Speaker 1: This is Bloomberg day Break Asia for this Tuesday, April
Speaker 1: fourth in Hong Kong, Monday April third in New York.
Speaker 1: Coming up today, The surprise cut in oil production from
Speaker 1: OPEC Plus could be another headache for central bankers. The
Speaker 1: Reserve Bank of Australia may stand pat on infrast rate hikes,
Speaker 1: and China is warning its top bankers that a crackdown
Speaker 1: on corruption is far from over. Donald Trump in New
Speaker 1: York to face arrangement tomorrow. Meeting between PRESIDENTSI and Speaker
Speaker 1: McCarthy is on for Wednesday. Pentagon says China spy balloon
Speaker 1: did get some intelligence. I'm at Baxter with Global News.
Speaker 1: That's all straight ahead on Bloomberg Daybreak Asia. The business
Speaker 1: news you need to start your day in just one
Speaker 1: fifteen minute podcast available on Apple, Spotify, the Bloomberg Business
Speaker 1: App and everywhere you get your podcasts. Good morning, I'm
Speaker 1: Bonnie Quinn and I'm Dog Prisoner. Here are the as
Speaker 1: we're following today, some oil analysts saying crude prices could
Speaker 1: reach one hundred dollars a barrel this after OPEC plus
Speaker 1: unexpectedly cut production. On that list is Goldman Sachs Bank
Speaker 1: of America also said the unexpected supply cut could add
Speaker 1: as much as twenty five dollars a barrel to the
Speaker 1: price of Brent crude. However, Morgan Stanley broke away from
Speaker 1: other major banks. Morgan lowered its forecast from ninety five
Speaker 1: dollars a barrel to eighty seven fifty by the fourth
Speaker 1: quarter of this year, and City Groups said the oil
Speaker 1: market is nowhere near a rally that could produce a
Speaker 1: hundred dollars a barrel oil Here's City Groups, ed Morris,
Speaker 1: the global head of Commodities Research. To get to one
Speaker 1: hundred dollars oil, we'd have to have significantly more oil
Speaker 1: taken out of the market and have a lot of
Speaker 1: uncertainty based on that oil taken out of the market.
Speaker 1: That is to say, it would come from a destruction
Speaker 1: to supply in countries such as it Ran, A rat
Speaker 1: would be in Nigeria altogether at the same time, and
Speaker 1: we would have no sense because of the domestic situation
Speaker 1: in those countries of and that oil could come back
Speaker 1: into the market. Meantime, Saint Louis FED President Jim Bullard
Speaker 1: says it's not yet clear what higher oil prices could
Speaker 1: mean for monetary policy. Here is Bullard speaking exclusively with Bloomberg.
Speaker 1: This was a surprise that OPEC decision, But whether we'll
Speaker 1: have a lasting impact, I think is an open question.
Speaker 1: Oil prices fluctuated around. It's hard to track exactly. Some
Speaker 1: of that might feed into inflation and make our job
Speaker 1: a little bit more difficult. Bullets said that even without
Speaker 1: OPEC pluses production cuts, oil prices were still likely to rise.
Speaker 1: The FED chief said he expected higher prices with China
Speaker 1: reopening sooner than expected, Europe skirting recession, and strong economic
Speaker 1: data in the United States well. The Reserve Bank of
Speaker 1: Australia will meet later today after the FED and the
Speaker 1: ECB pushed ahead with tighter restrictions on monetary policy. Question
Speaker 1: now is what will the RBA do? We have Paul
Speaker 1: Allen with a preview. Economists divided over whether the RBA
Speaker 1: will hike interest rates for an eleventh consecutive or pause
Speaker 1: its most aggressive tightening cycles since nineteen eighty nine. Nineteen
Speaker 1: economists survey by Bloomberg forecast the RBA will stand pad
Speaker 1: at three point six percent, as do money markets. Eleven economists,
Speaker 1: though see a quarter point hike to three point eight
Speaker 1: five percent. Economists favoring in RBA pause site. The faster
Speaker 1: than expected easing of inflation in February more subdued consumer spending,
Speaker 1: as well as wiries about bank stresses becoming systemic. Economists
Speaker 1: calling for a rate high can argue that inflation at
Speaker 1: six point eight percent in February is still well above
Speaker 1: the RBA's two to three percent target and the job
Speaker 1: market is very tight. We'll get a monetary policy decision
Speaker 1: from the Reserve Bank of Australia at two thirty pm
Speaker 1: Sydney time. I'm Paul Allen Bloomberg Day Breacasia and Chinese
Speaker 1: authorities have warned a crackdown on corruption in the finance
Speaker 1: industry is far from over. Let's get more from Bloomberg's
Speaker 1: at Joanne Won. Regulators and inspectors called in top executives
Speaker 1: from at least six large state owned banks. The meeting
Speaker 1: took place just as the investigation of the Bank of
Speaker 1: China's former chairman Liu Niango was announced. This came just
Speaker 1: about a month after he was abruptly removed as the
Speaker 1: party chief of the nation's fourth biggest bank. Liu was
Speaker 1: said to be suspected of quote serious voulations of discipline
Speaker 1: and law. We hear. Chinese officials said the bankers should
Speaker 1: draw lessons from Liu and that staff must comply with
Speaker 1: laws and regulations and strength and self discipline. The latest
Speaker 1: warning asked to evidence the Chinese president in Chijing. Ping's
Speaker 1: antigraphic campaign continues to pick up steam in Hong Kong.
