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tv   Bloomberg Daybreak Asia  Bloomberg  January 3, 2022 6:00pm-8:00pm EST

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♪ >> good morning. i am paul allen in sydney counting down to asia's maker jor marczyk opens. >> our top stories, investors brave risk despite the virus threat. treasury yields surge. omicron cases soar worldwide but more studies suggest that the
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variant causes less severe illness. china facinga $750 billion liquidity debt. >> australian markets returning from the holiday the first trading day of 2022. market staying open as always but we are on positive territory following that encouraging day on wall street. the asx up by 0.1%. the yield on the 10-year was up nine basis points roughly now. that follows yields in the u.s. higher as well. kospi futures in a positive director. we have the data out in the past few seconds. house prices fall the months of december, rising 0.6% on mo nth. slowing from the rise we saw in november. housing values in australia ending the year better by 22%. although there is evidence that
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momentum is now slowing in terms of price growth in sydney and melbourne. still looking strong and brisbane according to those prices. shery: we are seeing u.s. futures muted out the open after we had the s&p 500 and the dow finishing at record highs. on the first trading day of 2022, but of course we have to know that it was light volume trading given it was just after the new year holidays. we have seen cyclical and growth stocks sharing the spotlight. we also have the dollar index seeing its best day since mid-november, these expectations of a more aggressive federal reserve being felt across the board. wti at the moment losing a little bit of ground but still above that $75 a barrel level. we have seen a surge in the new york session ahead of the opec-plus meeting. one stock that took the spotlight today was apple. we saw evaluation briefly topping $3 trilling. the matching number right there
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would be $182.86 in order to get past that$3 trillion park it cap. we will get there soon but we have set in the past that every time apple tops a new trillion dollar milestone the stock dropped. 40% at 1 trillion. we will have to keep a close eye on apple shares in the next few days. we have been seeing treasury yields popping higher. there is more economic optimism out there at the start of the new year. we saw the 10-year yield a surge above that 1.6%. the 30 year at the highest since march 2020. we have some key economic numbers this weekend the u.s. including the jobs report. not to mention the fomc minutes as well. paul: it is easy to brush out what we see in these really early days but it does actually mean something. the stock trader's almanac runs what it calls the january
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barometer. if markets rise in the first months it is found that the following later months tend to rise as well. 84.5% of the time they have been right. if you throw in the santa claus rally and what happens in the first five trading days of january, if all three indicators are up, there was a pretty solid indicator it is going to be a good year. shery: so far investors are embracing risk to ring in the new year. asia's major markets will open after the holidays in the next few hours. let's bring in our contributor. what are you going into 2022? >> i'm watching in awe as the seemingly irrepressible rise in equities, even when they are at high valuations and they have gone up so far so fast.
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it is something that i was pondering on when you're talking about that january barometer was, yes, but most of the time you're not looking forward to a lot of rate increases that the same time. i wonder whether those 15% or so the time is when it didn't work, those of the times that fed rate hikes came along to spoil the party as it were. paul: yeah, there is an obvious yes but to that the fed may step in and take the punch bowl away in 2022. there other risk we need to be conscious of as well. garfield: yeah. one of the risks that has been a little bit hidden precisely by the strong concerns about inflation or the likelihood the fed will respond to that with aggressive rate hikes is will the global economy be able to perform as robustly as the
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expectation is? the expectation for a strong economic growth is part of what underpins the expectation for inflation, the asportation for fed highs. but everybody also expects china's economy did not do very well and china's economy has been a huge contributor to global growth over the last ten, 15, 20 years. if chin'as going backwards, that raises the question, can the global economy remain strong? the other thing i thought was very interesting looking at with the big take that was out yesterday, what is wall street looking for and the concerns they have, and the fact that definitely something that wasn't getting much concern was the pandemic because the assumption is that omicron is going to be the dominant variant. it is going to be milder. so, that's going to mean it
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causes less of an impact economically. for one thing, omicron by itself can have plenty of impact whilst hospitalization levels rise. yes, they are rising more slowly but there are so many cases. but the other thing is that everybody yet again is going, we can deal with omicron. well, what happens with the next variant in the next variant? and that is not something that people seem to want to think about anymore. there is a sort of a, the question that maybe that is the right attitude. maybe society is adapting so we can live with the virus. or maybe it is got a few more stings in the tail. shery: there is the optimism but what happens with the next variant especially given the rest of the world is still unvaccinated. garfield runnels, our chief rate correspondent. joining us with some of the risks for the markets. let's delve into the virus because in new york, mayor eric adams is laying a booster
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mandated april in an effort to avoid more restrictions in the city. mayor adams: it is needed to do mandates for certain reasons. let's do so and we come back around. so this is the new reality that we must face. our city and school system must open. we must continue to focus. we cannot use -- lose two more years of education for our children. shery: for more on this we bring in our san francisco bureau chief. how widely implemented are these vaccine mandates across the u.s. and what could in new york rooster mandate look like? >> new york's mandate is really one of the strongest and one of the largest cities in the u.s. requiring both public and private sector workers to be fully vaccinated. many other cities have similar recurrence for public workers, they have not gone so far as to require private companies and workers for those companies to have full vaccination. going a step further, would be
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significant for new york. but it comes at a time adams has just taken office over the weekend and is clearly, it comes at a time where new york is coming in a massive virus surge. new york has been at the forefront telling people to work from home and a step back for new york and a time to get back on track economically. you also have adam saying in interview you cannot run new york city from home. you want workers to get back as quickly as possible. >> adams very keen that school resumes at the start of the year but it is one thing to say that. are there enough staff around to make it happen? kara: right. that's something schools across the country are dealing with right now is the staffing issues and, of course, with covid operates causing teachers to have to stay home and quarantine themselves. today was really the first day back for many school districts. and everyone, theref is hope for
