Global Eco Data and Ford's ‘Battery Independence’

ministers of US and China this week. Pentagon says the three objects shot down over the week imposed air safety concerns. Turkey Syria death toll approaches forty thousand. I'med Baxter with Global News. His name Marst time in Paris close to coming to an end and swarts, but I'll have that

story more coming up in Bloomberg Sports. That's all straight ahead on Bloomberg Daybreak Asia on Bloomberg eleven three on New York, Bloomberg Washington, d C, bloo Bird one six one, Boston, Bloomberg nine six, San Francisco, Sirius x M one nineteen and around the world on Bloomberg Radio dot Com and via the Bloomberg Business Act. Good morning, I'm de Prisoner and I'm Brian Curtis. Here are the stories we're following today. We'll get u S CPI data for January tomorrow at

eight thirty in the morning Wall Street Time. Let's get the story from Bloomberg's Michael McKee. Starting with the good news headline, Inflation is forecast to have fallen again in January, but that's because of base effects, the fact that it was higher last year at this time. The bad news is on a month to month basis, January price is

likely rose at a faster pace. Some things like gasoline and used cars rose in price, but the government is also rejiggering its seasonal adjustments of the way it puts on various sectors that will give the CPI a statistical boost. Bottom line, markets in the Fed will likely look through the report anticipating some reversion this if Fed doesn't meet again until March twenty two. Michael McKee, Bloomberg Daybreak asient, well, it is clear that markets are reassessing how high US

interest rates will rise this year. Today we heard from Fed Governor Michelle Bowman, and she is expecting more hikes. She thinks it's likely necessary to bring inflation down to the FEDS two percent target. We are still far from achieving price stability, and I expect that it will be necessary to further tighten monetary policy to bring down inflation down towards our goal. Doing so will likely lead to subdued growth in economic activity and some softening in labor

market conditions. Now Bowman went on to say the cost of persistent inflation is greater than the risk from higher interest rates. Back in December, FED officials forecast at a peak in the Fed funds rate of it around five point one percent this year. Those estimates will be updated next month. The Biden administration plans to sell more crude

oil from the Strategic Petroleum Reserve. Bloomberg's and Kate's reports the non emergency sale amount to twenty six million barrels of crude, with the deliveries estimated to happen between April and June. It as part of the congressionly mandated sale lawmakers approved in twenty For the current fiscal year, the Energy Department has sought to stop some of the requirements so it can refill the emergency reserve, which currently has three d seventy one million barrels and will drop to

three D forty five million after this latest release. The White House decided to tap crude from the oil reserve and an effort to lower prices. After Russia's invasion of Ukraine last year in Washington and Kate's Bloomberg daybreak Asia, European Union officials have raised their forecast for economic growth in the euro Area this year. The combination of a mild winter and high levels of gas storage have helped to ease and energy crisis, and the EU Commission said

a recession would be narrowly avoided. Even so, EU Economy Commissioner Paolo Gentiloni struck a more cautious tone. Risks to this forecast appears to be balanced. While pastries related to pandemic and gas shortages have ebbed significantly, Uncertainty remains very high, also in relation to the war and to the geopolitical tension. Now. EU forecast show that all member states will achieve growth this year, the only exception being Sweden, It's expected to

contract by around eight tenths of one percent. Ford is charging ahead with plans to build a US battery plant with a Chinese partner. More from Bloomberg's Denise Pellegrini. Ford is investing three and a half billion dollars in this EV plant near Kalamazoo, Michigan, and in a controversial move, it is contracting China's contemporary Amperex technology to help it

set up and staff the facility. The US automaker will be operating it under a wholly owned subsidiary, and Ford is aiming to create jobs and take advantage of tax breaks for the location. The announcements a bit marred, though, by some political events. Earlier, Virginia Governor Glen young and pulled his state from consideration for the factory. Youncan called it all a trojan horse for the Chinese Communist Party. Denise Peligrini, Bloomberg Day, Bracasia. Like you mentioned the survey

by the New York Federal Reserve. It showed that one year inflation expectations were little change last month. Anything that points to possible disinflation in wages is being seen as positive for risk assets. Doesn't mean we won't see an uptick tomorrow, but still positive for the market. Well, you're absolutely right about that, but I think in the bigger picture here, the Fed seems intent on maybe creating a bit of an insurance policy. That seemed to be the

