Bloomberg Daybreak Weekend: Inflation, Banking, China

Bryan Curtis in Hong Kong. We look at the restructuring plan finally delivered by China Evergrand Group in the court and what it means for China's property recovery. That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg ELEVEM FREEO, New York, Bloomberg ninety nine one, Washington, DC, Bloomberg one oh six one, Boston, Bloomberg nine sixty, San Francisco, DAB Digital Radio London, Sirius XM one nineteen and around the world on Bloomberg Radio dot Com and via the Bloomberg

Business App. Good day to you. I'm Tom Busby. We begin today's program with inflation the driving force behind the Fed's decision to raise its benchmark lending rate again last week despite the banking crisis. And this coming week more headlines on inflation, with a key reading on consumer prices, also on economic growth in the final quarter of last year. And joining me now to talk about all this and more, Bloomberg's Global Economics and Policy Editor, Michael McKee. Michael, welcome,

h nice to be here. Well, Michael will be getting and this is a mouthful. The US Personal consumption Expenditures price index from February this week. What is it? What is it? Measure? It is the Fed's favorite measure of inflation. It's constructed a little bit differently from the consumer price index. It has different weights on the kinds of things that people buy. But the FED looks at it as a

much better indicator of where underlying inflation actually is. So they're expecting a three tenths increase for the month over month index, which would be down from six tents and that would be in theory good news. It would take the year over year level down to five point one from five point four. They're really watching core, which came in at six tenths in January, they think it economist survey by bloomberg'll go down to four tenths, and so

that would show progress against inflation. The feed is also looking at these PC numbers to see what's happening with the services side, but that part is not forecast. Now we got a surprise increase in January, you know, also along with consumer spending, was that they think just an

anomaly in January. Not an anomaly. What basically they think is happening is the low hanging fruit for inflation has been picked and now it gets harder to root out the inflation in various categories, and so we're going to see some lumpy inflation reports. Some months it'll go up a little bit in surprise people, and some months at

the fall faster than anticipated. But we had their annual not annual, but quarterly new economic projections out this week, and they think that inflation is gonna fall the PC. Inflation is gonna fall to about three point four percent by the end of the year. So at five point one, if that's what it comes in at in February, that would still be a significant decline by the end of the year. And is that why this is often called the PC price deflator. Well, it's called the deflator because

here's what they do. It's part of the collection of data for the GDP report, which we also get coming out for the fourth quarter, although they do the PC price collection monthly, but they take the GDP numbers and they subtract inflation. They deflate inflation, and so the data that they use is called the deflator. Okay, Now, more on inflation stubbornly high even after nine straight increases in

the federal funds rate. So what are some of the main drivers of inflation that the FED is still concerned about right now? Well, we're still concerned mostly about housing. That's been the biggest problem for the FED all along. It has a smaller weight in the PC, which maybe one reason they think it's going to come down some. It is only about maybe twenty five percent or so of the PC, where it's about forty percent in the CPI, So that's an issue. They're also looking at some unusual

things like used cars. People went out and bought a lot of used cars when they came back on the market, and now there's a bit of a shortage again. So on the wholesale level, we've seen used car prices going up. The question is does that translate over and then people keep an eye on things like medical care areas where we have seen inflation and they're trying to see if it if it continues. Now, let's dive a little more

into housing. In February, we did see the first year over year price decline in in prices and over a decade, so prices are starting to soften. Bidding wars pretty much evaporated, Mortgage rates fluctuated right now, they've been down two weeks in a row. So is all this looking good for the PC? Yes and no good, but not for this PC. The problem is it takes a long time for the housing costs numbers to get into the indicators. They don't

look at the actual cost of housing. They look essentially at what it would cost you to rent your house today. And what they find is it takes a while because you don't sign a lease every day, you know, by

a house every day either. So even if prices were falling, and even if they were doing direct house prices into the index, this something that went down this month wouldn't make it into the data for six or eight months in general, because it takes that long to get enough housing activity to make a change visible to the Fed. They've been expecting because rents have been going down for about a year, they've been expecting it to start to

show up anytime. And a lot of analysts think that maybe by April May will start to see housing decline and that will be one of the factors that would bring down the overall inflation rate as the FED anticipates towards the end of the year. Well, and that, let's talk about jobs and how that factors. And now we've seen a lot of headlines, a lot of tech sector layoffs, some other sectors tens of thousands, but the labor market still remains pretty strong. We won't get you the job's

