Speaker 1: This is Bloomberg Day Break Asia for this Friday, May
Speaker 1: twenty sixth in Hong Kong, Thursday May twenty fifth in
Speaker 1: New York and coming up today, Nvidia powers a rally
Speaker 1: in tech stocks and Nears won trillion dollars in market value.
Speaker 1: Trader is fully priced in another quarter point fed rayhike
Speaker 1: within the next two policy meetings, and the Bank of
Speaker 1: Japan Governor Kazua Ueida indicates his desire to hold on
Speaker 1: to policy flexibility. Debt ceiling negotiations continue without a deal.
Speaker 1: A January sixth perpetrator gets sentenced eighteen years in jail.
Speaker 1: I'm Dan Schwartzman with Global News.
Speaker 2: That's all straight ahead on Bloomberg day Break Asia, the
Speaker 2: business news you need to start your day, and just
Speaker 2: one fifteen minute podcast available on Apples, Spotify, the Bloomberg
Speaker 2: Business app and everywhere you get your podcasts.
Speaker 1: Good morning, I'm Richard Salavat and I'm Brian Curtiz. Here
Speaker 1: are the stories we're following today.
Speaker 3: Chip Macan Nvidia is now within touching distance of one
Speaker 3: trillion dollars in market value. Now, this would become the only,
Speaker 3: but only the ninth firm evetive hit that milestone. It
Speaker 3: does come after in Vidia's surprise channas with a surging
Speaker 3: revenue forecast, it propelled to jump in stocks linked to
Speaker 3: artificial intelligence. We should know that in Video is the
Speaker 3: bigs maker of advanced chips that are required to train
Speaker 3: a generation AI services. We heard from Kyle Bass, founder
Speaker 3: of Hayman Capital Managements, saying that investors should now be
Speaker 3: looking at developing data centers to capitalize on the demand
Speaker 3: for AI.
Speaker 4: When you look at the data center market, it is
Speaker 4: white hot. The US is reshoring on shoring this high
Speaker 4: powered chip business, and in Vidia is leading the way,
Speaker 4: you know, first with their GPUs and their gaming chips
Speaker 4: and now their generative AI stuff. That is just again
Speaker 4: white hot. I wouldn't short in Video. I think it's
Speaker 4: just as has a long way to run here.
Speaker 3: Meantime, Trader is betting against in Video, facing two point
Speaker 3: three billion dollars in paper loss on Thursday, leon in
Speaker 3: vid shs closing up twenty four percent in.
Speaker 1: New York Well today, the amount of money the US
Speaker 1: government has to pay its bills tumbled to forty nine
Speaker 1: point five billion dollars, the lowest since twenty twenty one.
Speaker 1: It raises the chances of a default early next month
Speaker 1: if the statutory debt limit isn't raised or suspended before then.
Speaker 1: Republicans and the White House are narrowing their differences, but
Speaker 1: still have not reached an agreement over raising the debt limit.
Speaker 1: Today we heard from Nobel Prize winning economist Paul Krugman.
Speaker 1: He said that budget negotiators risk harming the nation by
Speaker 1: cutting programs that support education and childcare.
Speaker 5: What's happening right now is that in the effort to
Speaker 5: hold down headline spending, right now, we're actually kind of
Speaker 5: disinvesting in the country's future, and that's pretty alarming.
Speaker 1: Krugman also pushed back on suggestions that the surge in
Speaker 1: US government debt would undermine the dollar's role as the
Speaker 1: world's reserve currency. There's simply no obvious candidate to replace it,
Speaker 1: but he did say that the greenback could be hurt
Speaker 1: by repeated confrontation over the debt ceiling and a series
Speaker 1: of defaults.
Speaker 6: Well.
Speaker 3: In recent weeks, of course, we saw a First Republican trouble.
Speaker 3: JP Morgan Chase came to the rescue. Well now, JP
Speaker 3: Morgan Chases Justice and around about one thousand First republic
Speaker 3: employees Bloomberg's and Kate's reports.