Speaker 1: I'm join Wang Bloomberg Day Brigasia Well. HSBC senior executives
Speaker 1: faced off with the bank's largest investor base in Hong
Speaker 1: Kong at a shareholder meeting. Chairman Mark Tucker said he
Speaker 1: regrets cutting a dividend payments during the height of the pandemic,
Speaker 1: calling it a highly unusual event. Tucker told investors HSBC
Speaker 1: has now substantial dividend distribution capacity. Also said the bank
Speaker 1: is set for the best returns in a decade this year.
Speaker 1: Executives at the bank also repeated their opposition to a
Speaker 1: push by HSBC's top shareholders to spin off the company's
Speaker 1: Asian operations. Ping On Insurance Group has been waging a
Speaker 1: battle largely behind the scenes, asking HSBC to deepen cost
Speaker 1: cuts and be open to some other suggestions. However, Tucker
Speaker 1: told those investors in Hong Kong restructuring the bank would
Speaker 1: create uncertainty and it would also destroy value. So the
Speaker 1: big story, obviously is the rally that we had in
Speaker 1: crude oil today and the question mark it puts over
Speaker 1: FED policy. Bloomberg Economics today currently with a baseline for
Speaker 1: the FED to hike another twenty five basis points at
Speaker 1: the main meeting to bring the FED funds target to
Speaker 1: around five and a quarter percent and then hold it
Speaker 1: there for the remainder of the year. But now Bloomberg
Speaker 1: Economics is saying, with a banking turmoil somewhat subsiding the
Speaker 1: tight US labor market, China reopening, adding to global demand,
Speaker 1: and the risk of higher inflation as a result of
Speaker 1: the elevated oil prices, the prospect for a pause on
Speaker 1: the part of a FED on the FED, I should say,
Speaker 1: looks less certain. Vonnie, all right, well, it is also
Speaker 1: a big story here in New York. Donald Trump arriving
Speaker 1: in New York to face being processed under reigned tomorrow.
Speaker 1: Let's get a Baxter. He's got global news for US. Yea,
Speaker 1: it is definitely history, Vonnie. You're right, it's called from
Speaker 1: major demonstrations which have not yet materialized. Bloomberg Xamer Hordern
Speaker 1: was at Trump Tower a bit earlier today. On the
Speaker 1: west side of the street. It is a long lane
Speaker 1: of reporters, camera crews, lenses everywhere you look. It was
Speaker 1: very confusing, Joe, I have to say, for some of
Speaker 1: the tourists that just wanted to see Fifth Avenue. Then
Speaker 1: the other side there were Trump supporters, but definitely the
Speaker 1: journalists outnumbered them. Yeah. Police Chief Keachan Sewell says very
Speaker 1: large police force will keep the peace as well. Violence
Speaker 1: and destruction are not part of legitimate lawful expression and
Speaker 1: it will never be tolerated in our city. Meanwhile, the
Speaker 1: MAGA campaign says the indictment has been very good fundraising.
Speaker 1: It says seven million dollars since the indictment not verified yet.
