1 00:00:02,520 --> 00:00:05,480 Speaker 1: Good morning. I'm Doug Krisner and I'm Brian Curtiz. Here 2 00:00:05,480 --> 00:00:08,680 Speaker 1: are the stories we're following today. Saint Louis FED President 3 00:00:08,760 --> 00:00:11,400 Speaker 1: Jim Bullard has stepped down from his post as head 4 00:00:11,400 --> 00:00:14,160 Speaker 1: of the bank effective today. Bullard said that he would 5 00:00:14,200 --> 00:00:17,680 Speaker 1: fully depart on August fourteenth to become the inaugural dean 6 00:00:17,800 --> 00:00:21,200 Speaker 1: of Produced Business School. Wellard, who doesn't vote on rates, 7 00:00:21,239 --> 00:00:24,319 Speaker 1: this year, has been seen as a bellweather because his 8 00:00:24,440 --> 00:00:28,640 Speaker 1: views have sometimes foreshadowed FED policy changes. We heard earlier 9 00:00:28,680 --> 00:00:30,320 Speaker 1: from Bloomberg's Kathleen Hayes. 10 00:00:30,640 --> 00:00:32,680 Speaker 2: Coming out of the pandemic, Jim was one of the 11 00:00:32,680 --> 00:00:34,920 Speaker 2: first people who made it clear that the FED was 12 00:00:35,000 --> 00:00:38,120 Speaker 2: going to have to get much more aggressive. He was 13 00:00:38,159 --> 00:00:39,960 Speaker 2: the one one of the first to start talking about 14 00:00:39,960 --> 00:00:42,559 Speaker 2: needing to front load interest rate hikes. 15 00:00:42,960 --> 00:00:44,480 Speaker 3: I'm going to have to move more. 16 00:00:44,240 --> 00:00:45,879 Speaker 2: Going to have to move faster, rates are going to 17 00:00:45,880 --> 00:00:48,760 Speaker 2: have to be higher, and continuing to push in that direction. 18 00:00:48,880 --> 00:00:52,120 Speaker 2: He obviously, in the end isn't the only one. But again, 19 00:00:52,200 --> 00:00:55,320 Speaker 2: Jim has been I think a big monetary policy thinker, 20 00:00:55,440 --> 00:00:58,960 Speaker 2: and in terms of actual policy steps, he has been 21 00:00:59,240 --> 00:01:01,280 Speaker 2: a major for all the. 22 00:01:01,280 --> 00:01:03,400 Speaker 1: Saint Louis FED said that Bullard will remain at the 23 00:01:03,440 --> 00:01:06,800 Speaker 1: Bank in an advisory capacity over the next month. The 24 00:01:06,840 --> 00:01:09,600 Speaker 1: Bank also said that Bullard has recused himself from his 25 00:01:09,680 --> 00:01:14,080 Speaker 1: monetary policy role and also other related duties, and he 26 00:01:14,160 --> 00:01:15,920 Speaker 1: has ceased all public speaking. 27 00:01:16,440 --> 00:01:16,640 Speaker 4: Well. 28 00:01:16,680 --> 00:01:20,000 Speaker 5: A court ruling today that is being widely hailed as 29 00:01:20,000 --> 00:01:22,440 Speaker 5: a victory for the crypto industry and that story from 30 00:01:22,440 --> 00:01:23,600 Speaker 5: Bloomberg's and Kates. 31 00:01:23,959 --> 00:01:26,360 Speaker 3: A federal judge has ruled that a Ripple Lab's token 32 00:01:26,480 --> 00:01:29,200 Speaker 3: is a security when sold to institutional investors, but not 33 00:01:29,240 --> 00:01:32,160 Speaker 3: the general public. The Securities and Exchange Commission has been 34 00:01:32,160 --> 00:01:36,880 Speaker 3: aggressively targeting crypto firms for allegedly selling unregistered securities. Whether 35 00:01:36,920 --> 00:01:39,880 Speaker 3: cryptocurrencies are securities had long been a major question hanging 36 00:01:39,920 --> 00:01:42,520 Speaker 3: over the industry, which has argued it is not subject 37 00:01:42,520 --> 00:01:45,480 Speaker 3: to the jurisdiction of the sec and other regulators in 38 00:01:45,680 --> 00:01:48,440 Speaker 3: Washington and Kate's Bloomberg day Break Asia all Right. 39 00:01:48,480 --> 00:01:51,520 Speaker 1: The US Federal Trade Commission has asked a California judge 40 00:01:51,560 --> 00:01:54,840 Speaker 1: to temporarily block Microsoft from closing on its deal at 41 00:01:54,920 --> 00:01:58,800 Speaker 1: sixty nine billion dollar takeover of Activision Blizzard, and it 42 00:01:58,840 --> 00:02:01,400 Speaker 1: comes as the Agency of pearls a lower court ruling 43 00:02:01,440 --> 00:02:04,320 Speaker 1: that greenlighted the deal in the US. The ruling had 44 00:02:04,360 --> 00:02:06,760 Speaker 1: found that the deal would not thwart competition in the 45 00:02:06,840 --> 00:02:10,480 Speaker 1: markets for gaming, and it would also not harm consumers. 