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more -- -- there is hope for more testing. many school district have handed out tests for school children. local officials are really determined to keep schools open at almost any cost and to do what they can to not have to go back to remote learning. paul: our san francisco bureau chief keeping an eye on the pandemic in the u.s. let's get to vonnie quinn with the first word headlines. >> thank you. bloomberg is being told the white house is likely to nominate economist jefferson for a seat on the fed board of governors, the fourth black man to hold the position in the central banks more than 100 year history. jefferson's in economics professor and faculty dean at davidson college in north carolina and has worked at the fed twice before. a winter storm sweeping across
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the mid-atlantic is dropping heavy snow on washington, d.c. it's forced the closure of schools and federal offices and knocked out power to more than one million people. half the flights out of reagan national airport have been canceled and the storm warning is in effect from northeast georgia to central new jersey with the front expected to pass south of new york city. opec and its allies are poised to revive oil production when they meet on tuesday. delegates say the 23 nation alliance is on track to ratify another modest output -- of 400,000 barrels a day. on monday the groups analyst met -- predicting weaker supply growth from rivals. global news 24 hours a day on air and on bloomberg quicktake powered by 2700 journalists and analysts in 120 countries. this is bloomberg. paul: a look at what is ahead for bitcoin and cryptos after a volatile year with australia's
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largest digital asset exchange beating -- the ceo joins us next. plus, one startup is finding value in the -- one of the world's dirtiest industrial sectors. green oil shows how it plans to help. chinese steel mills go green this is bloomberg. ♪
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>> the things that makes me optimistic is more regulatory clarity in the u.s. and globally which i think could help a ton. and institutional options. >> that is the ftx ceo. we continue to see volatility player. we've seen crypto assets rebounding after falling in the
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new york indexes. bitcoin is below the 200 day moving average. at $48,000. we also have the 14 day rsi near that oversold territory for bitcoin given that we lost 20% in december. which was one of the worst months for 2021. we also have the galaxy crypto index at googler -- bloomberg falling 20%. we have seen a little bit of those losses being recouped in this session. paul: bitcoin starting the year the way it ended the last one would volatility. market value fell 19% in december, the largest monthly loss since may. and it's worst december since 2013. to get the outlook for crypto and 22 -- in 2022, we are joined by the ceo carolina
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bowler. there is always plenty of conjecture around the future. a former skeptic is now allocating 2% to 3% of his portfolio to bitcoin. it could go to a zero hour could go to one million. i really don't know. do you know? >> that is the risk investment -- portfolio allocations as an alternative asset class that tends to be around 5%. enter cryptocurrency. we have heard this narrative being beaten so many times but what we will see in 2022 or beyond. instead what we are going to see the narrative -- focused on bitcoin. it has about 40% of the market cap.
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a theory of is at 20% of the market cap in crypto. if itself is going to, its 2.0, this next iteration and will help with speed and sustainability and scalability which is so important. the first half of 2022 the it will be sentenced around ethereum it will also be the layer two story. for those who are new enter cryptocurrency, you have the layer one blockchain's the bitcoins we are talking about but there has been an understanding of the issues surrounding the blockchain, the scale of ability -- the scalability being one. the -- the next layer being
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built is the story for 2022. paul: we often talk about regulation having the potential to blow a hole in some assets but could regulation be a blessing as well by bringing some order to all of this in helping the markets mature? >> yes, absolutely. i know for, in australia that has been the story of the past year. they are very much taking the front foot locally. they're very open and a consultant to fashion, which gives them a lot of we see extra regulation as a positive thing. the ceo of ftx in the commentary said it will give it up greater surety for our client base and for wider investment both in the infrastructure and also within the asset class.
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shery: when we are talking about the maturation of this industry, does that mean more m&a's in 2022? >> absolutely. that is probably something for us locally in australia. that is going to be the discussion over the next 12 to 18 months. that maturation that comes in actually brings with it a wave of consolidation, smaller exchanges and smaller trades, merge together and increasing that larger m&a. but i suspect the m&a will not just be amongst crypto players themselves, i suspect we will see increased m&a from larger more established institutional financial players coming in and snapping up different crypto players, in exchanges and other protocols, etc. looking at defi. the period is going to be the
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next 12 to 18 months in the next business cycle seems to be where we are at within crypto right now. shery: and when we are talking about this market maturing, what about the mechanisms for investing in these digital assets? will we see these big companies -- big companies or will we see smaller ones and startups as well? >> yeah, i think it is going to become the story of david and goliath when it comes to this industry that you got this scrappy players going to do battle against the larger more established. we'll definitely see that point. we have a long way -- to come th rough. a direct interest from the institutions now. what are the channels, how can i get on board in proactive white? if 2021 and 2022 now 2022
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is the year that they start to put some money in. it is going to be very exciting put we say that every year about cryptocurrency, the accelerated pace of growth, but that is what we are going to see going into 2022. shery: caroline bowler joining us from melbourne thank you. we do have an alert on the bloomberg. we are hearing that credit suisse will be laying off 69 employees in new york according to report by "the new york times" that is see a filing with the state department of labor saying the swiss bank is cutting jobs because it will close its -- division by august 1st. in the wake of that $5.5 billion in losses from the collapse of their capital management. again, credit suisse reportedly laying off 69 people in new york. coming up, apple closing in at another record after briefly becoming the first company to hit $3 trillion in market value.
