WEBVTT - Apple's Record Buyback Plan, Watching The Yen

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>This is the Bloomberg Daybreak Aisia podcast. I'm Doug Krisner.

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<v Speaker 2>You can join Brian Curtis and myself for the stories,

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<v Speaker 3>Joining us for a closer look at Apple is Marabell Lopez,

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<v Speaker 3>principal analyst at Lopez Research. So we had some gains

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<v Speaker 3>in the after hours, so perhaps we can start from that.

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<v Speaker 3>The stock was up around six percent in late training,

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<v Speaker 3>albeit I'd imagine with fairly light light volumes and such.

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<v Speaker 3>And we have maybe three things to talk about, the performance,

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<v Speaker 3>the stock bypack, and the dividend. How do you think

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<v Speaker 3>that sits with investors? And what was most important?

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<v Speaker 1>I think everyone was surprised by the performance of the quarter.

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<v Speaker 1>It was guided as a potentially weak quarter, so we

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<v Speaker 1>were all expecting that. We had had many research reports

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<v Speaker 1>that were coming out of China that said that Apple

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<v Speaker 1>was losing tremendous share in that market. They frankly came

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<v Speaker 1>into the call and said that they had done very

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<v Speaker 1>well in mainline China, so I think that was a

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<v Speaker 1>big surprise for one in a big win for Apple.

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<v Speaker 1>In some ways, they didn't quite pull a rabbit out

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<v Speaker 1>of the hat, which is always what one expects from Apple,

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<v Speaker 1>but they did a very solid job of navigating the quarter.

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<v Speaker 1>It was still a mixed bag.

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<v Speaker 2>Yeah, Greater China revenue was better than expected. I think

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<v Speaker 2>we can agree on that. It's still about one and

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<v Speaker 2>a half billion below where we were a year ago,

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<v Speaker 2>So the year over year, I think that's negative eight

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<v Speaker 2>point one percent. Have we kind of seen an inflection

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<v Speaker 2>point here where Apple and China are concerned.

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<v Speaker 1>I don't believe.

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<v Speaker 3>So.

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<v Speaker 1>I think we are still in a very tenuous position

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<v Speaker 1>for Apple in the China market. It's going to take

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<v Speaker 1>us at least a couple of quarters to figure that out,

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<v Speaker 1>to see if there's any leveling out of that. Huiawe

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<v Speaker 1>had a very strong quarter, so that certainly gives pause.

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<v Speaker 1>It's an extremely competitive market and many of us are

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<v Speaker 1>waiting to see what happens in the coming weeks with

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<v Speaker 1>the software announcements that are expected at WWDC, the Big

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<v Speaker 1>Apple Show.

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<v Speaker 3>Some might have had an inkling that the performance would

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<v Speaker 3>not be so bad in that if you looked at

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<v Speaker 3>Qualcom's earnings, and also Samsung the other day sort of

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<v Speaker 3>spoke about you know, obviously returning to profit on semiconductors

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<v Speaker 3>was the biggest thing for Samsung, but they also sort

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<v Speaker 3>of indicated that smartphone sales were reasonably solid. So I'm

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<v Speaker 3>wondering whether or not, you know, investors here are waiting

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<v Speaker 3>on the next big thing, or if they're just waiting

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<v Speaker 3>for us to see gradual recovery in the smartphone market.

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<v Speaker 1>I think we're the smartphone market have the same hit

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<v Speaker 1>that the PC market did, but it certainly had everyone

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<v Speaker 1>at some point in time experiencing some softness, and really

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<v Speaker 1>a lot of that is timed to their releases, when

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<v Speaker 1>they have their big flagship releases, and if they're a

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<v Speaker 1>little earlier or a little later. So I do expect

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<v Speaker 1>and even Apple, when they gave their guidance, expected they'd

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<v Speaker 1>be up. They did not give guidance specifically on iPhone,

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<v Speaker 1>but if they're expecting growth, iPhones are such a huge

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<v Speaker 1>portion of the Apple revenue that we have to imagine

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<v Speaker 1>that they're at least expecting some leveling. And they gave

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<v Speaker 1>some good guidance in the emerging markets. The emerging markets

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<v Speaker 1>have always been a bit of a wild card. It's

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<v Speaker 1>the growth market for everybody in the smartphone business, and

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<v Speaker 1>the issue is really in emerging markets, will people buy

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<v Speaker 1>premium flagship phones, which is the market that Apple really

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<v Speaker 1>tries to address.