Speaker 7: JP Morgan is offering full time or transitional jobs to
Speaker 7: almost eighty five percent of the nearly seven thousand First
Speaker 7: Republic staffers who are still working for the lender when
Speaker 7: it collapsed, while the rest were told they would not
Speaker 7: be hired. Those who are not being brought on by
Speaker 7: JP Morgan will get wages and benefits covering sixty days,
Speaker 7: and they'll be provided an additional love sum payment and
Speaker 7: continuing benefits coverage. A spokesperson for JP Morgan says the
Speaker 7: move is meant to bring clarity and closure to First
Speaker 7: Republic employees in Washington and Kate's Bloomberg Daybreak Asia well.
Speaker 1: On the FED, traders fully priced in another quarter point
Speaker 1: rate hike by the Central Bank within the next two
Speaker 1: policy meetings, and a more than one in two chants
Speaker 1: that the high could arrive as soon as next month. Today,
Speaker 1: Boston Fed President Susan Collins said that there are promising
Speaker 1: signs that inflation is cooling and that may impact the
Speaker 1: Fed's next move. Is Colin's speaking at the Community College
Speaker 1: of Rhode Island.
Speaker 8: While inflation is still too high, there are some promising
Speaker 8: signs of moderation, and I believe that we may be
Speaker 8: at or near the point where monetary policy can pause
Speaker 8: raising interest rates, and this will provide an opportunity to
Speaker 8: more fully assess the impact of the actions we've taken
Speaker 8: to date.
Speaker 1: Colin said that a low predictable inflation rate is needed,
Speaker 1: and she added that officials should approach policy on a
Speaker 1: meeting by meeting basis and take a comprehensive assessment of
Speaker 1: information that's available at the time. Collins doesn't vote on
Speaker 1: the Federal Open Market Committee this year. Policymakers will meet
Speaker 1: next June thirteenth and fourteenth.
Speaker 9: Thank you.
Speaker 3: Japan Governor Kazuu Aida indicated his desire to hold onto
Speaker 3: policy flexibility, playing down the importance of wages on any
Speaker 3: single economic data sets a trigger for change. He spoke
Speaker 3: to selected media in Tokyo.
Speaker 10: On how wages might lead to policy change. We aren't
Speaker 10: targeting wage growth itself. If we have sustainable and stable
Speaker 10: inflation of two percent, it's natural that wages should also rise.
Speaker 10: The key point for our policy decision is whether inflation
Speaker 10: will rise in a stable and sustainable manner at two percent.
Speaker 3: Way It's remarks leave room for the BOJ to nimble,
Speaker 3: a b nimble about how and when it'll be convinced
Speaker 3: about the prospect of price gains. It's a science which
Speaker 3: you'll leave investors and should I say speculators guessing about
Speaker 3: the trimming of policy change. The BOJ board next meets
Speaker 3: on the fifteenth and sixteenth.
Speaker 1: I'm Brian Curtis along with Rishad Salamat. We will be
Speaker 1: looking more closely at all the enthusiasm over AI and
Speaker 1: a little bit more on Nvidio and the spoils being
Speaker 1: shared there, as well as some of the top stories.
Speaker 4: We have.
Speaker 1: Joanne Feene coming up, a partner and portfolio manager at
Speaker 1: Advisors Capital Management. If we have time, we'll also get
Speaker 1: to May twan's earnings jumping twenty seven percent and taking
Speaker 1: a closer look at Ali Baba saying that he plans
Speaker 1: to hire some fifteen thousand people this year, including three
Speaker 1: thousand university graduates. That's all ahead. Now it's time for
Speaker 1: global news. Well, debt sealing negotiations are ongoing, but no
Speaker 1: deal is in sight. Dan Schwartzman has more from the
Speaker 1: Bloomberg newsroom.
Speaker 11: Dan, Yeah, Brian's not good right now. Negotiations are continuing,
Speaker 11: with reports saying that the divide between the two sides
Speaker 11: has now rowed, but there was no agreement in site.