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this is bloomberg. ♪
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♪ shery: we have an alert on the bloomberg. we are hearing that the judge, the jury has told the judge they can't reach a verdict on the last three counts of the 11 charges that elizabeth homes is facing in her fraud trial. now, the judge will be inquiring with the jury foreperson and po ll the jurors that are deliberating for the seventh day in this trial. we have seen earlier that the jury has sent a note to the judge in the trial. we do not know exactly what those three counts are where they cannot reach a verdict, but at this point we know that we haven't move forward in terms of
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reaching a verdict on the last three counts so far. but paul, we have to look at apple now, very close to that $3 trillion mark. paul: yeah, they cross that mark briefly before pulling back, but still closing at a record high along with the s&p 500 index. let's get over to l.a. and our apple reporter. mark, apple's valuation was -- looking really rich. how long can is stay above this level, how sustainable is this? mark: i think 2022 is going to be a massive product year for apple and of course with apple product is what drivves-- what drives the revenue and what you will see is a rally this year as investors anticipate the iphone 14 to potential introduction of a v headset, three new air p
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ods. in years with the markets and analysts of investors are expecting big product in the later half of the year. so, i think based on history we are likely to see something similar. of course, there are many economic aspects to calculate in stock price. of course apple will be announcing earning results at the end of this month or early february and that is going to give us a very strong indication of where the stock may go. we really are waiting to see perhaps the end of january to know what the rest of the year is going to look like. shery: how much of the gains and fortunes of apple correlate to the gains of its asian suppliers? we have many in taiwan and south korea and japan as well. mark: typically you see the asian suppliers react based on what apple does versus vice versa. so they are sort of connected but in many ways they are not. pegatron in some of those other
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companies in asia make the bulk of their revenue from apple. if they are not getting revenue from capital date -- from apple they are getting revenues from other companies that are working with them primarily because they are working with other companies. paul: as the a $3 trillion valuation. we are tracking the fallout of the global supply chain crunch. mercedes-benz excess supplies of cap semi conductors will continue to grip the injuries, urging chipmakers to add more capacity globally. inflation is sitting ikea. the company raising prices by an average of 9%. it says it continues to face raw material constraints with no anticipated break in the foreseeable future. the holidays may be over, but cargo volumes are set to remain high. ups says to expect if i'm a return packages to come in 10%
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higher than last year's peak season. shery: we continue to watch the elizabeth homes fraud trial. we are hearing that the jury will be delivering a partial verdict in the trial given that they have not been able to reach a verdict in the last three counts
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shery: we continue to watch the story on the jury deliberating on elizabeth holmes' fraud trial. they will be delivering a partial verdict because they were not able to reach agreement on the last three counts of 11 charges. they have been deliberating for seven days. they have not been able to reach an agreement and verdict on the last three counts. they have to decide if holmes is
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guilty of charges from 2018. we will be awaiting the partial verdict to be delivered soon. paul: evergrande says a recent government order to demolish 39 apartment buildings will have little impact on the sprawling complex on hainan island. chinese stocks sank. let's get to stephen engel in hong kong. what do we know? stephen: sentiment towards the property sector in china picks up where left off in 2021. yesterday, the first day of trading, we saw negative sentiments on the property market dragging down the hong kong stock exchange index, the first time in three years we had such a down day in the first day of trading. any optimism wiped out by evergrande again. in the fourth quarter it did
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default on dollar bonds. there is pressure across the sector, a cash crunch with bond securities and payments in january coming due, -- due. we had news late last week the company had been ordered by a local government in hainan island to demolish 39 apartment buildings in an offshore artificial island development called ocean flower island. this is a statement from evergrande saying, they are denying it will have a material impact saying, the demolition order affects 39 buildings in that northwest corner of the island. it is the number two complex. they are building three artificial islands, similar to what we see being built in dubai.
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evergrande will proactively communicate in accordance with the demolition order. the sentiment continues to be negative toward evergrande. we have numbers on their december contracted sales falling 99% year-over-year. there are more than one million evergrande apartments to be delivered yet. people are not lining up to buy these properties. shery: properties owners are not getting a break with the lunar new year. each year we see the race for cash. how are authorities going to deal with this? stephen: it is a fairly early lunar new year start, january 31, february 1. there will be a rush for cash as they hand out cash during the lunar new year holiday. there is a maturing debt in the property sector and in public bonds and government bonds that
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will be maturing. there will be a rush. there will be a respite from the triple r cut from the pboc, but market waters are saying the central bank perhaps needs to ease to avoid a cash crunch, given the short amount of time between the 1st of the year and the holiday. the pboc did cut the rrr requirements ahead of the lunar holiday. they did not in 2021. what did we see drop? tightening policy. shery: let's get to vonnie quinn. vonnie: the new york attorney general subpoenaed ivanka trump and donald trump, jr., looking into their father's business dealings. they wanted to see if the former president's real estate --
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president real estate was illegal. newly released documents show the woman suing prince andrew for sexual assault took a monetary deal. virginia giuffre -- her lawsuit is barred. andrew has denied the allegations. u.s. regulators have increased doses and schools reopen. the fda will allow a third stop for children between the ages of five and 11. the u.s. has seen an increase in hospital admissions, rising to more than 500 a day. new york mayor eric says they might expand vaccine mandates for booster shots. health sector employees are
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required to be fully vaccinated while a private sector mandate went into effect december 27. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: let's get more comments from new york city mayor eric adams. four banks remain open and the city will continue in a smarter way. listen -- >> what would happen in the past, we had one diagnosis, we wanted to close an entire school. it makes no sense. instead of using our resources in a strategic fashion, science has shown, just because one should -- one child has an infection does not mean the whole school does. we will have it and defeat covid. >> give us a sense of the strategy. one is, let's slow down the
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spread, another, we have to manage through it. do we as new yorkers have to get used to the idea we all may get this? >> i could not have said it better. here is the strategy, the way i look at it. i take my hat off to the u.s. chief president and these great educators, these are real heroes on the front line. we need to realize we can't live our lives through covid. every variant comes out, we cannot spend $11 trillion. we have to figure out, how do we live with covid? be smart, social distancing, washing our hands, wearing our masks. when it is needed to do mandates, let's adjust and then come back around. this is a new reality we much face. our city and school system must open, we must continue to focus.
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we cannot lose two more years of education for our students. it impacts them and families. this city will function, be safe, and stay open. >> you mentioned you need to have mandates and go in that direction. tell us about mandates for boosters for city employees. i have heard you say you are thinking about it. do you have a sense of when you will have a decision on that? mayor adams: we are thinking april. we will do an analysis. covid does not realize covid -- new york is resilience. we will do an analysis and see if we want to mandate them. that does not take away from my message to new york. get your booster shots, get vaccinated, do an analysis of the chart. people think, i have my vaccine,
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i won't get covid. you may get covid with the vaccine, but you are less likely to die and be hospitalized if you have been vaccinated and have the booster shot, especially for those with comorbidities and pre-existing conditions. it allows our city to reopen on a faster pace. we will look at if we have to mandate. we are not there yet. paul: that was new york city mayor eric adams speaking with david westin earlier. coming up, finding value in one of the dirtiest industrial sectors. helping chinese steel mills go green. this is bloomberg. ♪
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paul: there is no shortage of opinions when it comes to the energy outlook in 2022. some analysts see oil reaching $120 a barrel. let's get the view from head of asia research. how did the energy sector play out last year in the asia-pacific? >> the final days of the year we saw energy commodity prices from
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lng oil and thermal coal continue to decline. that was a positive development. on the renewable friends, good news. on christmas eve japan released the results of its latest offshore auction and the winning bead by a consortium had achieved a record low price. on electric vehicles, preliminary estimates had apac, $3.2 million, more than double the $1.3 million we saw in 2020. shery: what are your predictions for 2022? should we be concerned about wildcards? ali: keeping it short, for energy commodity prices for lng and others, we expect prices to
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decline the first of the year. there are important wildcards to pay attention to. for lng, tensions between russia and ukraine are important to watch. any flareup of tensions in europe will resolve -- result in higher lng prices in asia. for coal, we expect prices to decline. we saw on the first of year, singapore announcing a temporary ban on exports due to domestic supply challenges. if that is prolonged, that may reverse the trend and we will see higher prices. shery: his outlook for the energy sector. another focus area, we expect half of all reduction capacity, with a corporate net zero target by 2022. that brings us to china and its
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massive steel industry. still making material iron ore, after a turbulent 2021 sparking a rally. industry-specific pmi shows a pickup. analysts expect a bump in co2 production after the beijing olympics. still a key driver for an industry that is a major source of air pollution in china. five-year plan for raw materials released last week show coal consumption including steel will be strictly curbed to cut carbon emissions. let's stay in this sector. a start built out of columbia university can seal pollution. piloting a project in mongolia, to get waste from a steel plant, to get products that they can -- that can be used in paint.