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<v Speaker 2>The other thing that was better than forecast was the

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<v Speaker 2>revenue for Apple services. I think about six hundred million

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<v Speaker 2>of of what the street was looking for. Is it

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<v Speaker 2>a problem for this company when we begin, as one analyst,

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<v Speaker 2>to put it to focus on the services side at

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<v Speaker 2>the and maybe put the hardware in the back or

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<v Speaker 2>in the rear view a little bit.

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<v Speaker 1>I actually don't think so. I think that that is

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<v Speaker 1>the nature of a diversified portfolio. Even if you look

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<v Speaker 1>at Nvidia at their last GtC conference, you know, obviously

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<v Speaker 1>a strong GPU hardware focused company spent a tremendous amount

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<v Speaker 1>of time talking about building a software stack and creating

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<v Speaker 1>a software revenue stream. So I think that that is

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<v Speaker 1>a good portion of where Apple expects to see its

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<v Speaker 1>long range growth. That doesn't mean that the smartphone market

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<v Speaker 1>will fade. It also indicates, you know, we're talking about services,

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<v Speaker 1>but really a lot of what's happening in smartphones now

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<v Speaker 1>is not hardware based. Everybody has their chips. Everybody has

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<v Speaker 1>a solid smartphone portfolio, with the exception there may be

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<v Speaker 1>some of their full some that aren't. So a lot

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<v Speaker 1>of the areas they're differentiating in right now happen to

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<v Speaker 1>be around the AI software that runs on the device.

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<v Speaker 1>So Apple already has AI capable chips in their device. Now.

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<v Speaker 1>The question is, and that's what everybody's waiting for in

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<v Speaker 1>the next coming weeks, are they going to make a

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<v Speaker 1>big play that says that they're using a lot of

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<v Speaker 1>AI to do things like help people take better photos

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<v Speaker 1>with their camera.

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<v Speaker 3>Right, you've got the WWDC, the Worldwide Developers Conference coming

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<v Speaker 3>up from Apple. I suppose they couldn't really say too

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<v Speaker 3>much in this earnings report about what might be coming.

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<v Speaker 3>Do you expect something kind of shocking and strong or

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<v Speaker 3>just on the incremental in advancement.

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<v Speaker 1>I expect Apple to come in with on par features

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<v Speaker 1>that are AI driven at WWDC, which is one of

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<v Speaker 1>the things that they've been giving a lot of flak on.

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<v Speaker 1>And frankly, if they come in with on par or

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<v Speaker 1>slightly better, they'll actually do very well. They have a

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<v Speaker 1>strong loyal base. The iOS base is actually doesn't move

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<v Speaker 1>that much really, so this is one of the things

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<v Speaker 1>that if they can just keep pace with innovation, they

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<v Speaker 1>could do very well in the market.

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<v Speaker 2>It's kind of interesting Microsoft, you know, kind of works

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<v Speaker 2>with open Ai. Then you've got Amazon and Alphabet together

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<v Speaker 2>working with Anthropic. Has Apple kind of missed an opportunity

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<v Speaker 2>here now very quickly Marble not to have partnered with

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<v Speaker 2>an AI firm outside of the company.

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<v Speaker 1>It's still extremely early days. There are many large language

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<v Speaker 1>models or foundation models being built every day. There's still

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<v Speaker 1>billions that need to be invested in those guys to

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<v Speaker 1>keep them going. So I still think Apple has a

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<v Speaker 1>play yet there to announce.