report for March for another week more. But what are some of the signs you're seeing in the labor market and is wage inflation still a factor? Wage inflation is a factor in certain categories. One of the things that happened was we did not refill all the jobs in a lot of service industries that went away during the pandemic, and so companies, restaurants, bars, people like that are struggling to find workers to fill the jobs, and so they have had to raise wages, and we've seen those categories

of wages continue to rise. The question is do they start to flatten out. There are some tentative signs that's the case, even though hiring has been fairly strong. So we're really watching wages in the service sector and as far as prices, the FETE has been watching the service sector because of those wages. Since in services much of your cost is labor. When they have to raise wages to attract employees, then that's going to have an impact

on what they charge you for the service that you get. Gotcha, Okay? Now, Also this week we talked about it, just for a moment, the latest read economic growth for the end of last year, fourth quarter GDP. This one looking backward a bit, but for all the hemming and hawing about economic weakness, it looks like it's going to be pretty good. Well, this is the second reverse to the number, and so it

doesn't carry as much weight. The Commerce Department looks at a Census Bureau looks at all the sales of products in the United States, but it takes a while to get all the data in, so they will put out a first first indication and then they start putting out revisions to it, and this is the sort of the final revision of this series. It'll be revised again next

year when they get benchmark numbers. But for right now they're looking at two point seven percent, which would be unchanged from the first revision and would be still much faster than the sustainable rate without inflation that the FED needs to see. And the Atlanta Fed GDP now number, which is sort of a NowCast of what they think the data are telling us about the current quarter, is showing three point two percent growth, so that really suggests

that the economy has not slowed down. Now, we're only going to just start getting March data in the next few weeks, so that could change things. But right now between the fourth quarter and the first quarter still looks pretty strong. But that March data is certainly going to reflect the crisis in banking and what it means to lending and on economic growth. And you know, we don't know when this is going to end, if it's going to end, how bad it's going to get, but it's

certainly going to weigh on things. Well, there's an old law in economics, if something can't continue, it will stop, and so at some point this will stop. We just don't know when. The data for March may not reflect a lot of this, because the way the crisis would hit the economy is if banks stop lending, if they raise their lending standards so high to keep from having problems, then we would see a restriction of the flow of credit into the economy. And that'll take a while to

show up because the same sort of manner. You don't buy a house every day, you don't go to the bank for a loan every day, and businesses have to make decisions about whether they're going to still want to get loans. The FED does a couple surveys, won the Senior Loan Officers Survey, which will be out in April, and it will tell us whether banks have tightened credit standards.

But they also have a survey of credit officers that the most recent one out a couple of weeks ago, showed that demand for loans was off significantly, and that was before the banking crisis. That was just saying that loans have gotten expensive, and companies at this point are saying, maybe we don't want to pay that. Oh boy, well, we live in interesting times. Michael, Thank you so much. Always a pleasure. That was our Global Economics and Policy

editor Michael mckeeon coming up on Bloomberg Daybreak weekend. Inflation back in focus in Europe this week. I'm Tom Busby. This is Bloomberg. This is Bloomberg Daybreak weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York and up later on our program What's Ahead in our Nation's capital.

But first, after last week central bank meetings, inflation will be back in focus in Europe this week with the first March readings for the euro Area and some of its major economies. This after European Central Bank President Christine Lagarde said that underlying inflation wasn't trending down for more. Let's ad to London and bring in London Daybreak Europe Banker Stephen Carroll, Stephen Tom. February was a month of

inflation surprises in Europe. The German and French numbers came in higher than expected, just like they did here in the UK. So will the March data bring good or bad news for officials at the European Central Buying quot To discuss. I'm joined by Bloomberg's chief Europe economists Jamie Rush. Jamie, So, we had a few surprises in February. The wider Eurozone reading was eight and a half percent, still en Rogy dictory from the peak that we had in October. What's

the general expectation from March. Well, we're expecting headline inflation to drop from eight and a half to seven percent, so big drop, largely caused by energy prices, and you know, there's there's an element of inflation which is going to fall and that's just baked in because of the energy

cost stuff. So that's what we expecting. Headline core though probably very similar to where it was in the last month, so around about five point seven percent, and we think it probably be around that number for the next few months, and that's something that's very important for the ECB. Will get to that in a moment, but I want to reflect a little bit on what happened in February, because first of all, we had the Spanish reading coming in,

then France and Germany came in harder. You know, where did those surprises come from the last time around her? And it does it give us any clues as to where we could be looking for surprises this time. Well, I think that the troubling thing when you looked at all the numbers from the Eurozone is that services price inflation picked up, and so this is the thing that

we need to probably pay most attention to. It's not always like the most clear read on inflation because it bounces around up and down because of like package holidays in Germany, for example, airfares. There's lots of stuff that moves things around. But I think that's that's where these people were focused. That's certainly where we're focused. In terms of energy prices, of course, the energy price shock was what drove so much of this inflation over the past year.