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explain to us your technology and why did you get started in this sector when it comes to iron and steel manufacturing? sean: good morning, and happy new year. we funded green ore out of columbia lab. my phd research was on sustainable science. our fundamental research was on how to utilize national rock to turn co2 gas into solids and valuable products. for decades the cost of this technology has been big trouble for us. we cannot reduce the cost. then we are searching for alternatives. steel waste is one of the options.
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when we visited several steel companies in 2014, we see the chinese steel companies are facing a solid waste issue other than a carbon issue. we could integrate those two problems into one solutions and that is how we started greenore. paul: i wonder how scale -- shery: i wonder how scalable this is? sean: we started from the labs, a beaker, in 2009. after 12 years we scaled up step-by-step from beaker to demo prototype, to pilate, to pilot factories, and now we are building the first of its kind plant. paul: to shery's points, carbon capture sounds like nuclear fusion. there are loads of experiments,
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plenty of pilot studies, but it is always 20 years away. you say you are building a plant now. when will it be operational and cost-effective? sean: we will complete construction by mid 2022. it will be in full operation toward the year end of this year. the carbon capture project has been going viral in recent years. it is not new. in 2000, people were doing these demonstration projects. bringing down cost and finding value in co2 is a challenge. because we can merge the carbon emission issue and recycling waste challenges together, we see optimism based upon the greenore technology. paul: where is the money coming
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from? who is investing in this? sean: previously we were raising money when we started this company at columbia. we received a lot of attention from the vc's. and by collaborating with our steel company partners in china. they have been funding this commercial project this time. paul: i know you are also looking at lithium battery recycling. can you talk about the scale of that problem and how you are looking to address it? sean: it is step-by-step, takes years. the chemistry of using carbonic acid, a weak acid, instead of a strong acid, can be applied to lithium battery recycling.
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we are doing lab research right now. based on the experience of flagging up this process, we are hoping in the shorter period, we can bring this technology to the market as well. paul: our cofounder and ceo, -- greenore cofounder and ceo sean zhou, thank you for joining us. we are waiting for a jury from the elizabeth holmes trial. we have been reporting the jury unable to reach a verdict on three of the 11 charges. they are waiting to find out more after that lengthy trial, which resulted in the detention of elizabeth holmes. more news on that when we get it. this is bloomberg. ♪ is is bloomberg. ♪
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paul: a quick check of the latest business flash headlines. credit suisse laying off 69 employees in new york. the job cuts will take place in march, set to wind down its prime services division by august. this in the wake of a collapse which cost them $5.5 billion in losses. bridgewater has two ceo's to
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replace david mccormick. they will be the joint heads of the world's biggest hedge funds. nir bar dea, and mark bertolini. a singapore arbitration tribunal could allow the indian retailer to settle assets. the singapore tribunal head refused to terminate the case before the final hearing. they argued the arbitration is illegal, and had an indian antitrust ruling against amazon. shery: we are counting down to trading inso -- in seoul. we are expecting the first speech of the new year and korea's fair trade commission to release a plan today. hyundai motor is in focus after
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it is aiming for an 11% increase in sales this year, with kia targeting 13% wage growth. japan will be watching apple suppliers, given that company had a $3 trillion valuation. japan is back from the new year holidays. we are watching manufacturing pmi, that should be released in the coming hour. the nikkei reporting toyota is looking to develop its own operating software for its vehicles by 2025. mitsubishi's ceo says the company may need to be restructured to avoid long-term decline. paul: let's stay with japan, where markets are set to reopen for the first time in the new year. it paves the way for japanese stocks in 2021 as pandemic
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struggled. what are we watching? >> after performance against the u.s., stocks are expecting a better year for japanese expert -- equities as people look to better options and valuations. a lot of things they need to watch this year. fed policy in japan by the prime minister, how he defines it. we have the upcoming market restructuring by the japan exchange group, which will decide the market structure and have three markets instead of the existing four markets. those are things we are watching for. and how investors see japanese equities after being underweight
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on japanese equities for quite a while. that will be a key theme to watch. shery: let's delve into some of those stocks we continue watching as we see trading beginning in tokyo and seoul. we had mentioned those suppliers. for apple both in japan and south korea. in the u.s. when we had apple talking about that $3 trillion mark we saw pnc seeing their best day since july of 2020, when it came to abr trading. look at those stocks in tokyo and seoul at the open as we get those markets underway. we saw south korea higher for the first trading session of the year. in yesterday's trading session. we will see if that continues
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after japan comes back from the new year holiday break. they ended 2021 on a sour note. we will see if we continue to see that momentum. the opening ceremony taking place now in japan. this is bloomberg. ♪ this is bloomberg. ♪
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shery: welcome to "daybreak asia." i am shery and. paul: i am paul allen in sydney. asia's major markets opened for trade. investors embrace risk despite the virus threat to read u.s. stocks starting the year at record highs while treasury yields surge. cases surge worldwide, but studies show omicron has less
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severe illness. the jury of the elizabeth holmes trial deadlocked on three counts. shery: take a look at japanese stocks coming back from the new year holiday. every sector in the green with utilities and information tech leading the gains. the japanese yen continues to see weakness. unchanged against the u.s. dollar, 115.32 level. we see the weakness given the dollar strength we have seen the highest since mid-november. you can see on the left the opening ceremony at the open -- tokyo stock exchange as the market comes back online for this first session of 2022. they ended 2021 on a sour note, but still positive territory for the year. the kospi, the second day of trading for south korean stocks. after ending higher yesterday,
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we are seeing it is muted. we are seeing the korean won under pressure given the strength of the dollar, that 1196. we have been watching bond markets in the korean space given we have the indication we may be up bigger than expected, leading to more concerns. paul: trading underway in australia for the new year. we have been going for a little over an hour, off to a strong start. the asx higher by zero point 8%. materials and energy among the best sectors. uranian -- uranium doing well. up 6%. the e.u. said it would designate some nuclear energy projects as a sustainable investments. we also see the aussie dollar
