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Speaker 1: Seven pm on Wall Street. I'm Doug Prisoner at Bloomberg

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Speaker 1: World headquarters in New York, kicking off the first hour

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Speaker 1: of Daybreak Asia. And I'm Paul Allen in Sydney where

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Speaker 1: we got the ASX. Just I've been portray ten am

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Speaker 1: Friday morning. It's a stagged stat here, so it takes

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Speaker 1: a while to get things rolling. But what a day

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Speaker 1: quarter a day boy. Well, let's stay focused on the

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Speaker 1: markets for the moment. We kind of had a very

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Speaker 1: interesting session in the US pol We had a number

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Speaker 1: of FED speakers essentially reiterating their resolve to bring down inflation.

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Speaker 1: Now importantly, one of the Fed's preferred measures of inflation,

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Speaker 1: that's the Personal Consumption Expenditures Index. We had data on

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Speaker 1: that reading today for the fourth quarter. Again that was

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Speaker 1: revised up to a rate of four point four percent,

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Speaker 1: slightly above the initial reading. But remember that's a fourth

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Speaker 1: quarter figure. The important number will happen tomorrow morning when

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Speaker 1: we get PCE for the month of February. Now, in

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Speaker 1: terms of Fed speaking, not really any a big surprise,

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Speaker 1: and not a lot of movement in the bond market

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Speaker 1: as a result, with a two year treasury very little changed.

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Speaker 1: We finished New York trading at a yield of four

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Speaker 1: eleven the ten year at three fifty four. In terms

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Speaker 1: of equity market price action, only one industry group among

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Speaker 1: the eleven that make up the S and P five

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Speaker 1: hundred was lower, that being financials. Overall, today we had

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Speaker 1: the S and P five hundred higher by six tenths

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Speaker 1: of one percent, where the DAO was concerned to gain

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Speaker 1: a four tenths of one percent, and in the Nasdaq

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Speaker 1: market the Composite index up about seven tenths of one percent.

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Speaker 1: The dollar weaker today against its piers, with a Bloomberg

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Speaker 1: Dollar Spot Index dropping about four tenths of one percent,

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Speaker 1: and we've got a weaker yen now at one thirty

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Speaker 1: two eighty seven. We also have early trading underway in

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Speaker 1: Sydney poll and I'm going to say it's mild positivity

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Speaker 1: for the ASX two hundred. Yeah, that's right. It does

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Speaker 1: take us a while to get going, but those stocks

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Speaker 1: that are online at the moment showing some reasonable gains

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Speaker 1: were a little bit more than a quarter of one percent.

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Speaker 1: He mentioned that the latest FED speak there well FED

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Speaker 1: officials are suggesting that more monetary tightening might be needed

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Speaker 1: even after the collapse of three US banks earlier this month.

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Speaker 1: Minneapolis FED President Neil Kashgari said the services sector excluding

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Speaker 1: housing has yet to slow down despite a series of

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Speaker 1: aggressive rate hikes, and he said it's premature to judge

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Speaker 1: what impact recent term oil in the financial system is

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Speaker 1: going to have on the US economy. What's unclear right

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Speaker 1: now is how much of this of the banking stresses

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Speaker 1: of the past few weeks is leading to a sustained

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Speaker 1: credit crunch, which would then slow down the US economy. Meantime,

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Speaker 1: Richmond FED President Thomas Barkin said the FED can high

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Speaker 1: rates more if inflation risks persist, but Bakin remains undecided

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Speaker 1: on whether the FED should adjust rates at its next meeting.

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Speaker 1: Boston FED President Susan Collins said more needs to be

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Speaker 1: done to bring inflation down to the FEDS two percent target.