Has that effect largely petered out now? Not yet, not in the annual rate. I mean, it's still got quite quite a bit further to run, but by the end of the year we should be heading back towards sort of like three percent headline inflation rates, and the energy cost could even start to push down on the headline rate a bit further out, how much of the differential and rates that we see across the Euro Area, because I mean, look, if you look at the numbers across

the twenty countries, hungry. CPI was nearly twenty six percent in February. The lowest reading was in Luxembourg at four point eight percent. How much of this is down to national factor and national responses to inflation. I'm thinking about things like the energy price cap in France. Does that does those sort of differentials still holds when we think about the numbers to come. Yeah, it's made a massive difference. I mean, you're broadly speaking has faced the same sort

of shock. There's a bit of a difference in the mix which countries consume, what proportion of gas, electricity, this sort of thing. But generally speaking, it comes down to how governments have responded and how it's been priced and hedging against against changing energy prices. So there's a massive difference on the way up. There's going to be a big difference on the way down. Now, obviously this is

going to be very important to work. The European Central Bank doesn't its next rate decision, although that's not until early May. Now, Christine Legard has been speaking about the inflation picture in recent days. Let's listen to some of her speech at the ECB and it's Watchers conference, which we brought to you live on Bloomberg Radio. The Urrea has been hit by an inflation shock which is now

working its way through the economy. While headline inflation is likely to decline steeply this year, driven by falling energy prices and easing supply bottlenecks, underlying inflation dynamics remain strong and in such an environment, our ultimate goal is clear. We must and we will bring down inflation to our medium term target in a timely manner. So that was Christine the Guard speaking at the ECB and its Watchers

conference in Frankfurt. Jamie the last ECB decision, which really isn't very long ago in the grand scheme of things, they got in a fifty basis point hike. There's been lots of speculation they're up to it, that perhaps the instability in the banking sector might affect that. How should we be thinking about the ECB's trajectory from here, given that they did manage to get through a fifty basis

point hike last time around. So I think on the last meeting there's important thing to understand it, which is that you can be hawkish in two ways. Now. You can be hawkish because you're worried about underlying inflation being too high. But you can also be hawkish about the division of monetary policy and financial policy, and that's what we saw. You can be a dave about inflation but not want to muddy the water between muniture policy and

financial stability. And so I think that's probably why they have much more support for the big fifty basis point hike than markets are expecting even up to the day, and that carries forward to the subsequent meetings. They're still going to be focusing on this division between monetary and financial stability, and we've heard from Lagarde they're going to be thinking about three things as they set policy. They're

going to be thinking about inflation forecasts. They're going to be thinking about underlying inflation as measured now, and they're going to be thinking about how much policy is transmitting to the economy. So they're monitoring those three things. Our view is that the banking crisis isn't yet severe enough to take great hikes off the table, and we think they're going to keep hiking tony five basis points of

meeting through the summer. What does that mean then, in terms of the sort of terminal rate, where do you see that now I think we're probably getting somewhere between three and a half and three point seven five. There has been a tightening of financial conditions in terms of the cost of credit for banks relative to risk free rates. That is going to be that is going to weigh on the economy a bit in future years. But it takes like it takes one hike out the cycle. It

doesn't take it doesn't take three out. So I think, whereas markets for previously expecting a terminal rate of four percent, somewhere three and a half three point seventy five. Now, now that's reasonable to us. Christie and regard did mention wage pressures in that speech in Frank First, what is the situation as regards wage inflation in Europe and how

does that feed into the broader inflationary picture. Well, so we've had this energy shock and we're going to decide who's going to pay for it, and it's a negotiation between employees and between is, and so far businesses have basically one like, they've expanded their profit margins quite a lot, and they haven't made made good on on wage gains

all that much. So the question is our household, our employees gonna achieve these some compensation over the coming year, and the more they push for it and the higher their wage costs go up, the longer inflation is going to be is going to stay high. So I think that's that the it's a negotiation the moment, the balance is probably already song too far in favor of businesses, but there are upside risks the inflation outlook from that. From that negotiation, we of course are sitting here in