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clawing back from lost ground. yields in australia climbing as well. we were higher by 11 basis points. the yield on the aussie dollar now 1.769. shery: let's bring in our guest. could 2022 see risks catching up? from shelter investment management, richard. happy new year. could we see bear markets here and there? richard: yes, but i don't think immediately. we have seen the markets start off like a train. not surprising because we are still carrying on from last year. good news about apple hitting the $3 trillion. the key thing in the first part of the year is the fact we will
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see low interest rates. we saw inflation crack up toward the end of last year. we still have low interest rates. that is likely to continue. if inflation comes back a bit, my forecast this year shows we are looking at a period where inflation will continue to grow. the fed and other central banks have few tools to defeated. -- defeat it. paul: what are you seeing in terms of opportunities, given valuations are expensive? richard: first of all, you need to stay in the market. you want to focus on, the tech sector has proved itself. tech is the darling of our age just as previously tv was, cars
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were, shipbuilding, even steel 120 years ago. we have to look at the themes of our age. tech is still there. you have to be careful about it. tech will not be without its concerns. if i was looking at a theme for 2022, i would be looking at electric vehicles. we are now seeing major companies getting together. the big thing holding it back, the range of electric vehicles, is starting to increase. the supply chain of electric vehicles will be interesting. keep an eye on inflation-type stocks. where companies can increase races bit by bit, the things you see in the supermarket. those are the kind of things i would look at on the inflation side.
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paul: you said to stay in the market, but are there any pockets getting overvalued? particularly with fed typing on the horizon? richard: the whole market looks overvalued. we are in an environment where interest rates mean nothing. that has affected valuations across the board. most of our traditional valuations are relative anyway. it is difficult to say we should be here rather than somewhere else. as we are going to go on further into the year, we will have the base effect, where you have good year -- good numbers, the covid recovery from last year, not so good this year. that will be a concern. clearly [indiscernible] we will not see a stem -- a
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systemic issue out of the chinese side. we do have a number of unknown unknowns. we will see a couple of events that will shake markets. we are analysts. if i was going to look at a map far 2022, it would be a good first half and maybe a bear market, may be a 20% fall half way. the big question is, will we go more than halfway? shery: we are getting more in terms of that fraud 5 -- trial of elizabeth holmes. the jury reached a unanimous verdict on the partial verdict after they did not agree on three counts of the 11 charges. we will have details in a few minutes and keep you updated. in the meantime, let me turn
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back to you, richard. what are your expectations in terms of the strength of the dollar, in terms of monetary policy and diversions we will see between the u.s. and asian central banks? richard: this time in the cycle, when we are likely to see fed rates rise, the dollar will have an element of strength. that is likely to continue. it may fade as we go further into the year, if the bull market continues. the dollar traditionally has been a haven. i am a believer of looking back in history. history does not repeat itself, but it does rhyme. typically the dollar is good in times of crisis, not good when markets are stable. it is a risk on environment. the interest rate story may be weakening further out.
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i am talking small percentages. it is the place to be. currencies are a zero-sum game. you can't stay completely out of other currencies. i don't think we will see those moves for other currencies. shery: richard harris, thank you for your insights. i look forward to speaking to you again. we continue to watch what is happening in san jose, california. the jury in the elizabeth holmes fraud trial has reached a unanimous verdict. let's bring in emily chang. it is unanimous, but it is a partial verdict. explain what is happening. emily: this morning the jury told the judge they were at an impasse on three of the 11 counts, that they could not agree on three of the 11 counts. the indication was that on eight of those 11 counts they did
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agree. now we know the jury is saying it reached a unanimous partial verdict on those eight counts. we don't know what the verdict is yet. we are waiting for that verdict to be read minutes from now, potentially one minute from now. there are 11 counts, wire fraud, conspiracy to commit wire fraud. she is accused of defrauding investors of hundreds of millions of dollars. this is a culmination of a four month trial, 14 weeks of testimony, 900 pieces of evidence, 29 witnesses. deliberations have dragged on through christmas and new year's and in the middle of a covid surge. we are on the seventh day of deliberations, and all of us are waiting to see what that partial verdict is. shery: it seems we are getting the latest headlines now from
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the jury. elizabeth holmes has been found guilty. we were discussing it has been a really long trial, more than three months, for the combated start up founder. elizabeth holmes found guilty in this trial. they were trying to decide whether holmes was guilty of fraud and conspiracy charges filed in 2018. give a little context for what this would mean for elizabeth holmes. emily: they are working through eight charges. officially, elizabeth holmes has been found guilty in this fraud trial. she has been found not guilty on count number two. they are going through count by count. one guilty count is a guilty verdict. all of these counts carry a maximum of 20 years in prison. those would be served
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concurrently. she likely would not serve more than 20 years in, even if guilty on all eight counts. the jury has no verdict on counts3, 4, and 5. those must be the counts the jury was in an impasse on. the big takeaway, she has been found guilty of at least one count, not guilty on count number two. we are getting count number six and seven. guilty on counts number six and seven. we have ou -- four more counts. guilty on count number eight. we are waiting for count number 9, 10, and 11. the maximum sentence for all of these counts is 20 years in prison, but that would be served concurrently, and she would not serve more than 20 years in
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prison because that jail time would be served concurrently. still waiting for three more counts. paul: while we wait for those, let's talk about counts three, four and five, where no verdict was reached. will she be retried? could we expect an appeal for the counts on which she was found guilty? emily: we got another not guilty verdict on count number 10. still waiting for nine and 11. not guilty on count number 11. right now the prosecution, based on those three counts, could have an option to file for a retrial, but even one guilty verdict is a victory for the prosecution. i would say right now this is a victory for the u.s., a victory for the prosecution. it was always the government's
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case to lose. there was a ton of evidence presented, a ton of evidence against is elizabeth holmes, and a ton of evidence that she misled investors. elizabeth took the stand and offered compelling testimony. she said she was sexually and emotionally abused by her business partner. she had many "i don't think i did." it was a widespread defense. if she was found not guilty of all the counts on the case, experts would say it was based on her testimony alone, which was very compelling. however, this is a loss for her. others will look at this as an indictment of the culture of silicon valley, the fake it until you make it, the stretching the truth in pursuit of big innovation, fame and fortune.