46 00:02:10,760 --> 00:02:14,840 Speaker 1: But the former FTC chair, William Kovacik, tells US that 47 00:02:14,880 --> 00:02:18,760 Speaker 1: the regulator concerns over the deal aren't going away anytime soon. 48 00:02:19,440 --> 00:02:24,320 Speaker 6: As organizations and institutions of this kind grow and grow dramatically, 49 00:02:24,680 --> 00:02:27,560 Speaker 6: you start to wonder whether they become manageable even on 50 00:02:27,600 --> 00:02:31,200 Speaker 6: their own terms. That is, to what extent do the 51 00:02:31,240 --> 00:02:35,840 Speaker 6: managers of the large enterprises as they grow, as they 52 00:02:35,880 --> 00:02:40,240 Speaker 6: move quickly, are they fully able to manage effectively what 53 00:02:40,280 --> 00:02:44,120 Speaker 6: they're doing even with the best based efforts to manage effectively. 54 00:02:44,520 --> 00:02:48,480 Speaker 1: That's William Kavasik, a former chair of the FTC. The 55 00:02:48,560 --> 00:02:51,480 Speaker 1: FTC said that it would it would seek emergency action 56 00:02:51,680 --> 00:02:55,040 Speaker 1: by the Ninth Circuit Court to stop the Microsoft deal 57 00:02:55,080 --> 00:02:57,920 Speaker 1: from closing, as if its request to pause the deal 58 00:02:58,040 --> 00:03:02,280 Speaker 1: is denied. Barring court act, Microsoft and Activision can complete 59 00:03:02,320 --> 00:03:05,240 Speaker 1: the deal. As of eleven fifty nine pm in San 60 00:03:05,280 --> 00:03:07,959 Speaker 1: Francisco on July fourteenth. 61 00:03:07,440 --> 00:03:11,280 Speaker 5: Well US Treasury Secretary Janet Yellen is traveling to India 62 00:03:11,320 --> 00:03:14,400 Speaker 5: and Vietnam next week with a goal of strengthening some 63 00:03:14,520 --> 00:03:18,000 Speaker 5: economic ties. Yellen will first head to India for a 64 00:03:18,040 --> 00:03:22,519 Speaker 5: meeting of G twenty finance ministers and central bankers. Now, 65 00:03:22,560 --> 00:03:24,760 Speaker 5: the US Treasury says that Yellen will be pushing for 66 00:03:24,919 --> 00:03:30,840 Speaker 5: reforming global engzing institutions to boost their scope of their firepower. Basically, 67 00:03:30,960 --> 00:03:33,560 Speaker 5: Yellen is also going to be looking to advance talks 68 00:03:33,600 --> 00:03:37,680 Speaker 5: on easing the burden of debt in poorer nations. Up next, 69 00:03:37,760 --> 00:03:40,400 Speaker 5: after India, it's onto Vietnam, where she will be meeting 70 00:03:40,400 --> 00:03:44,640 Speaker 5: with senior government officials and private businesses currency and trade. 71 00:03:44,680 --> 00:03:48,120 Speaker 5: While those will be among the topics for discussion, the 72 00:03:48,160 --> 00:03:51,160 Speaker 5: stated goals of the trip pretty simple. Improving ties with 73 00:03:51,200 --> 00:03:55,360 Speaker 5: both India and Vietnam. The less obvious goal well perhaps 74 00:03:55,600 --> 00:03:59,680 Speaker 5: smoothing the path of those supply chains away from China. 75 00:04:00,560 --> 00:04:05,240 Speaker 1: And China is taking a friendlier approach now towards artificial intelligence. 76 00:04:05,560 --> 00:04:07,520 Speaker 1: That story from Bloomberg's Joan Wong. 77 00:04:07,920 --> 00:04:10,440 Speaker 7: China has loosened some of the guardrails that proposed for 78 00:04:10,560 --> 00:04:14,440 Speaker 7: chat GPT like surfaces. Some twenty four guidelines have just 79 00:04:14,520 --> 00:04:18,320 Speaker 7: been finalized, though go into effect on August fifteenth. They 80 00:04:18,320 --> 00:04:21,920 Speaker 7: suggest more flexible regulation than in the initial draft back 81 00:04:21,920 --> 00:04:24,719 Speaker 7: in April. The document is the products of months of 82 00:04:24,800 --> 00:04:28,240 Speaker 7: consultation between the government and the industry. The hope is 83 00:04:28,240 --> 00:04:31,960 Speaker 7: to ease concerns over who takes responsibility for governing AI 84 00:04:32,160 --> 00:04:35,400 Speaker 7: content on the platforms. The revised rules seem to balance 85 00:04:35,440 --> 00:04:39,880 Speaker 7: that responsibility between the regulators and the platform operators. The 86 00:04:39,920 --> 00:04:43,120 Speaker 7: goal is to regulate AI but not stunnest development in 87 00:04:43,160 --> 00:04:45,400 Speaker 7: Hong Kong. I joined Wong Bloomberg Day Brigasia. 