London looking at the picture as well. How different is the picture for Eurozone inflation versus inflation in the UK. Well, here in the UK and in the US, we do have really strong wage growth which is pushing up costs for businesses and extending the overshoot of inflation, and as the target and the Zone, it's not quite there yet. So I think that's the main difference. We have a difference in the amount of underlying pressure in the economy, and you could definitely say I think that the UK

and the US were overheating by more. We have a couple more data points to come before the next ECB meeting, but I am conscious that we're looking ahead to the March figures. I suppose how important will it be in that scheme of policymaking when you come towards the next decision. Well, I think they're going to want to see underlying inflation come down. I mean they've said as much, and they're not going to see that probably until maybe even as

late as September. So I think there's nothing There's not going to be a major change in core inflation or the underlying cost pressure until you get to the end of the summer, so that that keeps them hiking. And the main risk to that is just that something else blows up in the banking sector or that the tensions we've seen so far turned out it's been more painful than people in visage, in which case you know that

all bets are off okay. Bloomberg's chief europe economist, Jamie Rush, thank you very much for joining us with those insights. I'm Stephen Carroll in London. You can catch us every weekday morning here for Bloomberg Daybreak. You're at beginning at six am in London and one am on Wall Streets. Tom, thank you, Stephen, and coming up on Bloomberg Daybreak weekend, the latest out of our nation's capital. I'm Tom Buzzbee This is Bloomberg broadcasting live from the Bloomberg Interactive Broker

Studio in New York. Bloomberg elvon Freo to Washington, d C, Bloomberg ninety nine one to Boston, Bloomberg one oh six one to San Francisco, Bloomberg nine sixty to the country, Sirius XM Channel one nineteen to London DAB Digital Radio, and around the globe the Bloomberg Business app in Bloomberg Radio dot com. This is Bloomberg Daybreak Weekend, Tom Posty in New York, where your global look ahead at the

top stories for investors in the coming week. On Tuesday, the Senate Banking Committee will hold the first of several hearings on the collapse of Silicon Valley Bank and Signature Bank. For what we can expect, led ted to our Bloomberg ninety nine one newsroom in Washington and sound On host Joe Matthew. Thanks Tom. I'm joined by Kaylee Lines here in Washington as we look ahead now to the week on Capitol Hill. You thought this past week was fun.

We may not have TikTok influencers crowding the halls of Congress next week, but we do have a lot of heavy duty stuff on the calendar here, Kayley. It begins with the first banking hearings, the first hearings into the collapse of SVB and Silicon Bank. We've been waiting for these, and as Emily Wilkins at Bloomberg Government will help us look ahead to as well, some important energy legislation will

dominate the House next week. So you know, rest up this weekend, right, Yeah, definitely, because it's going to be two days of probably what is going to be pretty intense questions of regulators on Capitol Hill. We thought the first hearing in inquiring as to what happened at Silicon Valley Bank and Signature Bank was going to be in the House. They announced it first Chairman Patrick McHenry and ranking Member Maxine Waters that they're going to have the

hearing on Wednesday. Then the Senate Banking Committee came out and said they are actually going to have their hearing Tuesday, so that will be the one that we get first. But same witnesses will have Marty Grunberg from the FDIC, Michael Barr, the Vice chaff Supervision at the FED, and Nellie Lang, the Under Secretary for Domestic Finance. At the Treasury Department, so they will all three be testifying both days, and in the statements that the committee's put out, the

language is the same. We want to get to the bottom of how Silicon Valley Bank and Signature Bank collapsed, and they say that's to maintain a strong banking system going forward. My question, Joe, is how much of it is going to be backward looking at what happened versus forward looking? What should we do now so it doesn't happen again. Well, that's what we've heard. Let's add Emily