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huge, huge news that elizabeth holmes has been found guilty. now guilty on multiple counts of wire fraud and conspiracy to commit wire fraud. shery: tell us more about that culture and the broader implications for silicon valley. it has been a lot about aspirational statements of these startups, how to improve people's lives through technology. elizabeth holmes attempted to imitate steve jobs. will silicon valley look back and assess where they are at? emily: there is a huge camp of folks in silicon valley who believe elizabeth holmes does not represent silicon valley at all. they will say her investors were not traditional investors or venture capitalists. they were people like the walton family, rupert murdoch. others will say she was a product of stanford university, based in seleka and valley. theranos was based in silicon
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valley. one of her earliest investors was a long time silicon valley investor. in many ways, she was an outlier. she was so extraordinary and what she claimed in the amount of money she raised, and of the fact she was a woman. very few white collar cases go to trial, and this one went all the way. in some respects, there are folks who do not want to claim any relation to elizabeth holmes as a product of silicon valley. others say she is a perfect example of the overly optimistic salesmanship you see among founders. most of the time they are not called on it or prosecuted. very few cases like this actually go to trial. paul: for those viewers perhaps not familiar with the background of the case, can you tell us what it was about and examples
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of the salesmanship that occurred? emily: elizabeth holmes claimed theranos' blood testing machine could conduct over 1000 tests, when it could conduct may a dozen tests. the others were conducted on traditional machines that did not use theranos technology. she claimed theranos was used on the battlefield to test the blood of soldiers. she claimed contracts with companies like safeway and walgreens would reach millions and millions of dollars in a short amount of time. there are reports of her speaking with a fortune news reporter where she stretches the truth. there are recordings of her speaking to investors where she most definitely stretches the truth, and some would argue, outright lied. this jury has decided she is guilty of misleading investors on multiple counts.
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as i understand it, elizabeth holmes today will be leaving the courtroom. the sentencing will come later. she now faces up to 20 years in prison, even though she has been found guilty of multiple counts, those sentences will be served concurrently. she likely won't serve more than 20 years in prison. speaking with legal experts, that sentence will likely be reduced. shery: what do we know about what is happening to her one time romantic partner and former president of theranos? emily: his trial is coming up in february. elizabeth holmes will likely not be a witness in that trial, though now with a guilty verdict, we will have to watch the potential of that. his case will be different, focused on technical, scientific
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arguments, not touching on the physical and emotional and sexual abuse elizabeth holmes has alleged. it is a separate case coming up in february. i would say a guilty verdict for elizabeth holmes does not bode well for balwani. if the jury has come to this conclusion about elizabeth's involvement, given how closely they worked together, it will make this an uphill battle for him. paul: bloomberg technology anchor emily chang. elizabeth holmes found guilty on charges 6, 7, 8, not guilty on charges 7, 10, 11. we are still waiting to hear on charges 3, 4, 5, and 9. maybe oversupply on the horizon. we discussed the semiconductor outlook. this is bloomberg. ♪ is bloomberg.
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shery: you are watching -- >> you are watching daybreak asia. the white house will nominate philip jefferson for the fed chair. the first black man to hold the position in its 100 year history. he is a faculty dean at davidson college in north carolina and has worked at the fed twice before. a winter storm hitting the u.s. midatlantic is dropping heavy snow on washington, d.c. it forced the closure of schools and federal offices and knocked out power to more than one million people. half the flights out of reagan national airport have been canceled. a winter warning is in effect from central georgia to new jersey with the front passing
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outside new york city. opec and its allies to revive oil production when they meet tuesday after giving a tighter outlook for global markets. delegates say the 23 nation alliance has a modest outlook revival of 400,000 barrels a day. on monday the analysts cut estimates, predicting weaker supply growth from rivals. tesla has criticism for opening a new showroom in china's xinjiang region, where the government has been accused of human rights violations against the uighur population. an alliance for american manufacturing says it is especially despicable. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. paul: property developer china
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evergrande says a government order to demolish 30 nine apartment buildings will have little impact on its sprawling complex on hainan island. the news did way on sentiment and it sank in monday trade. let's bring in stephen engle in hong kong. what is the latest? stephen: property sentiment picking up where 2021 left off. property developers sank across the board. evergrande was the main catalyst for the negative sentiment. the report you mentioned, this is about the island flower complex off the northwest coast of hainan island. ocean flower island, i should say. they have three artificial islands and they say the demolition order that came from a local government, just outside haico, has ordered the
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demolition of 39 apartment buildings. but evergrande is saying that won't affect of the overall project. this is a huge project, $24 billion. evergrande is heavily indebted and the poster child for liquidity problems, default on dollar bonds. that sent sentiment lower. the company is saying they will handle the demolition order in accordance with the order from the government. nevertheless, more bad news to start the year in the property space. shery: it does not help with up the lunar new year holiday is earlier this year. what will happen to the cash crunch? stephen: in addition to the $190 billion plus in liabilities coming due, whether it is bonds
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or deferred wages in the property space, you have the big cash crunch in the first part of the year leading up to the lunar new year holiday in china, where people give cash, take out cash. for the big migration happening in non-covid times in china. there is always a cash crunch. the pboc did reduce the reserve ratio requirement at banks. they did not do that last year ahead of the lunar new year holiday, signaling what we did see transpire over 2021, and overall tightening of policy. they already had a rrr cut by the pboc in the fourth quarter of last year. economists are predicting because of the liquidity crunch, which could be to the tune of 4.5 trillion one -- won in
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january, they are predicting the pboc may have to produce rrr ahead of that crunch. shery: let's get a quick check of the business flash headlines. credit suisse laying off 69 employees in new york. the job cuts will take place in march. the lender said the move comes in -- after the collapse which caused $5.5 billion in losses. ridge water associates has named two ceo's as david mccormick steps down for a senate run. there will be joint heads of the hedge fund. bertolini was head ceo of the insurer at not. we will discuss the direction of