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Speaker 1: She views the quarter point rate increases as the appropriate

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Speaker 1: pace needed. PC deflated data was out tomorrow at thirty

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Speaker 1: am Wall Street time. That might offer some clues on

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Speaker 1: what the fit's going to do next. And let's expect

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Speaker 1: the data to show price pressures ran at a pace

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Speaker 1: more than double the FITS Tigeham February meantime, the Biden

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Speaker 1: administration is proposing tougher bank regulations to help make sure

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Speaker 1: there are no more failures of those midsize banks. We

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Speaker 1: have that story from Bloomberg's Tom Busby. The White House

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Speaker 1: now calling on federal banking regulators and the Treasury Department

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Speaker 1: to tighten up the rules from midsize bank to prevent

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Speaker 1: any more regional banks like Silicon Valley Bank from collapsing.

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Speaker 1: Among the recommendations annual stress tests for those midsize banks,

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Speaker 1: shortening the time to apply those stress tests once banks

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Speaker 1: reach one hundred billion dollars in assets, and strengthening supervisory

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Speaker 1: tools to ensure that those lenders can withstand rising interest rates.

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Speaker 1: Tom Busby, Bloomberg Daybreak Asia. We hear Tesla is looking

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Speaker 1: to build a battery plant in the US. This would

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Speaker 1: likely be an arrangement with China's dominant electric vehicle battery manufacture.

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Speaker 1: We've got more from Bloomberg's Ed Ludlow. Tesla officials notified

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Speaker 1: White House officials of this plan in the last couple

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Speaker 1: of weeks. According to sources, the idea is that it

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Speaker 1: is a new battery facility. Texas is a possible location

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Speaker 1: for it. But what sources are saying is that Tesla

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Speaker 1: wants to mirror the type of deal that Ford did

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Speaker 1: with Atlatl, the biggest maker of battery cells for evs

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Speaker 1: in the world, a sort of Chinese giant. But in

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Speaker 1: the case of Ford and Michigan, what they did is

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Speaker 1: Ford is wholly owns the US entity. It wholly owns

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Speaker 1: the operation they license the technology from CTL. Tesla wants

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Speaker 1: to replicate that, We're told by sources. Representatives of TESLA'STL

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Speaker 1: and the White House didn't immediately respond to requests for comment.

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Speaker 1: Tesla is not a lot of change after hours well.

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Speaker 1: The logistics arm of Ali Barber is said to be

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Speaker 1: gearing up for an initial public offering. That story from

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Speaker 1: Bloomberg Zivan Men sources says Hi Naw Network Technology has

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Speaker 1: started preparations with banks for its Hong Kong IPO and

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Speaker 1: the listing could happen by the end of this year.

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Speaker 1: It would be the first of Ali Baba's six business

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Speaker 1: units to go public. Banks including China International Capital and

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Speaker 1: Citigroup are said to be working with ti U to

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Speaker 1: prepare for the share sale. TAIL is currently valued at

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Speaker 1: more than twenty billion dollars. We here the company hasn't

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Speaker 1: decided on the IPO size, and the timing is still

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Speaker 1: subject to change depending on market conditions in Hong Kong.

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Speaker 1: I'm Van Maham Bloomberg Daybreak Asia. JD dot Com ads

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Speaker 1: Sort after two of its subsidiaries also filed for Hong

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Speaker 1: Kong IPOs. We've got more from Bloomberg's Joe and Wong.

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Speaker 1: Jingdong Property and Jingdong Industrials said they've submitted listing applications

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Speaker 1: to the Hong Kong Stock Exchange. The firms didn't disclose

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Speaker 1: fundraising amounts, valuations, or prices for the shares. The two

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Speaker 1: are the latest Chinese companies choosing to tap the Hong

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Speaker 1: Kong IPO market instead of a US listing. Increasing scrutiny

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Speaker 1: of Chinese businesses in the US, combined with Paijing's concern

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Speaker 1: about data security for US listed companies, are among the

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Speaker 1: factors for listing in Hong Kong. Still, debuts by Chinese

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Speaker 1: firms of slumped in Hong Kong and overseas since Paijing's

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Speaker 1: cracked down on the tech sector two years ago. Since January,

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Speaker 1: Hong Kong IPO proceeds are forty eight percent lower than

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Speaker 1: at the same time. Last year in Hong Kong. I'm