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<v Speaker 3>Marble, thanks so much for joining us, Marble. Lopez, Principal

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<v Speaker 3>analyst at Lopez Research. Well the end touched the three

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<v Speaker 3>week high against the greenback in overnight trading, the currency

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<v Speaker 3>really lifting its gains against the green back, the currency

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<v Speaker 3>likely facing some official support and to discuss this, we're

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<v Speaker 3>joined by Michael Wilson, Bloomberg FX rates market reporter and

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<v Speaker 3>strategist to join us here on the program. So we've

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<v Speaker 3>moved from about one sixty this past weekendto one fifty

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<v Speaker 3>three and this range now one fifty two one fifty

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<v Speaker 3>three could be a key level I suppose, because it

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<v Speaker 3>was seen as resistance before. So how do we see

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<v Speaker 3>it moving here in the short term and how much

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<v Speaker 3>do we know about whether or not there has actually

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<v Speaker 3>been intervention?

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<v Speaker 4>Hi, Matte, thanks for having me. Well, the first things first,

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<v Speaker 4>I think that the move today we actually made a

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<v Speaker 4>new load down there one fifty two eighty eight not

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<v Speaker 4>far from there right now, And I think the market

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<v Speaker 4>has probably given up the ghost on the week in

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<v Speaker 4>terms of taking it higher, just as buy the dip mentality.

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<v Speaker 4>I think that the the price action itself with it

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<v Speaker 4>without confirmation of intervention is enough to scare away dollar

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<v Speaker 4>bulls for the moment, even heading into a non farm

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<v Speaker 4>payroll number to nine. But you're quite right that a

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<v Speaker 4>little bit further down that one fifty two level, which

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<v Speaker 4>was previous resistance, that was also around about the level

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<v Speaker 4>back on April tenth, twenty US hot CPI print landed,

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<v Speaker 4>and that's when you know it all really started, I suppose.

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<v Speaker 4>I know it's been building up for a while, but

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<v Speaker 4>that was the catalyst, as it were, to really get

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<v Speaker 4>those dollar bulls going and pushed up above that one sixty.

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<v Speaker 4>You know, on Thursday we saw a nasty move again

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<v Speaker 4>after Powell spoke in his press conference, and again the

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<v Speaker 4>short priced favorite is intervention. Looking at the at the

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<v Speaker 4>current account balances, I think they the contention is that

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<v Speaker 4>they sold another twenty three billion dollars worth of yen

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<v Speaker 4>that in that moment we won't obviously won't find out

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<v Speaker 4>to the end of the month. But you know, if

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<v Speaker 4>it walks like a duck and quacks like a duck,

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<v Speaker 4>well probably is so. And what's been quite surprising just

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<v Speaker 4>of late is that most of the commentary that you read,

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<v Speaker 4>we get everything, as you know, from all the banks

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<v Speaker 4>around the world, they've just they're casually just expressing that

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<v Speaker 4>it was intervention. They're not hiding behind you know, possible

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<v Speaker 4>maybes or rumored or any sort of qualifying phray, so

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<v Speaker 4>just you know, calling it out as intervention, which is

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<v Speaker 4>actually surprising because you know, we're very careful about those

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<v Speaker 4>things ourselves, when most of the banks are too. But

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<v Speaker 4>they resigned to the fact that that's probably the only

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<v Speaker 4>thing that could have done or could have caused what happened.

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<v Speaker 2>It's kind of an interesting week, Mike, because there's been

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<v Speaker 2>this this spurt of volatility that began during the holiday

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<v Speaker 2>on Monday in the Japanese session in terms of dollar yen.

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<v Speaker 2>Is volatility something that we've got to be dealing with

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<v Speaker 2>a lot more now than let's say we've had in

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<v Speaker 2>the recent past.

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<v Speaker 4>Well, it's the overnight volatility was bid all week around

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<v Speaker 4>about twenty four twenty five volst just under thirty vold,

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<v Speaker 4>which is a lot for dolly and does have this

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<v Speaker 4>seasonal spike that happens for say a non farm payroll

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<v Speaker 4>or Bank of Japan meeting, but only this week, only

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<v Speaker 4>like this this morning post New York has overnight volatively

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<v Speaker 4>come off, which is actually unusual in itself in that

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<v Speaker 4>we're just ahead of a nonfold non farm payroll print.