88 00:04:45,839 --> 00:04:48,480 Speaker 1: I'm Brian Curtis in Hong Kong along with Doug Prisner 89 00:04:48,600 --> 00:04:51,560 Speaker 1: in New York. And Doug we have two major developments 90 00:04:51,560 --> 00:04:55,320 Speaker 1: here stoking gains in risk assets. We've talked about this 91 00:04:55,520 --> 00:04:58,720 Speaker 1: more benign inflation readings that we've seen of late in 92 00:04:58,720 --> 00:05:01,040 Speaker 1: the past few days in the US, and then also 93 00:05:01,520 --> 00:05:06,040 Speaker 1: Chinese policymakers clearly reaching out to the private sector. Both 94 00:05:06,120 --> 00:05:09,359 Speaker 1: of these trends can be fickle, but at the moment 95 00:05:09,400 --> 00:05:11,320 Speaker 1: the green light is flashing. 96 00:05:10,960 --> 00:05:13,440 Speaker 5: Most definitely here in the States. One of the things 97 00:05:13,480 --> 00:05:15,920 Speaker 5: that it has produced a much weaker dollar. I think 98 00:05:16,040 --> 00:05:19,240 Speaker 5: for the four days that we have had of dollar trading, 99 00:05:19,360 --> 00:05:21,400 Speaker 5: we're down about two point eight percent. If you look 100 00:05:21,520 --> 00:05:25,960 Speaker 5: at the Bloomberg dollar spot index. Later today in China, 101 00:05:26,120 --> 00:05:28,240 Speaker 5: this is going to be very interesting. There's going to 102 00:05:28,240 --> 00:05:31,279 Speaker 5: be a press conference at ten am Beijing time, hosted 103 00:05:31,320 --> 00:05:35,920 Speaker 5: by Deputy Governor of the PBOC Luk Wao Chung. Basically, 104 00:05:35,920 --> 00:05:37,520 Speaker 5: it's going to be a look at a look at 105 00:05:37,560 --> 00:05:39,320 Speaker 5: some of the financial data that we have seen for 106 00:05:39,440 --> 00:05:42,120 Speaker 5: China in the first half of the year. Now we 107 00:05:42,240 --> 00:05:44,599 Speaker 5: know there have been a number of challenges. All you 108 00:05:44,680 --> 00:05:47,600 Speaker 5: have to do is to look at the trade data 109 00:05:47,640 --> 00:05:50,760 Speaker 5: that we had yesterday, a twelve point four percent decline 110 00:05:50,800 --> 00:05:53,440 Speaker 5: in exports for the month of June. Brian, you and 111 00:05:53,480 --> 00:05:58,159 Speaker 5: I have talked about the disinflationary or deflationary trend when 112 00:05:58,160 --> 00:06:02,200 Speaker 5: it comes to factory gate inflation in China. So based 113 00:06:02,240 --> 00:06:04,080 Speaker 5: on a lot of the data that we've been looking at, 114 00:06:04,120 --> 00:06:07,120 Speaker 5: there is a lot to be concerned about Bloomberg economics. 115 00:06:07,120 --> 00:06:09,640 Speaker 5: I think I pointed this out earlier as expecting Beijing 116 00:06:10,120 --> 00:06:12,560 Speaker 5: to do a lot more in terms of recharging growth. 117 00:06:13,160 --> 00:06:15,320 Speaker 1: The way the market is looking at this, Doug is 118 00:06:16,120 --> 00:06:18,719 Speaker 1: not so much the data, and not so much even 119 00:06:19,240 --> 00:06:21,520 Speaker 1: you know, the ins and outs of the stimulus. It's 120 00:06:21,560 --> 00:06:24,240 Speaker 1: really more the approach of policymakers. You asked me a 121 00:06:24,279 --> 00:06:26,560 Speaker 1: couple of days ago, and I said, well, it really 122 00:06:26,600 --> 00:06:30,880 Speaker 1: does seem to have the policymakers approach seems to have changed. 123 00:06:31,560 --> 00:06:33,920 Speaker 1: It's a much different attitude. It's like all of a 124 00:06:33,920 --> 00:06:36,600 Speaker 1: sudden the light went on that the way that they 125 00:06:36,600 --> 00:06:39,279 Speaker 1: can get the animal spirits back is to stimulate the 126 00:06:39,320 --> 00:06:42,320 Speaker 1: private sector. So we've seen a number of these developments 127 00:06:42,360 --> 00:06:45,679 Speaker 1: who today we talk about balancing the approach to AI 128 00:06:45,800 --> 00:06:48,800 Speaker 1: regulations that it's a little bit friendlier. We talked about 129 00:06:48,839 --> 00:06:51,960 Speaker 1: the meeting between the premiere and the big tech companies 130 00:06:52,000 --> 00:06:54,599 Speaker 1: and the relaxing or the loosening of some of the 131 00:06:54,600 --> 00:07:00,000 Speaker 1: payback restrictions on property developers. It's more about the approach, 132 00:07:00,000 --> 00:07:02,200 Speaker 1: which then it is the actual data here at the moment. 