Speaker 1: The meeting between Taiwan President Sion When and Kevin McCarthy
Speaker 1: is on for Wednesday in Los Angeles. Bloomberg's Dan Flatley
Speaker 1: says both sides are defending the meeting in the wake
Speaker 1: of China protests, with some statements from the President of
Speaker 1: Taiwan and the White House sort of talking about the
Speaker 1: right of the President of Taiwan, Kingwen to meet with
Speaker 1: whoever she chooses to meet with here in the US
Speaker 1: a free country. Taiwan says no room for China comment,
Speaker 1: but of course China will fire. Foreign Ministry says China
Speaker 1: will take resolute measures to safeguard the sovereignty and the
Speaker 1: territorial integrity. Meanwhile, the Pentagon is saying that that China
Speaker 1: spy balloon was able to get some intelligence this while
Speaker 1: investigation continues. Pentagon Deputy Press Secretary Sabrina saying, we do
Speaker 1: know that the balloon was able to be maneuvered and
Speaker 1: purposely driven along its track, but not going to get
Speaker 1: into specific sights it was able to hover over. She
Speaker 1: does say the US was able to take mitigation operations
Speaker 1: once it did reach the US though. Finland becomes a
Speaker 1: full fledged member of NATO tomorrow, and Secretary General Yan
Speaker 1: Stoltenberg says the process is moving forward for Sweden as well.
Speaker 1: We agreed on that he could move forward on finalizing
Speaker 1: the Swedish accession, and the president on the Turkish Parliament
Speaker 1: National gun Desamblas delivered on that. So that's the reason
Speaker 1: why we are we are now with Finland full members
Speaker 1: from tomorrow. Stoltenberg says both have followed through on their commitments.
Speaker 1: And just of note, Russia today started its monthly turn
Speaker 1: as head of the UN Security Council. Global News powered
Speaker 1: by more than twenty seven hundred journalists and analysts and
Speaker 1: over one hundred twenty countries. In San Francisco, I'm at Baxter.
Speaker 1: This is Bloomberg. Let's get to our guest. David Waldell
Speaker 1: is with us. He as the CEO also the chief
Speaker 1: investment strategist at Waddell and Associates. He's on the line
Speaker 1: from Nashville. David, thanks for being with us. I'm curious
Speaker 1: what did you make of today's price action in the
Speaker 1: face of the spike and crude oil. Well, it was
Speaker 1: good for beating up energy names, so that was helpful.
Speaker 1: I just think we're in a noisy market right here.
Speaker 1: The deck is being reshuffled, so you see. You know,
Speaker 1: once the banking panic took hold, that sort of knocked
Speaker 1: off the MidCap trade and the small cap trade, it
Speaker 1: knocked off the value trade, and so the markets in
Speaker 1: sort of chern mode, just trying to hold on to
Speaker 1: any short term trend line it can, and so you
Speaker 1: got that in energy today. But it was certainly a
Speaker 1: lukewarm response. You know, two of the indussees worked, one didn't,
Speaker 1: and really the participation was pretty lame, so it was
Speaker 1: just kind of an ugly tape. Today, in my opinion,
Speaker 1: the market is so strange these days. There are so
Speaker 1: many coals that are bearish, and the latest being James
Speaker 1: Morgan's Marko kolonoish warning that stocks are in a calm
Speaker 1: before the storm type mode. Is that how you see it.
Speaker 1: I love bearish sentiment, right because that's what's required to
Speaker 1: provide the fuel for rallies to go up. I mean,
Speaker 1: people have been bearish all year long for a variety
Speaker 1: of reasons, and yet here we are up seven percent
Speaker 1: on the SMP and actually the international stocks are outperforming
Speaker 1: the domestic stocks. So you know, bearish sentiment is a
Speaker 1: good thing because it's the conversion of the skeptics which
Speaker 1: provides the fuel for rallies. In terms of a really
Speaker 1: determinant catalyst, I believe people are looking past twenty twenty three,
Speaker 1: they're looking into twenty twenty four, and they're seeing all
Speaker 1: of these cloth cutting efforts that we read about every
Speaker 1: day that seemed depressing in the now, are going to
Speaker 1: be really great relief in the future. And then you
Speaker 1: add you know, some technology advances into that and you
Speaker 1: could have serious margin expansion in twenty twenty four. So
Speaker 1: if you think we're going to be in a garden
Speaker 1: variety recession, I do. Even if you think there's going
Speaker 1: to be a crisis, POWE will put is back in
Speaker 1: play and so that neutralizes. So the sentiment can be barished.