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Speaker 1: Joan Wong Bloomberg Day, Brigaesia, and we were talking earlier

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Speaker 1: about today's mildly hawk ish Fed speak. Well, markets are

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Speaker 1: now expecting the FED funds rate to sit around four

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Speaker 1: point three percent by the end of the year. If

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Speaker 1: that is true, it is about seventy basis points below

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Speaker 1: where we are currently Now. A number of strategists are

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Speaker 1: being very cautious in saying the market is wrong to

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Speaker 1: expect rate cuts later this year. Then, if you look

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Speaker 1: at today's economic data, US unemployment claims clicked up for

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Speaker 1: the first time in three weeks now. In terms of

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Speaker 1: inflation as measured by that so called PCE cored later

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Speaker 1: it's due tomorrow, that is Friday in the US, and

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Speaker 1: it's expected to have remained persistently high in the month

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Speaker 1: of February. Let's check Global News next on daybreak g

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Speaker 1: Aisia top story. Donald Trump has been indicted by the

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Speaker 1: Manhattan Grand Jury at Baxter with Moore from the Bloomberg

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Speaker 1: News Roman San Francisco, Eddie, Yeah, this is true history.

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Speaker 1: Douglas the first former president in American history to be indicted.

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Speaker 1: Bloomberg's Wendy Benjaminson. It's an incredibly historic moment in American history, really,

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Speaker 1: but it's also it is justin we don't know what

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Speaker 1: the charges are yet, as you said, and we were

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Speaker 1: very surprised because yesterday we heard the grand jury was

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Speaker 1: taking a three week break, so we didn't know what happened.

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Speaker 1: But I guess they came to a quick conclusion and

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Speaker 1: decided to indict him. I don't think this will even

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Speaker 1: slow him down from his current run. He's going to

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Speaker 1: run as a victim of the Democratic deep state, try

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Speaker 1: to capitalize and try to capitalize. Trump has said that

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Speaker 1: he wanted to be indicted. He's reported to be in

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Speaker 1: mar Lago now he'll most likely be brought back to

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Speaker 1: New York, will be arrested, fingerprinted, arraigned the first part

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Speaker 1: of next week. Authorities have said it will not be

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Speaker 1: a public purp walk. Trump is now saying the indictment

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Speaker 1: was political persecution and Bloombridge Joe Matthew says that he

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Speaker 1: has posted this is political persecution and election interference at

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Speaker 1: the highest level in history. From the time I came

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Speaker 1: down the Golden escalator at Trump Tower, the radical left

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Speaker 1: Democrats have been engaged in a witch hunt to destroy

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Speaker 1: the Make America Again movement Now again Joe, reading from

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Speaker 1: the Trump's statement, he went on to say that this

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Speaker 1: whole prosecution is funded by George Soros. Finland has cleared

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Speaker 1: its last obstacle to gain NATO in Troy. Turkey's parliament

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Speaker 1: has voted to approve final membership and Finland is becoming

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Speaker 1: the thirty first member of NATO. Finland's membership will become

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Speaker 1: official once it deposits ascension, a bid and the US

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Speaker 1: State Department. That could happen in the coming days. Meanwhile,

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Speaker 1: it comes as a blow to Russia, which has been

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Speaker 1: signaling its opposition. The move gives the Alliance a bit

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Speaker 1: more control of the Baltic Sea region. Meanwhile, Russia has

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Speaker 1: detained Wall Street Journal reporter Evan Gerskovich for alleged espionage,

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Speaker 1: triggering a whole new confrontation between Moscow and Washington. State

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Speaker 1: Department spokesman Benda Patel says diplomatic channels are underway to

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Speaker 1: get him back. The US embassy in Moscow has requested

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Speaker 1: official notification of the arrest, and Russia is required to

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Speaker 1: provide that under our bilateral Consular Convention. But Bloomberg Jody

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Speaker 1: Schneider says, there's more than just espionage charges, and this

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Speaker 1: really is an escalation of tensions. It's basically Putin and

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Speaker 1: Russia saying that we will arrest your journalists if we