133 00:07:02,240 --> 00:07:04,760 Speaker 1: That's why you had bad data yesterday. But look at 134 00:07:04,760 --> 00:07:07,280 Speaker 1: the CSI three hundred is up one point four percent. 135 00:07:07,360 --> 00:07:10,160 Speaker 1: The Hangksng Tech index was up three point eight percent. 136 00:07:10,360 --> 00:07:12,840 Speaker 1: This is what investors are really feasting on. 137 00:07:13,160 --> 00:07:15,440 Speaker 5: So perhaps it's a combination of both I hope for 138 00:07:15,560 --> 00:07:18,760 Speaker 5: more stimulus and un understanding now that Beijing has come 139 00:07:18,760 --> 00:07:22,280 Speaker 5: to the realization that the entrepreneurial class really needs to 140 00:07:22,320 --> 00:07:25,240 Speaker 5: be embraced if you're going to recover an economy. 141 00:07:24,960 --> 00:07:28,880 Speaker 1: Absolutely it sets up well, but as I mentioned, it's fickle. 142 00:07:29,280 --> 00:07:31,680 Speaker 1: We don't know. We've got fed speak out there that's 143 00:07:31,960 --> 00:07:35,080 Speaker 1: still very hawkish, But I think the market, the way 144 00:07:35,120 --> 00:07:38,240 Speaker 1: the market's looking at that, perhaps you agree, is well, 145 00:07:38,600 --> 00:07:40,640 Speaker 1: we expect them to do this for now. 146 00:07:40,840 --> 00:07:43,320 Speaker 5: Perhaps perhaps I think one of the things that's going 147 00:07:43,400 --> 00:07:46,040 Speaker 5: to be very interesting going forward here in the US 148 00:07:46,160 --> 00:07:48,680 Speaker 5: is what we hear tomorrow from some of the big 149 00:07:48,720 --> 00:07:51,120 Speaker 5: banks right the degree to which they're going to be 150 00:07:51,200 --> 00:07:55,120 Speaker 5: positive or not on the trajectory for the American economy, 151 00:07:55,280 --> 00:07:57,239 Speaker 5: because one of the things I think the data show 152 00:07:57,400 --> 00:08:00,800 Speaker 5: in on the trade side for China, the recovery in 153 00:08:00,840 --> 00:08:04,640 Speaker 5: the global economy, as tricky as it's been right now, 154 00:08:04,680 --> 00:08:07,240 Speaker 5: if it's not there in a robust form, it's going 155 00:08:07,320 --> 00:08:09,800 Speaker 5: to be even more difficult for China to recover, don't 156 00:08:09,840 --> 00:08:10,160 Speaker 5: you think? 157 00:08:10,920 --> 00:08:11,200 Speaker 8: Yeah? 158 00:08:11,240 --> 00:08:13,679 Speaker 1: Absolutely, And we can put a lot of this Nancy Davis, 159 00:08:13,720 --> 00:08:16,040 Speaker 1: Who've got her coming up in a few moments. Nancy 160 00:08:16,120 --> 00:08:20,360 Speaker 1: Davis's founder in CIO at Quadratic Capital Management. Now it's 161 00:08:20,400 --> 00:08:26,200 Speaker 1: time for global news. Actors and performers have decided to 162 00:08:26,280 --> 00:08:29,160 Speaker 1: join writers on strike, saying it's an issue that will 163 00:08:29,160 --> 00:08:32,760 Speaker 1: affect all elements of US labor that Baxter has Global 164 00:08:32,760 --> 00:08:35,400 Speaker 1: News from the nine to sixty News from in San Francisco. 165 00:08:35,080 --> 00:08:37,600 Speaker 9: Ed, Yeah, they make it a societal issue for sure, 166 00:08:37,679 --> 00:08:39,839 Speaker 9: Bri and they go out tonight. The two main issues 167 00:08:39,880 --> 00:08:43,880 Speaker 9: sided by union lead negotiator Duncan Crabtree Ireland streaming and 168 00:08:44,000 --> 00:08:45,559 Speaker 9: AI actors. 169 00:08:45,160 --> 00:08:48,200 Speaker 10: Deserve a contract that reflects the changes that have taken 170 00:08:48,240 --> 00:08:52,120 Speaker 10: place in the industry. Unfortunately, the current streaming model has 171 00:08:52,240 --> 00:08:56,280 Speaker 10: undercut performers residual income and high inflation has further reduced 172 00:08:56,280 --> 00:08:58,840 Speaker 10: our members' ability to make ends meet. 173 00:08:59,040 --> 00:09:02,760 Speaker 9: Now SAG after President Franz Rusher says they had no choice. 174 00:09:02,840 --> 00:09:07,040 Speaker 4: If we don't stand tall right now, we are all 175 00:09:07,080 --> 00:09:09,760 Speaker 4: going to be in trouble, we are all going to 176 00:09:09,840 --> 00:09:13,280 Speaker 4: be in jeopardy of being replaced by machines. 