Speaker 11: President Biden and House Speaker Kevin McCarthy continued to communicate
Speaker 11: from their offices, with Biden saying that he wouldn't agree
Speaker 11: to certain Republican demands.
Speaker 12: Republicans passed the bill that would make huge cuts and
Speaker 12: important programs and millions of working in middle class Americans
Speaker 12: count os huge cuts and number of teachers, police officers,
Speaker 12: border control agents, and it increased white times for Social
Speaker 12: Security claims, and I won't agree to that.
Speaker 11: The President was speaking from the White House. Next Tuesday
Speaker 11: is emerging as the possible deadline to get a deal done,
Speaker 11: as Treasury Secretary Janet Yellen has said that her department
Speaker 11: could run out of cash on June first. On June second,
Speaker 11: social Security payments to millions of Americans' is due, which
Speaker 11: has added pressure on both sides to work out a
Speaker 11: deal soon.
Speaker 9: Now.
Speaker 11: Republican Congressman from Florida Byron Donald says, maybe it's best
Speaker 11: to have a default if.
Speaker 6: There's not enough sense between Republicans and Democrats to get
Speaker 6: this done and do it the appropriate way, just because
Speaker 6: they want to protect their political agenda nobody should be geting.
Speaker 11: Paid Representative Donalds was speaking just to day after Fitch
Speaker 11: Ratings placed the triple A credit rating for the United
Speaker 11: States on watch, with a chance at a potential downgrade
Speaker 11: if a deal is not reached in time. The leader
Speaker 11: of the Oathkeeper is a right wing group that took
Speaker 11: part on the January sixth attack on the US Capitol,
Speaker 11: has been sentenced to eighteen years in prison. Stewart Rhodes
Speaker 11: was sentenced by US District Judge I meet Meta in
Speaker 11: Washington for action deemed amount of terrorism. The prison term
Speaker 11: is the longest so far handed down in the government's
Speaker 11: prosecution of more than one thousand people who stormed the
Speaker 11: Capitol to try to disrupt the certification of Joe Biden's
Speaker 11: election as president. The United States, along with coalition allies,
Speaker 11: say they'll begin to train Ukrainian pilots to fly F
Speaker 11: sixteen fighter jets shortly. Both Denmark and the Netherlands have
Speaker 11: taken the lead on the initiative to have the pilots
Speaker 11: ready to fly the American made jetting combat. Last week,
Speaker 11: the Biden administration did in about face and decided to
Speaker 11: allow countries to send the single engind fighters to Ukraine,
Speaker 11: who have long been asking for them. South Korea and
Speaker 11: the US have begun their biggest ever live fire drills.
Speaker 11: The first day of the exercise took place just twenty
Speaker 11: five miles from the border with North Korea, which has
Speaker 11: threatened retaliation for the drills. Around two five hundred soldiers
Speaker 11: and six hundred and ten pieces of equipment, which includes
Speaker 11: fighter jets, tanks, and rocket launchers, participated. South Korean President
Speaker 11: unsukyul has been advocating for joint drills between the two
Speaker 11: allies after his predecessor moonjay In had suspended and scaled
Speaker 11: them back during his reign, along with former President Trump
Speaker 11: as both sides tried to improve relations with the North.
Speaker 11: A man has been arrested in London after crashing his
Speaker 11: car into the gates of Downing Street, the road which
Speaker 11: includes the residence of the Prime Minister. The driver was
Speaker 11: arrested by armed police officers who continued to investigate the incident.
Speaker 11: There were no reported injuries following the crash, which occurred
Speaker 11: around four to twenty in the afternoon. Prime Minister Rishi
Speaker 11: Sunak's office did not comment if Sunek was in his
Speaker 11: residence when the incident occurred. Global News twenty four hours
Speaker 11: a day, powered by more than twenty seven hundred journalists
Speaker 11: and analysts in more than one hundred and twenty countries.
Speaker 11: I'm Dan Schwartzman. This is Bloomberg.