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Speaker 1: have to get your attention. Meanwhile, former Deputy Secretary of

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Speaker 1: Defense Milk Mulroy says this is part of a high

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Speaker 1: risk ploy for more prisoner swaps. I think the Russians

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Speaker 1: are going to focus on the former Russian intelligence operative

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Speaker 1: in prison essentially for murder in Germany as an assassination

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Speaker 1: that he did there, and that's probably who they're going

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Speaker 1: to focus on. But that person is guilty and was

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Speaker 1: sentenced for murder. These two individuals are basically being held

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Speaker 1: as pawns at political hostages, and whether we're willing to

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Speaker 1: go to the Germans on that is to be seen.

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Speaker 1: And the US State Department is asking all non essential

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Speaker 1: American citizens to leave the Russian Federation. Global News powered

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Speaker 1: by more than twenty seven hundred journalist and analyst in

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Speaker 1: over one hundred and twenty countries in San Francisco. I'm

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Speaker 1: d Baxter and this is Bloomberg. Thank you, Eddie. Let's

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Speaker 1: get to our guest, to Pauline Crystal is with us

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Speaker 1: as she is a capital portfolio manager at Capstream. She

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Speaker 1: joins us from Sydney, Australia. Pauline, thanks for being with us.

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Speaker 1: A lot of the conversation in the US centers on

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Speaker 1: what is in store for the FED in terms of

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Speaker 1: the main meeting, whether or not we're going to get

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Speaker 1: a quarter point rate hike, and then after that perhaps

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Speaker 1: either you are of the opinion that the FED goes

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Speaker 1: into kind of a stasis mode kind of maybe the

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Speaker 1: pause is appropriate, or rate cuts before the end of

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Speaker 1: the year. Is it too soon to make that call? High,

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Speaker 1: Good morning the againtall. Thanks for having me. Look, it's

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Speaker 1: been a lot has changed since, you know, the beginning

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Speaker 1: of March, when it looked like inflation was taking higher

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Speaker 1: and rates has to keep going higher and higher, and

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Speaker 1: with what happened on the banking market, now suddenly the

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Speaker 1: narrative has changed, and I think it's still a little

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Speaker 1: bit early to work out what the FED is going

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Speaker 1: to do. And even now for the next meeting, a

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Speaker 1: lot of the speakers has come out and talked about

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Speaker 1: how inflation is still the main focus and that it

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Speaker 1: still has to find inflation and statilize prices, but at

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Speaker 1: the same time, the recession risk is becoming really really

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Speaker 1: real with instability in the banking sector. So look, I

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Speaker 1: given the message of defense and the dots are still

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Speaker 1: pricing and showing one more hike. You know, it's unlikely

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Speaker 1: that we're going to see the set pivot right away

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Speaker 1: at the next meeting. It was like a while even

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Speaker 1: from the tiping that we're going to see from the

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Speaker 1: banking sector to flow through the economy now. So your

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Speaker 1: question about is it too early to price hikes in,

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Speaker 1: it seems pretty early, because you know, you want to

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Speaker 1: see the large effect of the hips that we've had

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Speaker 1: over the past twelve or some months tech effect into

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Speaker 1: the economy, and arguably the cuts might be accelerated from

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Speaker 1: where they were before the SVB collapse, but you know,

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Speaker 1: whether or not we're going to have them by the

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Speaker 1: end of this year, it's probably a bit early to say, Yeah,

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Speaker 1: what is your expectation about that lagging effect around the

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Speaker 1: inflation fight. Do you anticipate to see inflation coming down

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Speaker 1: within the next few months. Yeah, Look, it's coming down,

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Speaker 1: and we've seen it trained down for a number of

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Speaker 1: months already. But now the question is going to be

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Speaker 1: Going from nine to five percent was the easy paths

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Speaker 1: now not from five pc. Being back within targets will

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Speaker 1: be the difficult path, because the change is going to

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Speaker 1: be very incremental. So and that's why, you know, we

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Speaker 1: don't believe that the fact is just going to pivot