Wilkins voice to this. Emily, there's been a lot of talk about an autopsy, write a post mortem, and lawmakers don't want to sug just a solution in many cases until they figure out what happened to bring us to this point. But are we ever going to do anything beyond hearings? That is a really good question, because I

think the question is what could actually be done. Republicans in the House have been pretty firmed that they do not want more regulation, that they are not very interested in a long term increase of these FDIC deposit insurance caps. And you do see, you know some Democrats who are interested in it, but we have split government and you

really need that bipartisan support. And what you've seen from Patrick McHenry is a lot of that level headed cautiousness that let's look into this, let's actually find the causes. You know, some of his colleagues have veered into some more partisan talking points when it comes to the banking crisis that he has not. He has kind of kept things very, very level. At the same point though, for a lot of these lawmakers, you know, at this point, we haven't heard of any more banks closing. It seems

like for now the bleeding has been stopped. At least that is the sun Song Capitol Hill. And if that's the case, then the momentum for actually having more legislation is going to lessen the more that lawmakers see this as a crisis that has already been addressed. Kaylee, I'm stuck on this. Moody's warning that we got risk that banking system stress will spill over into other sectors, unleashing greater financial and economic damage than anticipated, and we're still

trying to figure out what happened a month ago. Yeah. No, it's an excellent point because obviously, as we're trying to dissect the failures that have already happened. You risk if you overanalyze too much or spend too much time doing so, that you don't prevent the failures that could be to come. Perhaps because we're all still watching First Republic, which has been in our focus for several weeks, they had the thirty billion dollars in deposits put in by eleven larger banks.

We know that the Treasury or Secretary Janet Yellen had a hand in navigating that, and then there was the talk of potentially converting that into a capital infusion that doesn't really seem to be going anywhere. We really haven't in any real news, and I keep asking people, is no news good news or is no news bad news in this case? And we really we really don't know. So I think there are still things we're on high

alert for. And it raises the question emily, especially when we have had a week in which Jane Ellen has had to clarify some of her remarks, try to make tweaks to her language to convey to the markets, perhaps what she really is trying to say about ensuring deposits, if there is some kind of systemic risk, just kind of if that is let the market seem to be latching onto each and every word, and yet it's not really anything that the Treasury can do except for in emergencies, right,

And Congress isn't likely to give her much room otherwise. Yeah, I mean Congress. Congress tends to act two different times. Ay, if there is a giant emergency and Congress is the only one who can do anything to fix it, or be if there is some absolute hard deadline coming up that you can't pass, see the debt limit later this summer into this fall. And at this point, I mean there is that sense that, Look, I don't think lawmakers are thinking that they're out of the woods. When I

say that the bleeding is stemmed. I'm not suggesting that Capitol Hill is now ignoring banks were no longer paying attention to this issue or no longer feels that this issue is important. But I do feel like there is a lack of a crisis mode and just a cooling

of some of the urgency then that you saw previously. Now, certainly if that reverses, if we do see more banks get in danger, if we do see you know, the Treasury and that day I see having to step in more, you might see that urgency increased on Capitol Hill and you might start seeing folks talking about some sort of increase in caps But I think at this point Congress is kind of watching to see what happens next, and some of the urgency that was really there in the

early days of Signature Valley Bank and Signature Bank, it's just it's it's not as palatable on the hill right now. Kill did you hear what Larry Summers said about the deposit insurance. You can talk to David Weston about it and actually made a little bit of news. Yeah, well wants to have a much more full throated amen. Ye're coming out of the Treasury Department. Yeah, basically make it clear and he thinks they should pledge that they will back uninsured deposits in any banks that fail in the

next year. How palatable is that though? Really politically exactly here's what he said. There needs to be clarity on the situation regarding deposits. Authorities do not have the authority to say that there's going to be some kind of universal guarantee on deposits, But what they do have is the essentially equivalent power to declare that in the event of a bank's failure, they will use the systematic risk exemption in order to assure that depositors are paid off

in full. Okay, so as long as the Treasury if they did that, If Janet Yellen came out today and said that, what motivation to lawmakers have to stick their neck out and act as a really good question. And I wonder what we're going to hear about this next week. I wonder how much we'll be questioning to the regulators. Hey, what is your preferred policy initiative going from here? Should we just leave it up? Leave it up to you guys,

leave it up to the Treasury Department. Hey, Emily, we got to talk about energy legislation as well, not just any legislation, but HR one. This is the one they put HR one on, which typically means an important bit of messaging from the majority, in this case the Republican party in the House. I'm assuming this is going nowhere where the Democratic led Congress, Emily leave it? How does

it work? Well? HR one is I would not expect to see this go to the Senate and to the President, but Republicans are hoping that maybe some smaller parts of this bill could actually advance. I'll get to that in a minute, but basically HR one is Republicans big energy package. It is about producing energy in America. It is about