message from Bowman today. And if you look at what Marco Kolanovitch is saying over JP Morgan, the noted strategist is turning defensive. He is recommending fading this year's rally and equities. I was looking on the system today. You know, the S and P up eight percent nearly since the beginning of the year, but Kalanovitch says there is really a risk of recession, and that is not christ into

the equity market. I don't have a lot of sympathy with you know, we rose so much in in January and it was up six and a quarter percent or whatever. Because the S and P fell seven percent in December. It's really just sideways over the past couple of months. I get all the arguments, I see that and everything, but I think a lot a lot of people in the market are just sort of in chop mode, waiting to see what happens. A quick comment here on on

Kazu Kazuo Ada coming today. It looks like any thoughts on whether or not that's a hawkish or a devish move. I think it's going to be neutral at least for the medium term here. I don't think the b o J wants to create any more volatility than we've seen in the currency market right now. I had noted that we're on the week side of one thirty two against the green back. I don't get it, because if you Adeline's hawkish, why is the end weakening like this? It's interesting.

We had yes percole on on our area yesterday. He said, who waits a scientist? He's absolutely objective, not dogmatic, not out for a quick win, and he will be even handed. We'll see. Now it's time for Global News. China today is saying the United States needs to look at itself in the mirror with regard to the shooting down of foreign objects. Head back to will sort that out for us. He has Global News on the nine sixty News with San Francisco ed. Yeah, Brian, you're right, let's go through it.

The statement coming from the Foreign Ministry says that ten US objects have passed over China recently and that it is nothing rare for US balloons to illegally enter into other countries airspace. It says the US needs to reflect upon itself and change its policies. The US has denied those charges. Meanwhile, US Defense Secretary Lloyd Austin says recovery operations are in full swing to gain information on the

three objects that were shot down over the weekend. The three objects taken down this weekend are very different from what we were talking about last week, and says one appears to be a small metallic balloon with small payload attached. So at this point, US fighters have shot down four objects in the last nine days. What's different now, Will Bloomberg.

Nick Wadhams from our National Security Team says the US has changed radar signals, widening the aperture, and so what you saw the three shootdowns, two in the US and one in Canada over the last few days were things that were deemed to be a threat to civil aviation or drifting a little too close to military site. And now Bloomberg is reporting that there is a move a foot to get U S Secretary of State Anthony Blankeln and China Foreign Minister Wang Yu to meet later this week.

What we're seeing is there is an effort by both countries to if not get things back on track. Whatever that meant amid amid these increased tension to at least stop things from getting any worse. They're both gonna be there in Munich, and I think what you're seeing is a little bit of tentative outreach. Yeah, so this meeting, if it does happen, would be on the sidelines of the Munich Security Summit. Meanwhile, some back channels between the

two kind trees are still open. The US embassy in Beijing is still functioning, we're told, and NATO General Secretary Jan Stenberg says both China and Russia have been using increased satellite and balloon surveillance of Europe as well. The news he says, with tongue in cheek that all of all of us have been waiting for. From White House spokeswoman Karin Jean Pierre, there is no again, no indication of aliens or extraterrestrial activity with these recent takedowns, so

either relief or disappointment. Hong Kong's Lands Department has added national security clauses to all land sale and short term lease tender documents, moving powers of government disqualify bids and suspend short term leases due to national security reasons and the death toll in the Turkey and Syria quakes nearing forty thousand over thirty one thousand in Turkeys six thousand Syria as far exceeds that of the quakes near is Stanbul,

where eighteen thousand people eared. Officials in Turkey are considering extending the closure of Istanbul stock market. Past Wednesday Global News powered by more than twenty seven journalists and analysts and over one d twenty countries. In San Francisco, I'm at Baxter and this is Bloomberg. This is Bloomberg day Break Asia Brian Curtis and Richard Salad here in Hong Kong. Our guest is Toma Puluk, head of Multi Asset Solutions in the Asia Pacific at t ro Price. Toma, thanks

very much for joining us here. Market participmates, Toma are seeing the same data as the Fed. They don't get anything special. How do we reconcile the don't fight the Fed adage with the respect the price action adage? Looky all right there? That I to agree with what was said before about the disconnect between what is pristine and what the FED and economists are saying. Um, I guess the economists camp is most saying that the recission is

coming and the risk is great, doesn'tif. But when you look at what the market is pricing, they are more pricing a soft landing. So we need to reconcide that. We'd agree that there's risk to the markets right now given the evaluation is higher than what the yield environment is suggesting, and things can be revised lower. So our stands for now is to stay conservative defensive, but we are looking to add to equity as the disconnect closes.