177 00:09:13,720 --> 00:09:16,320 Speaker 9: Dresher says this is important in every field in society 178 00:09:16,360 --> 00:09:19,840 Speaker 9: because what's being done to them will be done in 179 00:09:19,920 --> 00:09:24,120 Speaker 9: all fields of labor, AI and automation. This action will 180 00:09:24,120 --> 00:09:27,120 Speaker 9: shut down most all productions. Some game shows, reality shows 181 00:09:27,160 --> 00:09:29,400 Speaker 9: have been able to go on, but this well should 182 00:09:29,480 --> 00:09:32,719 Speaker 9: dent them as well. China has issues has issued a 183 00:09:32,760 --> 00:09:36,600 Speaker 9: statement telling the US and it needs to stabilize ties 184 00:09:36,760 --> 00:09:39,880 Speaker 9: after meeting between Wang Yi and US Secretary of State 185 00:09:39,880 --> 00:09:42,800 Speaker 9: Anthony Blink and China. Statement says the US needs to 186 00:09:42,840 --> 00:09:47,920 Speaker 9: stop suppressing China's economic, trade, and technology development. Wang also 187 00:09:48,160 --> 00:09:50,960 Speaker 9: urged the US to end sanctions against China and says 188 00:09:51,280 --> 00:09:55,280 Speaker 9: channels of communication should be broadened. The statement also reiterated 189 00:09:55,360 --> 00:09:59,720 Speaker 9: china stance over Taiwan Now. The US statement specifically aimed 190 00:09:59,720 --> 00:10:03,280 Speaker 9: at the alleged China hacking of government offices, including the 191 00:10:03,320 --> 00:10:06,720 Speaker 9: State Department and the State Department Secretary of Commerce office, 192 00:10:06,720 --> 00:10:11,240 Speaker 9: and other businesses using Microsoft business software impacted by that hack. 193 00:10:11,640 --> 00:10:15,000 Speaker 9: White House spokesman John Kirby says the government did act swiftly. 194 00:10:15,040 --> 00:10:17,080 Speaker 11: We took it very very seriously, and we took actions 195 00:10:17,280 --> 00:10:20,080 Speaker 11: immediately after to try to mitigate the effects of it. 196 00:10:20,480 --> 00:10:23,079 Speaker 11: We're obviously taking a fresh look at our systems and 197 00:10:23,160 --> 00:10:26,400 Speaker 11: our cloud computing capabilities to make sure we can be 198 00:10:26,400 --> 00:10:27,760 Speaker 11: more resilient in the future. 199 00:10:28,040 --> 00:10:31,600 Speaker 9: He says systems are now secure. US President Joe Biden 200 00:10:31,640 --> 00:10:34,880 Speaker 9: says Russia cannot sustain years of war in Ukraine. Biden 201 00:10:34,960 --> 00:10:39,079 Speaker 9: says it is taking extraordinary economic and political toll on Russia. 202 00:10:39,240 --> 00:10:45,000 Speaker 12: What agreement is ultimately reached. Depends upon pud and what 203 00:10:45,080 --> 00:10:48,560 Speaker 12: he decides to do, But there is no possibility of 204 00:10:48,640 --> 00:10:53,200 Speaker 12: him winning the war in Ukraine, and he's already lost that. 205 00:10:53,200 --> 00:10:56,640 Speaker 9: War, he says, for two reasons. One, Russia cannot maintain 206 00:10:56,720 --> 00:10:58,280 Speaker 9: resources to go on fighting. 207 00:10:58,440 --> 00:11:02,800 Speaker 12: Number Two, I think that there is going to be 208 00:11:02,840 --> 00:11:09,040 Speaker 12: a circumstance where eventually prison Food is going to decide 209 00:11:09,080 --> 00:11:13,120 Speaker 12: it's not an interest of Russia economically, politically, or otherwise 210 00:11:13,559 --> 00:11:14,720 Speaker 12: to continue this war. 211 00:11:15,080 --> 00:11:17,720 Speaker 9: Biden says, when the war is over, Ukraine will enter NATO. 212 00:11:18,000 --> 00:11:18,120 Speaker 8: Oh. 213 00:11:18,160 --> 00:11:20,200 Speaker 9: By the way, Biden had an off the cuff suggestion 214 00:11:20,320 --> 00:11:24,440 Speaker 9: for Wagner Group, a chief progotion quote, I'd be careful 215 00:11:24,600 --> 00:11:27,520 Speaker 9: what I ate. Global News powered by more than twenty 216 00:11:27,559 --> 00:11:30,560 Speaker 9: seven hundred journalist and analysts in over one hundred twenty countries. 217 00:11:30,840 --> 00:11:34,120 Speaker 9: In San Francisco, I'm Ed Baxter, and this is Bloomberg. 