making it easier for companies that do produce. And we're not just talking you know, oil and gas here, but we are actually talking nuclear, we're talking solar, we're talking with Republicans have really kind of adopted in an era where more and more people are being to care about

climate change, including in the Republican Party. You see Republicans kind of changing their message to really start to include this all of the above energy approach where they aren't actually talking about renewable energy sources while continuing to talk about you know, oil, gas, coal, other different types of minerals. And so this is kind of their big package, their big proposal on what they're going to do. It is

a messaging bill. It's something that Republicans can take back and see, see this is what we did to lower your gas prices. Thanks to Bloomberg Government's Emily Wilkins with Kaylee Lines, I'm Joe Matthew in Washington. Back to you in New York time. Joe Matthew reporting from our Bloomberg ninety nine one Newsroom in Washington. Thank you Joe, and you can hear Joe on sound On's new Time weekdays one to three pm Wall Street Time. Right here on

Bloomberg Radio. Coming up on Bloomberg Daybreak Weekend, a close up look at what's happening with one of the u huge players in the Chinese real estate market. I'm Tom Busby, and this is Bloomberg. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. New details coming in on what's happening at one of the

best known names globally in the Chinese property market. For more, Let's go to Hong Kong and Bloomberg Daybreak host Brian Curtis and his colleague Doug Krisner. To Doug, and I thought we'd take a closer look at the China Everground restructuring and what it means for the overall state of

play in China's property sector. The plan calls for offshore creditors to swap their debt form new securities, but Everground needs an additional thirty six to forty four billion dollars worth of financing to ensure that it can deliver all of its properties, and as a result, it could mean a delay for some of it's more than thirteen hundred developments, and it could be a new blow to buyer confidence in projects brought forward by a number of property developers.

China's housing sector, as we know, is beginning to recover. Even so, there remain many uncertainties. No matter what, Everground will remain the world's most indented developer. But this overhaul could provide a guidepost for other builders restructurings, and that might be the key to unlocking the property sector for China's broader recovery. Joining us here in our studios in Hong Kong is Alice Wong, a Bloomberg China Credit reporter. So, Alice,

what's the general reaction to this much awaited overhaul? Yeah, I think you know. Markie is still trying to digest this news. To be honest, it has been a sudden quick turnaround after fifteen months of waiting following Everground's first public dollar bond default. So what we're seeing now actually Everground's dollar bonds this morning has jumped lightly, but it is still trading around license on the dollar. Now, that's much much lower than some of his peers that have

shown US plans so far. For example, Sunac, which used to be China's fourth largest developer, is bonds have been trading above twenty cents on the dollar. So that's that's double what what Evergrands dollar bonds are doing now? Um? But you know, arguably Evergrands debtload is a lot a lot more huge than all the other ones that we're seeing. It is China's largest dollar debt borrower among his peers. So yeah, that really um shows that it will have a lot more work to do before people can start

to see his money see their money back. So I would imagine this is a positive development not only for property developers, but for the overall dollar bond market as well. I know shares in China Evergrand have been halted since March of last year. Does this necessarily mean these developments, this restructuring. Does it mean that we've or will avoid a delisting of Evergrand in Hong Kong. Not really, that's

a very good point. Actually, Evergrand has a few things it needs to work through before it can avoid being delisted in September. Since its shares have been halted since March twenty twenty two. So number one, it actually needs to get the winding up petition. It's a hearing a lawsuit that's facing in Hong Kong to be either dismissed or withdrawn. And the proposal that we're seeing so far is an important step because this shows the Core that

the company is doing something. It will convince the Core that it's working toward a debt resolution. So perhaps at the next hearing the judge will actually be able to dismiss the case. But just seeing the plan is not enough.

Evergrand needs to get a bondholders support. Now we have reported that it got a major group of dollar bondholders support, but they only represent about twenty five percent of outstanding dollar bonds, while because every gonna want to go through what's called a scheme of arrangement, it typically would require seventy five percent of bondholder agreement. So you can see there's a lot to be done. Alice, thanks so much for joining us here in our studios in Hong Kong.

Alice Huang Bloomberg, China Credit reporter. I'm Brian Curtis along with Doug Christener. You can catch us every Weekday. Here for Bloomberg Daybreak Asia, beginning at six am in Hong Kong and six pm on Wall Street. Tom, thank you, Brian and Doug. That does it for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at five am Wall Street time for the latest on markets overseas and the news you need to start your day. I'm

Tom Busby. Stay with us. Top stories and global business headlines are coming up right now.