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oil ahead of the opec-plus meeting. this is bloomberg. ♪ this is bloomberg. ♪
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♪ shery: this is daybreak asia. vonnie: the new york attorney general has subpoenaed ivanka trump and donald trump, jr. as part of the investigation into their father's business. attorney general letitia james is examining whether their real estate business manipulated the value of key assets for tax and insurance purposes. trump should -- trump sued saying it is politically motivated. documents show a woman suing prince andrew for sexual assault took half million dollar payment
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in 2009. the deal required virginia dufresne to release any other -- involved in the case from litigation. the prince says the lawsuit has been barred. andrew has denied the allegations. your biggest -- u.s. regulators approved booster shots for children ages 12-15. access to additional doses as schools reopen. the fbi will allow a third chart for amino compromise children between the ages of five and 11. the u.s. has seen an increase in hospitalizations for children, rising to 500 per day. new york mayor eric adams says the city might expand its mac -- its vaccine mandate to require boosters. public sector employees that -- are required to be vaccinated. adams told us the rules are vital to keep businesses and schools >> it is needed to do mandates for certain reasons,
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let's adjust and to do so, then come back around. this is the new reality we must face. our city and school system must open. we must continue to focus. we can't lose two more years of education. vonnie: global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: we do have more data right now, manufacturing across asian countries. we saw pmi numbers in japan and vietnam seeing inflationary territory for another month and improved slightly. tecumseh vietnam, or thailand in fact, they fell into contractionary territory after two months of barely staying in the expansionary period. right now falling to the lowest since september 2021 when it comes to those december numbers. we have seen asia and european
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factory activity data continuing to expand. of course we do have the risk of the covid. the last time we had a wave around the middle of last year, asian factories taking a hit. we will be watching those numbers as we continue to see expansion, but thailand is falling into contraction. >> let's look at commodities now. oil futures rallying ahead of tuesday's opec-plus meeting. also a bullish forecast for record oil demand. su keenan joins us. are we looking at a strong start for 2022? >> it looks that way. if you take a look at the chart thereby you will see we are surging above $76 for west texas intermediate. that is on the tail of last year when oil boosted its biggest annual gain since 2009. the role of vaccines helped a
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lot of economies reopen and that boosted demand. we are seeing pullback in asia trading. not by much. west texas intermediate holding close. above $76, it has been wavering a little bit. as you take a look at the trajectory from the last couple of days, there is a lot of optimism going into this opec-plus meeting. the oil producers are set to boost oil supply, adding another 400,000 barrels a day. in january decision that will impact february. the announcement expected tuesday is widely seen as a foregone conclusion. monday, the cartel cut its estimate of surplus in oil markets for this quarter. they had previously thought there would be a bigger surplus, but now seeing the surplus is 25% smaller, bottom line a lot of analysts -- another good year. strategists say oil demand is
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widely expected to set new all-time highs in 2022. that would be above the 100 million barrels a day mark. there is a very positive sentiment going into the opec-plus meeting on policy having to do with output. that is a big contrast with the angst the oil market had about these decisions late last year. shery: we about to see a change in opec leadership? >> it was announced after the monday meeting that secretary general mohammed barkindo will be stepping down. he has served the maximum two terms. he will be replaced by a well respected kuwaiti oil executive with years experience. to quote one veteran, this former diplomat knows opec inside and out and also knows the ins and outs of the market. still, there are concerns over crude demands.
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despite the optimism we are feeling, opec is in a delicate position. someone of a narrow path because they are trying to pump enough oil to satisfy the anticipated recovery without -- and this is important -- tipping the market back into oversupply. across the board there is expectation that oil demand is recovering and will continue to recover to pre-pandemic levels. the fact that we have had a steady opec-plus supply increase cap of fact that there is some bumpy starts to air travel, as we saw in the u.s., thousands of flights canceled. and a bit of concern about seasonal demand softness. that is the one concern that opec has. china, asia's biggest oil user, has shown signs of weakening fuel demand because of its relentless covid policy.
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that is another factor weighing on opec-plus. they could pause these monthly increases down the road, but what we are looking at for later tuesday is pretty much baked in. shery: su keenan the latest. right now we are hearing that china's hunan province has announced a partial lockdown after we saw covid cases rising. we continue to see the omicron variant, the spread of covid wreaking havoc on the chinese economy. eurasia group saying china policy could be one of the top geopolitical risks. we spoke to hoover institute bus senior fellow about why the country's pandemic measures are such big concern. >> in spite of the massive case explosion, the developed world is going to feel more normal,
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finally, within weeks. but that is not the case at all in china. the ability to live with the virus, an extremely transmissible virus that is not as fatal, is the exact opposite of china's policy of zero covid. zero covid will not work, but they will stick with it. that means they are trying harder and harder to impose strict quarantines which is going to have big impact on their autonomy. it is not going to look good, but xi jinping can't back away. there vaccines do not work very well. they do not have a lot of antibodies in the population. they are going to be fighting harder and harder to deal with the strategy that looked the best in the world back in 2020 and this year it is going to be the worst. >> it worked for a couple of months, but what happens in
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china does not state insulated to china's economy. this is the second largest in the world. how much do you think there is a risk of that being extended globally in terms of supply chain issues and slowdown in general? >> the ability of the chinese government to ensure that there is a stable level of growth for chinese domestic citizens is high. but, if they are shutting down cities, and that would include significant amounts of production. you're going to have this spike and pullback must spike and pullback. the kind we felt in the u.s. and the west over the past 18 months. suddenly you get back in china and of course that means we will continue to have supply chain challenges across the world and it also means inflation has the ability to persist longer than otherwise expected. this is a politically driven challenge.