218 00:11:34,200 --> 00:11:36,720 Speaker 1: I'm Brian Curtesy in Hong Kong, along with Doug Prisner 219 00:11:36,720 --> 00:11:39,120 Speaker 1: in New York. Our guest is Nancy Davis, founder in 220 00:11:39,160 --> 00:11:42,880 Speaker 1: CIO at Quadratic Capital Management. Nancy, thank you very much 221 00:11:42,920 --> 00:11:45,480 Speaker 1: for joining us. One of the bullish trends that we've 222 00:11:45,520 --> 00:11:48,880 Speaker 1: seen here just of late is that inflation is coming 223 00:11:48,920 --> 00:11:53,640 Speaker 1: down while wages tick up, and that is strengthening consumer 224 00:11:53,760 --> 00:11:58,079 Speaker 1: buying power. How does that work its way into the 225 00:11:58,080 --> 00:11:59,800 Speaker 1: bond market and your approach. 226 00:12:00,360 --> 00:12:05,040 Speaker 8: Well, definitely, the inflation expectations have been hugging two percent 227 00:12:05,120 --> 00:12:08,319 Speaker 8: in the future for quite a while. We're having realized 228 00:12:08,360 --> 00:12:11,920 Speaker 8: CPI data come in lower with the PPI this morning 229 00:12:12,000 --> 00:12:15,760 Speaker 8: and the CPI print yesterday at three percent, so but 230 00:12:16,000 --> 00:12:19,920 Speaker 8: still future inflation expectations are all right around the two 231 00:12:20,000 --> 00:12:23,320 Speaker 8: percent level when you're looking at break events. So we 232 00:12:23,400 --> 00:12:27,560 Speaker 8: do think the market is really pricing in this two 233 00:12:27,600 --> 00:12:31,959 Speaker 8: percent level, and inflation protected bonds actually look pretty attractive 234 00:12:32,040 --> 00:12:35,320 Speaker 8: right now because the real yield that you can get, 235 00:12:35,400 --> 00:12:38,160 Speaker 8: so that's a yield beyond inflation. For instance, on a 236 00:12:38,200 --> 00:12:42,320 Speaker 8: five year inflation link bond some of one nine percent 237 00:12:42,520 --> 00:12:46,800 Speaker 8: of real yield, So higher real yields has really hurt 238 00:12:46,840 --> 00:12:49,720 Speaker 8: the tips market. You saw that in twenty twenty two. 239 00:12:49,800 --> 00:12:52,480 Speaker 8: In this year, we do think it's an interesting time 240 00:12:52,520 --> 00:12:55,760 Speaker 8: for investors to say, look, you know, the data has 241 00:12:55,840 --> 00:12:58,439 Speaker 8: been strong, but the said, you know, are the raid 242 00:12:58,480 --> 00:13:01,880 Speaker 8: hikes really working? Because even though the CPI and PPI 243 00:13:02,040 --> 00:13:05,160 Speaker 8: have been coming down, I don't know about you Doug 244 00:13:05,200 --> 00:13:07,480 Speaker 8: and Brian. But I still feel a lot of inflation 245 00:13:07,559 --> 00:13:10,120 Speaker 8: in my day to day life. 246 00:13:10,360 --> 00:13:10,600 Speaker 4: Yeah. 247 00:13:10,640 --> 00:13:13,000 Speaker 5: I mean in terms of what we learned yesterday from 248 00:13:13,000 --> 00:13:15,400 Speaker 5: that CPI print, I think we had a core rate 249 00:13:15,440 --> 00:13:19,520 Speaker 5: of what four to six and then if you look 250 00:13:19,520 --> 00:13:22,120 Speaker 5: at four eight, we look at four to six when 251 00:13:22,160 --> 00:13:26,440 Speaker 5: it's the core PCE. Here we have this idea that 252 00:13:26,480 --> 00:13:28,680 Speaker 5: there is the long and variable lag. Do you have 253 00:13:28,720 --> 00:13:31,760 Speaker 5: a sense of how much tightening has yet to be 254 00:13:32,040 --> 00:13:33,640 Speaker 5: felt by the economy. 255 00:13:33,280 --> 00:13:36,840 Speaker 8: Nancy, I think no one in twenty twenty one was 256 00:13:36,880 --> 00:13:40,560 Speaker 8: really expecting the Fed to hike you know, to five 257 00:13:40,679 --> 00:13:43,400 Speaker 8: over five percent in about a year. It was very 258 00:13:43,440 --> 00:13:47,679 Speaker 8: surprising the speed and the rate at which they hiked rates. 259 00:13:47,920 --> 00:13:50,080 Speaker 8: I think the question is is we still have you know, 260 00:13:50,120 --> 00:13:53,240 Speaker 8: to your point with four point eight core? Is it 261 00:13:53,320 --> 00:13:54,040 Speaker 8: really working? 262 00:13:54,320 --> 00:13:54,959 Speaker 3: Is it enough? 