Speaker 1: I'm Brian Curtis, along with Rashad Salama, and our guest
Speaker 1: is Joan Feene, partner and portfolio manager at Advisors Capital Management. Joanne,
Speaker 1: we laid out all the top stories today. Everybody knows
Speaker 1: what's ongoing with the debt ceiling talks and FED positioning
Speaker 1: in China's uneven recovery. You have to say one thing
Speaker 1: about this year. It's been an excellent one for stock picking.
Speaker 1: Do you think that continues?
Speaker 13: Well, Hey, Brian, Yeah, I think so. And the reason
Speaker 13: is there's still lots of sources of uncertainty. You mentioned right,
Speaker 13: the debt sealing, but also you know the concern that
Speaker 13: we could end up in a recession later on in
Speaker 13: the year. Interest rates are going to remain high and
Speaker 13: that's becoming an increasing challenge, certainly for some segments of
Speaker 13: the consumer population.
Speaker 3: All right, well certainly, but do you think that the
Speaker 3: sin of reserve is in u of you getting it right?
Speaker 9: Yeah? Broadly, Shad.
Speaker 13: I mean, look, the inflation that emerged because of the
Speaker 13: pandemic and the shortages and the ongoing strength and demand
Speaker 13: because of all the government transfers certainly put the US
Speaker 13: economy in a bit of a pickle. And it's you know,
Speaker 13: it's it was severe and it's going to take a
Speaker 13: long time to get inflation back down. You know, in
Speaker 13: our view, they're doing the right thing here, and I
Speaker 13: think they're trying to signal then interest rates are going
Speaker 13: to have to remain high for longer than what the
Speaker 13: market currently expects. Whether that leads us to a recession
Speaker 13: in the form of a surge in unemployment has yet
Speaker 13: to be determined, because that labor market is awfully strong.
Speaker 13: So can the Fed balance Hey, maybe lower demand without
Speaker 13: getting that unemployment up, that's the big question.
Speaker 1: But Joan, don't you think where the rubber meets the
Speaker 1: road is once you start seeing layoffs and recession kind
Speaker 1: of settling in that even if inflation is a little high,
Speaker 1: that the approach by the Fed may switch a little.
Speaker 1: It may, you know, move a little bit more to
Speaker 1: preventing a deep recession rather than bringing inflation down that
Speaker 1: last mile from say four percent to two percent. Don't
Speaker 1: you think that's likely given what we know about the FED, I.
Speaker 9: Wouldn't say it's likely. Clearly they have a duel mandate.
Speaker 13: You're right, they have to do stabilized prices and you know,
Speaker 13: support maximum employment. However, the fedch credibility is at stake
Speaker 13: here and that's what leads us to believe it's more
Speaker 13: likely that they are going to keep pushing against the
Speaker 13: inflation you know trends that we have, and so you
Speaker 13: know it'd be unlikely for them to change that target
Speaker 13: that's been communicated for just so long.
Speaker 9: And you know, the data on the economy actually isn't
Speaker 9: so bad.
Speaker 13: We're certainly seeing some parts of the economy slow down,
Speaker 13: but that's to be expected to give in the surge
Speaker 13: parts of the economy saw during the during the COVID know,
Speaker 13: height of the crisis.
Speaker 9: But you know, look at the job numbers.
Speaker 13: They've actually been revised over the last few weeks downwards
Speaker 13: in terms.
Speaker 9: Of those unemployment numbers the initial claims.
Speaker 13: So it's not clear yet whether we're seeing any kind
Speaker 13: of broad weakening and labor market remains.
Speaker 1: You can't be you can't really be positive on equities
Speaker 1: with your view.
Speaker 9: We invest in specific equities.
Speaker 13: So we typically hold between forty and fifty equities and
Speaker 13: client portfolios in the various strategies that we offer, and
Speaker 13: so we may not be positive on the overall.
Speaker 9: Market like the S and P five hundred.
Speaker 13: But as you started out saying, right, is this a
Speaker 13: stock pickers situation?