Speaker 1: But if you walk forward, you know, just a series
Speaker 1: of months from now, you're back into sort of, you know,
Speaker 1: a nice earnings environment. Why not participate in advance of that. Well,
Speaker 1: that's a very interesting point, and it runs counter to
Speaker 1: what we heard today from Chris Harvey over at where
Speaker 1: Else Fargo. Given the possibility of a recession that seems
Speaker 1: to look a little more certain these days. Harvey was
Speaker 1: saying the upcoming earning season maybe the first of several
Speaker 1: difficult quarters, and he puts his finger as you did,
Speaker 1: on margins being compressed. So it's kind of the opposite
Speaker 1: of what you're saying. Aren't you not at all concerned
Speaker 1: about the possibility of recession and what that made due
Speaker 1: to the bottom line for US corporates. I just think
Speaker 1: we're out of sequence, right, So we're gonna have a
Speaker 1: recession this year and we priced that in last year
Speaker 1: because earnings were good last year, up four percent overall,
Speaker 1: and you know, the economy was a nimic, but it grew. Typically,
Speaker 1: that's not an environment where you see a big negative
Speaker 1: year in the talk market. So we get recession returns
Speaker 1: for this year last year, and we're going to get
Speaker 1: recovery returns for next year this year. So I really
Speaker 1: think it's a sequencing issue. I agree with him. By
Speaker 1: the way, earnings are projected to be down from the
Speaker 1: high ten percent already, so they topped out in June
Speaker 1: of twenty twenty two, and you know for this quarter,
Speaker 1: based upon today's estimates, they'll be down eleven percent from
Speaker 1: that point. So maybe they go down fifteen percent, which
Speaker 1: wouldn't be out of the range of a normal recessionary environment.
Speaker 1: My point is we've already baked it in. Everybody knows this,
Speaker 1: so everybody knows we're going into recession. Everybody knows earnings
Speaker 1: are going down ten to fifteen percent, and yet here
Speaker 1: we are up seven percent. So the market's looking past it,
Speaker 1: and I think correctly so so are you in the
Speaker 1: Compson that sees rate cuts before the end of the year.
Speaker 1: I mean, if I was running the FED, you'd see
Speaker 1: rate cuts before the end of the year. I do
Speaker 1: think disinflation has taken hold. You know. I talked to
Speaker 1: bankers just like everybody else, and I don't know anybody
Speaker 1: out there who's really aggressively making loans right now because
Speaker 1: the small banks are seeing outflows, which isn't encouraging, and
Speaker 1: the large banks are seeing cash sorting, which is the
Speaker 1: same thing. So nobody's really interested, I think, in extending
Speaker 1: a bunch of loans right now. So finally, the yield
Speaker 1: curve that's been dramatically inverted is starting to bite. So
Speaker 1: if it were me running the FED, I'd let that
Speaker 1: play out because they may have raised twenty five basis
Speaker 1: points last month, but the tightness and the credit market
Speaker 1: might have added another fifty to seventy five basis point.
Speaker 1: So if you factor in and do dynamic modeling, how
Speaker 1: much further do you really need to go? It's already
Speaker 1: one of the fastest rate hike regimes in history. Why
Speaker 1: not let it just play out for a little bit.
Speaker 1: So are you seeing opportunities then? Given what you just said,
Speaker 1: are you seeing opportunities in fixed income at all? You know,
Speaker 1: I mean the yields are nice, and so you can
Speaker 1: buy short term paper and get big yields and then
Speaker 1: if you think their rate cuts coming in the future.
Speaker 1: You know, the spreads haven't really blown out, so the
Speaker 1: credit spreads are not indicating distress the way you know
Speaker 1: the stock market gyrating round might indicate. So even with
Speaker 1: the move index high and things kind of nutty, the
Speaker 1: credit spreads will still remain tight. So I don't know
Speaker 1: if if those will blow out a little bit. I
Speaker 1: think you can just be in duration sort of yield
Speaker 1: positions and be fine because you'll probably see a drift lower.
Speaker 1: You know. I look at like the five year break
Speaker 1: even year five year forwards, those are all benign at
Speaker 1: two point three percent, etc. So the bondom market actually
Speaker 1: is a lot calmer than the short term paper makes
Speaker 1: it appear. This is Bloomberg Daybreak Asia, your morning brief
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