263 00:13:55,400 --> 00:13:58,320 Speaker 8: And the market The interesting thing is all markets move 264 00:13:58,400 --> 00:14:03,200 Speaker 8: off of teacher expectations, and future expectations for inflation are 265 00:14:03,360 --> 00:14:08,000 Speaker 8: well below both the PPI and the CPI. The US 266 00:14:08,080 --> 00:14:11,880 Speaker 8: yield curve is near its all time levels of inversion 267 00:14:12,440 --> 00:14:15,880 Speaker 8: since the eighties, so in the last you know, forty 268 00:14:15,920 --> 00:14:19,520 Speaker 8: plus years. You can look on your Bloomberg terminal at 269 00:14:19,560 --> 00:14:24,360 Speaker 8: the twos tens, sofur swap curve for instance, that is 270 00:14:24,440 --> 00:14:29,120 Speaker 8: currently negative one hundred and four basis points, so it's 271 00:14:29,240 --> 00:14:32,240 Speaker 8: near all time lows, even lower than it was in 272 00:14:32,280 --> 00:14:33,120 Speaker 8: the late eighties. 273 00:14:34,160 --> 00:14:37,000 Speaker 1: We were over one hundred basis points and spread between 274 00:14:37,000 --> 00:14:40,440 Speaker 1: twos and tens, and now in the eighties it's not 275 00:14:40,520 --> 00:14:44,160 Speaker 1: a lot. It's only maybe twenty basis points. But you 276 00:14:44,720 --> 00:14:46,520 Speaker 1: seem to be saying that won't continue. 277 00:14:46,840 --> 00:14:50,080 Speaker 8: Well, it's perplexing, right, because if you think about it, 278 00:14:50,120 --> 00:14:52,440 Speaker 8: you can buy a T bill, for instance, you could 279 00:14:52,440 --> 00:14:55,000 Speaker 8: buy a one month T bill and get paid you know, 280 00:14:55,200 --> 00:14:58,560 Speaker 8: five twenty five thirty, or you can lend money to 281 00:14:58,640 --> 00:15:02,240 Speaker 8: the US Treasury for ten years and get paid. Three 282 00:15:02,280 --> 00:15:05,040 Speaker 8: point seventy six right now is the current yield on 283 00:15:05,560 --> 00:15:08,720 Speaker 8: the ten year treasury. So it's a little bit bizarre. 284 00:15:08,760 --> 00:15:11,760 Speaker 8: Like normally, when you win money longer, you get paid more, 285 00:15:12,120 --> 00:15:14,840 Speaker 8: and you're actually getting a negative term premium. That's what 286 00:15:14,880 --> 00:15:18,560 Speaker 8: the inverted yield curve means. It means loaning money in 287 00:15:18,680 --> 00:15:22,320 Speaker 8: US dollars for longer you get paid less. And so 288 00:15:22,560 --> 00:15:26,840 Speaker 8: that's really the deflation disinflation that's being priced into markets. 289 00:15:26,880 --> 00:15:31,920 Speaker 8: As you and Brian Doug were talking about earlier on 290 00:15:31,960 --> 00:15:32,400 Speaker 8: the show. 291 00:15:32,720 --> 00:15:34,800 Speaker 5: You know, Brian and I were talking on the pre 292 00:15:34,880 --> 00:15:37,440 Speaker 5: show call and he reminded me to take a look 293 00:15:37,480 --> 00:15:40,360 Speaker 5: at a note today from Barry Banister over at Steefel 294 00:15:40,480 --> 00:15:43,240 Speaker 5: and mister Banister is predicting that inflation is going to 295 00:15:43,280 --> 00:15:47,120 Speaker 5: be more sticky than many are counting on, and he 296 00:15:47,200 --> 00:15:50,080 Speaker 5: is also talking about the risk of recession for twenty four. 297 00:15:51,520 --> 00:15:53,840 Speaker 5: You seem to be somewhat in that camp. I mean, 298 00:15:53,840 --> 00:15:57,920 Speaker 5: I'm sensing a little bit of defensiveness. Maybe the tactic 299 00:15:58,120 --> 00:16:00,480 Speaker 5: here is going to be a little different, But are 300 00:16:00,520 --> 00:16:04,040 Speaker 5: you adverse to taking a position long the equity market 301 00:16:04,120 --> 00:16:04,520 Speaker 5: right now? 302 00:16:05,000 --> 00:16:07,560 Speaker 8: Well, I think the position that I'm taking is more 303 00:16:07,600 --> 00:16:11,400 Speaker 8: about owning inflation protection as part of core portfolio. It's 304 00:16:11,440 --> 00:16:14,680 Speaker 8: not so much a call on the equity markets. Equities 305 00:16:14,720 --> 00:16:17,320 Speaker 8: have obviously had a pretty good year in the US 306 00:16:17,360 --> 00:16:21,040 Speaker 8: and twenty twenty three, and that's coming off of the 307 00:16:21,120 --> 00:16:23,680 Speaker 8: sixty to forty portfolio had one of the worst years 308 00:16:23,720 --> 00:16:27,640 Speaker 8: ever in twenty twenty two. Bonds of really traded sideways 309 00:16:27,720 --> 00:16:29,680 Speaker 8: for the most part. But I think the thing that 310 00:16:30,120 --> 00:16:32,840 Speaker 8: is very compelling to me is that inflation is not 311 00:16:33,360 --> 00:16:35,400 Speaker 8: it's not a trade, it's not like, do you think 312 00:16:35,440 --> 00:16:38,560 Speaker 8: it's going higher or lower. It's something we have in 313 00:16:38,640 --> 00:16:41,040 Speaker 8: our day to day lives. We live in a real world. 