson's response. we're in the middle of implementing plan b, work from home. this is an addition to plan b, the warning. how serious is this from johnson? laura: it's series. that's why the u.k. government -- serious. that's why the u.k. government is boosting their booster shot targets by one month. they will be able to receive a booster shot before the end of the year, and eligible adults, someone over 18 years old, three months after their second dose, you can see the u.k. is above europe and the united states in terms of booster shots, with almost 30 and 100 adults having received one. 20 million adults in the u.k. have gotten their boo

does china provide --tom: does china provide a response given easing buys from the pboc?ina is -- in 2022. this is why that we see, in 2022, recovery as we expect china to bring some momentum back starting next quarter, next year. the more in general to the emerging markets, it is rather important -- actually, if we look at emerging markets, we like to put them into -- related to monetary policy and inflation. so are there -- there are some central banks doing well. tom: monica, i'm afraid we are running out of time. we will get you back on in the new year. thank you for your time, your insights. monica, global head of research in china for 2022. coming up, we get the views of tom donovan, chief economist at ubs. stay with us. this is bloomberg. ♪ hey, angie! you forgot your phone! hey lou! angie forget her phone again? yep. lou! mom said she could save up to $400 on her wireless bill by switching to xfinity internet and mobile. with nationwide 5g at no extra cost. and lou! on the most reliable network, lou! smart kid, bill. oh oh so true. and now, the moon christmas spec

the pboc has been clear on its rate path. the mood music is all quite positive.are seeing ppr moderation. you had had quite an excessive gap between ppr and cpi and very little read through to consumer prices. it all seems to be reasonably under control and the cpi levels are pretty much at their target. stability seems to be the name of the game. francine: we also have a great chart that dan curtis just sent out that looks at the evergrande price. good to remind everyone. there are no trades reported yet since the headline, which was fitch cutting evergrande to restricted default. does this in general worry you that it could be something systemic or because we talk about it day in and day out, we are also at a point where it will be ok? john: i'm not sure that it is a game changer. the tone has been set. when the evergrande story broke, there was a shock, it was new news, but it does seem the authorities have been clear that they are going to let the market do its thing, they are going to let things correct, people are going to find a way, the market is going to

we will see what the data is from china to see if we will get any readthrough until will the pboc startittle bit? guy: the emma: wrong story will be a fast -- the omicron story will be a fascinating wrinkle in that narrative given the fact they have taken a very tough approach. we have an omicron case being confirmed. the wildcard is omicron and the impact it will have. central banks coming up. we are mapping those out and have a good idea on the base case. the variant? who knows. alix: exactly, so what you do? that is why you see buying into treasury markets. the front end, which means perhaps there is a line between omicron and what the fed will say and what the fed will do. that all impacting everything. the curve flattening a little bit. off one basis point. that wraps it up for me and guy. coming up, jane harman will be joining "balance of power" on bloomberg television and radio. if you get more of me and guy all the time. guy: the cable show will be on d ab digital radio. if you're in new york, spotify and apple is where you will find us. this is bloomberg. ♪ hey, angie! you forg

there is one that is not, the pboc. what are your expectations for the yuan in 2022? back to the central bank story, and that is the big driver for 2022 carrying over to this year. the biggest is the u.s.-china story. again, we have seen this happen in china time and time again when they talk about structural rebounds and structural reforms and all of a sudden growth starts to slow and the policymakers panic and all of a sudden there is a foot on the gas pedal going back to credit fueled growth. that seems to be playing out again. to me that is negative so that you on -- guan -- yuan -- i like dollar yuan higher. and for the most part it is less dependent on official pronouncements and it has become trading more and more with wider em currencies. i like em as you pointed out, we are seeing massive movement of liquidity in 2022 and beyond. so two risk assets that are dependent on cheap liquidity will suffer. so i have a greater sense around em and the yuan should reflect that. kailey: we can talk about the policy differences but the ecb is not necessarily going the sam

the pboc says the crisis will be dealt wi

the pboc governor said china's financial system is stable overall. in an interview, he said market expectations are gradually improving. he did not name any specific developers. he said they will issue the first batch of carbon go funding by year-end. cathie wood is missing out on the urine rally on wall street. -- missing out on the year end rally on wall street. the famous technology fund is now down 23%, heading for the worst annual performance since its inception in 2014. apple is said to have awarded unusual and significant stock bonuses to some engineers in a bid to retain talent. sources tell us the staff found out last week about the bonuses worth up to $180,000. they're being issued as stock units which vest over four years. let's take a look at markets, starting with the u.s., the s&p up after yesterday's rally. the naz net -- nasdaq down more than .5%. apple dragging the nasdaq lower. commodity related stocks the major driver on the golden dragon index. the two year yield up another five basis points from the front end of the curve. 10 yea

that is certainly what it feels like looking at what the pboc is talking about right now.is a tricky situation because just like you don't fight the fed, you don't fight any central bank. this currency impact is feeding through to the equity markets. asia really doubled up to the top of our scorecard. across all regions, more bullish than even the u.s. outlook or the european outlook or the latin american outlook which sort of falls towards the lower end. a lot of that is due to currency and what is happening with the central banks, so we are somewhat dependent on this currency dynamic to drive equity market performance going forward, and i would argue it is one of the biggest risks to equity markets, particularly as we see those central bank's diverge. guy: it has been a huge risk this year, hasn't it? a 10% performance difference in europe if you are a u.n. fed -- a u.s. investor or a eurozone investor. gina: i just wonder how much it becomes asia as the story next year, considering the difference of central bank policy starting to emerge. kailey: we will continue to hav

do you need to factor in the policy resurgence we are expected to see, given the tapering and the pbocaking this stance? especially since we have this maniacal surge for yield. david: you are right. the strange thing is as the economies diverge -- let's take technology as an example -- where more and more we are seeing you used to be able to play china by simply owning apple, or another major technology company that had major sales in china. that's less true going forward. you need to be in china investing in chinese technology companies. as the global firms become less integrated, it is more important as a portfolio manager that you have exposure that can be driven on the ground. that's what we are seeing from our clients. haidi: would you say valuations look better given that we have seen the political risks being factored in and the selloff we have seen the past year? david: if you are willing to take the 10 year view and you believe the argument i laid out about the fundamental intrinsic's of the economy, i do think in china and many emerging markets that there is better value ther