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Speaker 1: right away and cut because we're still going to be

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Speaker 1: above target for a little while. Now that's obviously burying

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Speaker 1: some very major events, such as more instability on the

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Speaker 1: banking sector. Pauline, Rather, I'm sorry, let's shift the attention

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Speaker 1: to China because it's a very different situation, particularly when

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Speaker 1: you look at wholesale inflation where prices are in deflation

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Speaker 1: and later today, of course it's the official PMI data,

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Speaker 1: and I'm wondering whether or not we can look at

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Speaker 1: the PPI, the last print that we had for PPI

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Speaker 1: in China, that deflationary read and assume that the manufacturing

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Speaker 1: manufacturing economy in China is still struggling. Hey, look, that's

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Speaker 1: that's a very interesting point. That's actually a different speed

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Speaker 1: where we're seeing it happening in the US and happening

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Speaker 1: in China. But what we want to remember is China's

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Speaker 1: only started reopening and lifted all the restrictions that they

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Speaker 1: had at the end of November, so it still needs

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Speaker 1: time for the whole economy to reopen and for that

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Speaker 1: inflationary pressure. I mean then I'm saying inflationary lightly to

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Speaker 1: flow through the economy. So I don't think we can

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Speaker 1: joy any conclusions from a slightly weaker print and say, hey,

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Speaker 1: you know, things are not looking good, but it just

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Speaker 1: takes time to flow through. A lot of policies have

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Speaker 1: been in place to support the economy, in particularly the

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Speaker 1: property sector over the past eighteen months has suffered quite

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Speaker 1: a fair bit, and we've seen a very strong policy

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Speaker 1: impulse to go and support all those sectors. So you know,

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Speaker 1: it's getting there. It's taking a little time, and it's

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Speaker 1: not going to be a straight journey. But now China

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Speaker 1: is reppen in China is supporting its own economy, and

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Speaker 1: China is the growth is sticking back up. Yeah, and

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Speaker 1: a number of economies around the Asia Pacific are linking

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Speaker 1: their own growth stories to what's going on in China,

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Speaker 1: and among them Australia as well. And you've got a

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Speaker 1: waiting towards Australian domestic assets. Is it to do with

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Speaker 1: the China story or is there something else here? So

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Speaker 1: we have waiting so our domestic it's a domestic bias

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Speaker 1: that we have been based in Sydney. It makes sense

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Speaker 1: to invest in close to home assets. We've definitely benefited

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Speaker 1: a lot from China cements for commodities for example, and

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Speaker 1: that has supported the Australian growth quite a fair bit.

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Speaker 1: But at this stage we are a lot more dependent

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Speaker 1: on how what's happening in the US, in particular in

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Speaker 1: the rates market. That's driving our markets a lot small

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Speaker 1: and obviously China reopening and i'm growth sticking back up

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Speaker 1: will support to some extent exports from Australia. But you know,

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Speaker 1: if your global markets are being unstable, that's going to

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Speaker 1: affect us well. Should we be concerned about a policy

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Speaker 1: shift mild as it may be coming out of the

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Speaker 1: boj a new governor will take the reins in April,

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Speaker 1: or should we be concerned about a change in policy

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Speaker 1: at the Bojok That's something that we're watching very closely.

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Speaker 1: In particular, when the band for JGBS widened to fifty

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Speaker 1: basis points, that's something that we kept an eye on

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Speaker 1: and that ties back to what we saw with SEB

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Speaker 1: and what we saw around securities being incurring mark to

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Speaker 1: market losses. So obviously if that band widens further, or

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Speaker 1: if there's an unpegging, then you would expect rates to

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Speaker 1: sell off and that will impact the securities that a

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Speaker 1: lot of the banks will hold on their book. So

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Speaker 1: that's something that we're looking at very carefully. But again,

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Speaker 1: you know, it's a little bit early to just say

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Speaker 1: with certainty what DOJ is going to do. This is

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Speaker 1: bloom Break Daybreak Asia, your morning brief on the stories

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