314 00:16:41,480 --> 00:16:44,440 Speaker 8: We have a limited amount of savings, we have hopefully 315 00:16:44,480 --> 00:16:47,560 Speaker 8: some investments, but at the end of the day, everybody 316 00:16:47,600 --> 00:16:51,640 Speaker 8: has the cost of living and exposure to real inflation. 317 00:16:52,240 --> 00:16:54,520 Speaker 8: And I think the opportunity that the market is giving 318 00:16:54,560 --> 00:16:59,160 Speaker 8: investors that inflation expectations in the future are priced right 319 00:16:59,200 --> 00:17:02,840 Speaker 8: around two and whether you think that's going higher or lower, 320 00:17:02,880 --> 00:17:06,480 Speaker 8: the market is very confident that the Fed's interest rate 321 00:17:06,520 --> 00:17:10,840 Speaker 8: hikes are going to cool future inflation expectations. And we 322 00:17:10,880 --> 00:17:11,640 Speaker 8: could talk that way. 323 00:17:12,200 --> 00:17:14,480 Speaker 1: We could talk a lot longer on this, but I 324 00:17:14,480 --> 00:17:18,920 Speaker 1: wanted to pivot quickly to China. We're seeing policymakers there 325 00:17:18,960 --> 00:17:22,399 Speaker 1: in the process of adjusting attitudes a little bit, and 326 00:17:22,440 --> 00:17:26,840 Speaker 1: they're still tweaking their approach to stimulus. Do you do 327 00:17:26,880 --> 00:17:28,679 Speaker 1: you have like a rosy view of this or a 328 00:17:28,760 --> 00:17:30,840 Speaker 1: cautious view of this, or how you assessing it. 329 00:17:31,160 --> 00:17:35,200 Speaker 8: I do think if you look at the private capital markets, 330 00:17:35,240 --> 00:17:38,439 Speaker 8: whether it's private equity, private credit, those have been very, 331 00:17:39,280 --> 00:17:42,639 Speaker 8: very good for the economy and for the credit mechanism 332 00:17:42,800 --> 00:17:46,879 Speaker 8: to translate. Policy makers whatever they're doing in interest rates 333 00:17:47,000 --> 00:17:50,240 Speaker 8: and in currencies into the real economy, and so I 334 00:17:50,280 --> 00:17:53,679 Speaker 8: do think it's very hopeful to have more capitalism in 335 00:17:53,720 --> 00:17:58,480 Speaker 8: the private markets and more extension of credit in markets 336 00:17:58,520 --> 00:18:01,600 Speaker 8: in emerging markets and China as well. So I do 337 00:18:01,680 --> 00:18:06,000 Speaker 8: think that's a positive. And I think the more policymakers 338 00:18:06,040 --> 00:18:10,240 Speaker 8: can employ, you know, the entrepreneurialism that we have with 339 00:18:11,080 --> 00:18:15,160 Speaker 8: companies and growing businesses, the better it is for everyone. 340 00:18:15,640 --> 00:18:18,480 Speaker 1: This is Bloomberg Daybreak Asia, your morning brief on the 341 00:18:18,560 --> 00:18:22,240 Speaker 1: stories making news from Hong Kong to Singapore and Wall Street. 342 00:18:22,359 --> 00:18:26,400 Speaker 5: Look for us on your podcast feed every day, on Apple, Spotify, 343 00:18:26,640 --> 00:18:28,760 Speaker 5: and anywhere else you get your podcasts. 344 00:18:28,800 --> 00:18:31,440 Speaker 1: You can also listen live each day on Bloomberg eleven 345 00:18:31,480 --> 00:18:33,840 Speaker 1: three to zero in New York, Bloomberg ninety nine to 346 00:18:33,880 --> 00:18:37,080 Speaker 1: one in Washington, Bloomberg one oh sixty one in Boston, 347 00:18:37,400 --> 00:18:39,919 Speaker 1: and Bloomberg nine sixty in San Francisco. 348 00:18:40,200 --> 00:18:43,120 Speaker 5: Our flagship New York station is also available on your 349 00:18:43,160 --> 00:18:48,159 Speaker 5: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty. 350 00:18:47,960 --> 00:18:51,080 Speaker 1: Plus listen coast to coast on the Bloomberg Business app. 351 00:18:51,400 --> 00:18:55,600 Speaker 1: Sirius XM Channel one nineteen. The iHeartRadio app and on 352 00:18:55,640 --> 00:18:58,680 Speaker 1: Bloomberg dot Com, I'm Brian Curtis. 353 00:18:58,560 --> 00:19:01,119 Speaker 5: And I'm Doug Krisner. Us again tomorrow for all the 354 00:19:01,119 --> 00:19:03,679 Speaker 5: news you need to start your day right here on 355 00:19:03,720 --> 00:19:06,680 Speaker 5: Bloomberg Daybreak, Asia 356 00:19:08,720 --> 00:19:08,760 Speaker 4: M.