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it is not primarily virus driven, but it is one the chinese government can't get out of their way on. >> elizabeth, let me ask about china's economic growth and strength. despite zero covid, are they still expected to overtake the u.s. economy? are they still expected to rule the world, so to speak echo >> we have seen in the past year some economists have pushed the anticipated date for china's economy to be larger than the united states from 2030, 2033, now people are saying china will never exceed that of the united states. in fact it may fall prey to the middle income trap. one of the things we need to be looking at is how well china is managing out of its real estate
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crisis. it has had evergrande, but there are a number of other real estate firms in china that are equally overleveraged. we should expect over this next year to see that becoming an increase -- increasing problem. chinese people have about 75% of their overall wealth tied up in real estate. this is a big problem for china moving forward. on top of the covid issues. they got a lot on their plates. this is going to be a very challenging year for them. >> ian bremmer and elizabeth economy speaking with kailey leinz and matt miller. still to come, we get the outlook on the global chip supply from felix lee. he says the market might swing to oversupply. we ask when that happens.
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>> 2021 was a wild year for the chip sector. as well as everything else. everything from iphones to play stations, cars and ultrasound machines need chips and they
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were not enough of them. automakers estimate shortages cost them $200 billion in sales. apple says it has lost $6 billion in revenue. the unprecedented severity of the chip crunch added geopolitical weight. it showcased how interconnected industries have become an pushed countries to produce domestically. our next guest says chip shortage may turn into a glut in 2024. felix lee, morningstar. where are we in the semiconductor cycle right now considering the supply chain squeeze, demand from vehicles and electric vehicles. do you see this flipping to another supply? >> what we are seeing right now is supply chain constraint up to 2024. because of lack of new capacity. going forward, we see demand
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from -- such as smartphones and tds to be more or less reach a plateau in the next four to five years. coming up to future devices like virtual reality, these devices, the volume of these devices are 2 -- to make an impact at this point in time. to round up on the automotive's as well as the other kinds of demand, the automotive side is not going to grow much in terms of volume. a lot of the growth comes from ev's being more common, rather than overall automotive volume growth. all in all, this appeals to our view that we expect there is going to be a glut sometime in 2024. >> you have seen the demand side stabilizing but it does take a long time to build a new semiconductor plant.
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what sort of capacity is on the way? >> what we are seeing now is a lot of -- have announced larger budgets in the middle of 2021. if we lo at how does decision-making and construction goes, a lot of these new capacities will take two to three years to ramp up. that is why we will see more of the new capacity in 2024. by that time, it would be around 40% to 50% more new capacity compared to the end of 2020 levels. that is why on the supply side we are also seeing more of a 2024 timeframe. shery: who will be the most hurt and who will be the most protected?
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>> i would say semiconductors will be the most protected. it is pursuing more of a product premium price. and premium r&d strategy. there will be very few substitutes in its cutting edge products like three nanometers. samsung would be somewhat protected but it is also exposed to its memory -- of the worst hit players would be china. and to a lesser extent, united microelectronics in taiwan. shery: any thoughts on apple's valuation nearing the $3 trillion mark and what that could mean for some of those suppliers across asia?
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>> from a foundry standpoint, the growth of apple has to come in either a more -- an increase in value of the --. the m1 family of chips. the bigger the chips, the more dollars you get from apple in general. another avenue of growth for tsmc is -- whether apple releases new categories of product like a eyeglasses. if those classes come to market to buy then tsmc may well benefit from an increase in demand for semiconductor products, particularly in the chip sector. >> obviously you have a huge interest in this space, but i want to get your thoughts on one particular company.
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global foundries. it went public in 2021 and since then, up about 42%. now valued at about $35 billion. it has got some well-publicized deals, but how does that story look to you? >> global foundries -- from what has been disclosed over the past three to six months, it has been reporting under average metrics compared to their competition. companies like gs and c as well as taiwan's umc have been reporting 90% to 100% while global foundries have been consistently reporting more than 10% lower utilization on its production. that would throw a lot of doubt concerning how global foundries can improve.
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and also by extension its markets. shery: felix lee, morningstar equity analyst with his take on the chip sector. thank you for joining us again. we have a few lines on the alert, verizon saying they have no plans to delay its 5g expansion. airline executives were asking some of these companies to delay their 5g, given they could interfere with some of their aircraft. but, verizon now saying consumers want 5g now. after being asked by aviation groups and the faa to delay, they are planning not to delay. we will be watching more on those headlines and we will be leaving you with a shot of the courthouse where elizabeth holmes' trial, we got the
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verdict -- a partial verdict with four guilty, four not guilty, three no verdict. still not have seen elizabeth holmes leave the courthouse in san jose, california. this is bloomberg. ♪
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♪ >> a quick check of the latest
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business headlines. apple's market value briefly rose above $3 trillion before paring gains, still closing out another record. the stock has tripled since the -- since covid sent the world and lockdown. now trading at a premium and is 5% above the average analyst price target. future retail seeking to terminate amazon's case against it. in a move that can allow the indian retailer to sell some of its assets to reliance industries. the singapore tribunal had refused the request to -- the case before a final hearing. future retailers arguing that the arbitration is illegal after recent indian antitrust rulings against amazon. but see how things are shaping up in mainland china where markets will kick off their first session of 2022. richard -- joins us for more on this. 2021 seems to be about the
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regulatory crackdown we saw in so many sectors of the market. what would be the risk for chinese stocks this year? >> it is partly the same risk we saw last year, but really the focus has concentrated on what is going to happen to the properties sector. it is vitally important to the economy and it seems like the government in beijing is not keen to ease up on the crackdown on that market. we saw the fairly insane order for evergrande to sell any properties, teardown 39 tower blocks in hunan just yesterday. that's an illustration of the problems these companies are facing. >> we saw chinese stocks take a beating in 2021. is 2022 going to be better? >> right now for offshore
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stocks, it does not look optimistic. on one hand, they are extremely cheap relative to global search, but there is a reason why. we have seen continuing measures imposed on the tech industry. they had a terrible year last year. similar to the property industry. we are not seeing much relief. we know that this month is going to be a very testing month for chinese authorities because there is huge liquidity demand coming up in the run-up to chinese new year. they are trying to do a balancing act of providing sufficient easing to not cause too many shocks to the economy without a loosening the curbs they had before. >> richard frost. still to come, crystal smart and free sean -- huishan join us.
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we also have the open in china and hong kong coming up. that is it from daybreak, asia. coverage continues. we look forward to the start of trading in hong kong, shanghai and shenzhen. this is bloomberg. ♪
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>> 9:00 a.m. in beijing and shanghai. i am yvonne man and we are counting down the open of trade. mainland chinese equities set to play catch up after hong kong stocks made their worst start to a year since 2019. the pboc under pressure to aid china's dash for cash. and there are note founder --


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