I want to pick up on something that actually Brian was just talking about with the DOUG And you know, we saw the SMP go up what seven eight percent in January UM and indeed we saw also the hang sang up by uh I think about nine percent in January. In fact in December the big losses for other parts of the market. Where do we go from here? And you know the thing is that is does any type of landing have to be priced in? Can't we just price in actually a little bit of a slowdown? Yeah? Yeah,

you're right? Is that the it's the amount of economic slowdown that needs to be uh gouged and it's quite hard right now. So that's why the market and I guess ourselves. We are more on the watch and UM and wait for some data, especially the job market is key. You talked before about the wage inflation. Is that the key data. Now inflation is as peaked. Inflation is slowing, but it's hard to see that inflation will be going

back to two percent anytime soon. So there will be a sticky inflation environment which is dependent on how wages will will remain there, so that feed through what markets will be UM will be pricing in and for US it's UM. It's hard to justify evaluation as such a high level given how yields have moved over the past year. So for a six months horizon, with his some risk to the downside on the equity market, So you're out

here in Asia with us UM. Let's talk a little bit about Casuo Ueda if he becomes the next governor of the Bank of Japan. We mentioned many of the economists that know him and studied under him say, you know, he's a very objective guy. He's not coming in with a preset path. Do you believe that? Look at our view and that was in fact true for other candidates, is that the b O J we're not really changed dramatically the course of its policy over the coming year.

We believe that the changes that they already made to the yield of control will continue and can be potentially removed or expanded in the next of the following meeting, and that would be true under with a sn What we are question about is that there are talks that then we moved to the removal of the negative interest rate policy. This is not our base case and that will wait quite a while. It's at best the twenty

four story or even longer. So removal of the year of control has already been talked about and discussed by BOG members, and we don't think there would be any dramatic changes under with well, they're going to be changed. I mean, whatever little bits and bobs that they do have a great impact, as we saw in December. So you know, if they do even just tweak things, and I'm sure that you wouldn't disagree that they would do that TOMA, it becomes the one way bad look at

the what the markets. So in December was the first action and that's where the market move. I think after if they if they expand or not, it's it's not as big as the first step outside the yelcove control. So that's why I don't expect the move to be that large even if they do something. Of course, there is still some if you look at the OS pricing of of years, there is still some way to go higher, but not as dramatic as the first um increment that was done in December, so it's not one way street.

What I think many people would not understand is ditching or widening yield curve control. It would likely mean a strengthening of the end. But since we've been talking about CASUODA, we've seen weakness now in the end, so why is that happening? So I think it's more the the U

s dollars. The US dollar has had a very steep slow downs in the peak in the fourth quarter, so given the X the upside surprising the economic data is that we got in the first month of the year, the US dollar gotta strength and a bit and to reflect that, there is also an expectation that financial conditions eased too much, so financial conditions will be tightening and that supports the US dollar. So I guess that's more temporary thing of related to the us LA. But our

view is at the Japanese end. I agree with what you said, shoot strengthen, but he will not be as trade line as I said. This is Bloomberg Daybreak Asia, your morning brief on the stories making news from Hong Kong to Singapore and Wall Street. Look for us on your podcast feed every day, on Apple, Spotify, and anywhere else you get your podcast. You can also listen live each day on Bloomberg eleven three oh in New York, Bloomberg in Washington, Bloomberg one oh six one in Boston,

and Bloomberg nine sixty in San Francisco. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty plus listen coast to coast on the Bloomberg Business app, Sirius XM Channel one nineteen, the I Heart Radio app, and on Bloomberg dot Com. I'm Brian Curtis and I'm Doug Chrisner. Join us again tomorrow for all the news you need to start your day right here on Bloomberg Daybreak Asia two