Speaker 9: I agree it is.
Speaker 13: And so you know, you know, for example, you know
Speaker 13: we since since Nvidia is in the news, right, you know,
Speaker 13: we locked into AI many years ago. You know, I'm
Speaker 13: a former semiconductor analyst, and so you know, looking at Nvidia,
Speaker 13: A m D and Broadcom for example, all feed into
Speaker 13: the growth of data centers. Then you layered AI on
Speaker 13: top of that starting in the fall and became really
Speaker 13: publicly understood. And you know, we've been in these stocks
Speaker 13: for a long time. So there's room here still for
Speaker 13: growth in real sales and in real profits in parts
Speaker 13: of the economy, and I think that's where investors need
Speaker 13: to focus their attention.
Speaker 3: I want to pick up with that, and also just
Speaker 3: to use the same analogy that Brian did and say,
Speaker 3: you know where the rubber meats are is earnings. And
Speaker 3: there are some people and indeed there's a lot of
Speaker 3: evidence to show that these were no ways as bad
Speaker 3: as fear and perhaps you know, the thing is that's
Speaker 3: a shapey economies not heading off a cliff.
Speaker 13: Yeah, I think that's that's certainly showing up in the data. Right,
Speaker 13: all these earnings reports coming in a little bit better,
Speaker 13: not all, but you know, on average coming in better
Speaker 13: than expected. But we shouldn't, you know, overlook the areas
Speaker 13: of weakness in the economy. You know, smartphones, PCs still
Speaker 13: attle low. Looks like inventory is clearing, that's going to
Speaker 13: be better. But the consumer you have to really watch
Speaker 13: and differentiate the types of.
Speaker 9: Consumers that are out there.
Speaker 13: You know, I think the middle market of retail of
Speaker 13: restaurants could face some real risk later on in the
Speaker 13: year as consumers continue to tighten their budgets. That's why
Speaker 13: we like instead, you know, a company like a TJ MAAX,
Speaker 13: for example, show in the middle of the consumer market.
Speaker 1: You mentioned Broadcom av Go there and also I mentioned
Speaker 1: earlier that atvan Test in Japan was up sixteen percent.
Speaker 1: Chip a chip testing devices company a TSMC rally twelve percent.
Speaker 1: There are a lot of other companies that are benefiting
Speaker 1: from this AI enthusiasm. How are you positioning there.
Speaker 13: Yeah, so you know, we have different types of strategies
Speaker 13: in our growth strategy. That's probably where we have the
Speaker 13: most AI exposure, and it's you know, it's in Nvidia,
Speaker 13: It's Broadcom, Microsoft, Amazon Service now on the software side,
Speaker 13: Splunk on the software side, AMD more chips, Qualcom is
Speaker 13: probably a little bit less exposed to AI, but potentially
Speaker 13: we don't own it in our growth strategy. We owned
Speaker 13: it imbalanced and then imbalanced, you know, which is a
Speaker 13: more conservative strategy.
Speaker 9: We don't go for as much as those are really
Speaker 9: high volatile stocks. But Taiwan Semi is a there.
Speaker 3: So actually, as you foremost semiconductor analyst Joe, and you
Speaker 3: know what separates AMD from the rest NOTMD I beg
Speaker 3: your Pardonervidia given what it actually produced in terms of
Speaker 3: its results and its forecast. Nobody else has beaten that
Speaker 3: bullish and you know, is anybody like that out there?
Speaker 3: Is it just a one off?
Speaker 4: You know?
Speaker 13: It really does come down to the technology, and what
Speaker 13: Nvidia has developed over time is a certain type of
Speaker 13: graphic processing unit a GPU that can serve as a sidecar,
Speaker 13: if you like, to the main processor in the servers CPU,
Speaker 13: and that acceleration of computation is everything you need for AI.
Speaker 1: Joined feoene partner and portfolio manager Advisor's Capital Management. This
Speaker 1: is Bloomberg Daybreak Asia, your morning brief on the story
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