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<v Speaker 4>But I do think the market's probably unless it's a

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<v Speaker 4>really wild result there, I think the market's resigned to

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<v Speaker 4>the fact that, you know, they're not initiating any new risk,

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<v Speaker 4>they just want to get the weekend started, because normally

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<v Speaker 4>that volatility would be north of twenty But I think

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<v Speaker 4>it's down around fourteen now, so it's down five ticks

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<v Speaker 4>since New York close, and that probably speaks to the

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<v Speaker 4>event of the market's probably surrendering a little bit to

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<v Speaker 4>the Bank of Japan or whoever is out there.

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<v Speaker 2>Well, it's a holiday in Japan today too. That may

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<v Speaker 2>account for some of the pullback, right, it is.

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<v Speaker 4>And it is a start of Golden Wake, which is

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<v Speaker 4>like four or five holidays in a row. And I

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<v Speaker 4>think that that's one of the drivers of the Bank

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<v Speaker 4>of Japan that they wanted to get this thing down

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<v Speaker 4>and sorted before you know, the market's got very thin

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<v Speaker 4>for the next few days.

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<v Speaker 3>Yeah, because Monday is a holiday too, and it is Japan,

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<v Speaker 3>so yeah, it really does look like you know, it's

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<v Speaker 3>hard to figure here. I still think the dollar is

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<v Speaker 3>really driving this, right, because you had a big drop

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<v Speaker 3>in the dollar, and a lot of that was tied

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<v Speaker 3>to a kind of dubbish fed meeting and comments from

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<v Speaker 3>from your own pal and at least at the moment,

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<v Speaker 3>as long as the dollar is weakening, yeah, why why

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<v Speaker 3>get out there and you know, and try to bet

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<v Speaker 3>on weakness.

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<v Speaker 4>In the end, I think you're right. I think that

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<v Speaker 4>they were if they were in on the Thursday after Powell,

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<v Speaker 4>that was very opportunistic on their part. They timed it

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<v Speaker 4>well and they got a lot of bang for their buck.

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<v Speaker 4>But if we get a fundamental, good fundamental from let's

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<v Speaker 4>say a soft print tonight, it's best to let the

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<v Speaker 4>fundamentals work their way through the market. You know, we

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<v Speaker 4>might wake up and see Dolly in nearer to one fifty,

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<v Speaker 4>you know, by about Tuesday when Japan returns, treasuries reopen.

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<v Speaker 4>In Asia, there's no treasury market right now, or no

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<v Speaker 4>cash treasuries. So I think that, you know, we've got

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<v Speaker 4>ourselves a good catalyst to trade off tonight, and you know,

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<v Speaker 4>hopefully that suits the boj and they, you know, just

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<v Speaker 4>stand aside and let the market lick its wounds for now.

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<v Speaker 2>Give me your take on the Korean one, because I

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<v Speaker 2>see it strengthening quite a bit. I mean, obviously, intervention

0:12:35.960 --> 0:12:38.719
<v Speaker 2>is not the story in South Korea, although they've been

0:12:38.760 --> 0:12:41.240
<v Speaker 2>dealing with kind of the same effect on their currency

0:12:41.360 --> 0:12:44.360
<v Speaker 2>that Japan has, and again it's the result of just

0:12:44.360 --> 0:12:47.400
<v Speaker 2>this amazing dollar strength. What do you think is happening

0:12:47.400 --> 0:12:49.440
<v Speaker 2>with the Korean one right now? As strong as it is.

0:12:50.880 --> 0:12:53.959
<v Speaker 4>I think that it's I wouldn't say it's a collective

0:12:54.000 --> 0:12:59.000
<v Speaker 4>effort or coordinated bony measure, but there is certainly a

0:12:59.280 --> 0:13:02.200
<v Speaker 4>They're just every bit as vigilant, I suppose as Bank

0:13:02.240 --> 0:13:05.199
<v Speaker 4>of Japan, and I think that maybe the Bank of

0:13:05.280 --> 0:13:11.040
<v Speaker 4>Korea is probably leveraging off that and using the sentiment

0:13:11.080 --> 0:13:13.560
<v Speaker 4>as it were, where there's like this newfound respect for

0:13:13.600 --> 0:13:18.280
<v Speaker 4>central banks to maybe not take them on. And but

0:13:18.360 --> 0:13:21.200
<v Speaker 4>there is that by the dip mentality in dollar Korean

0:13:21.240 --> 0:13:23.880
<v Speaker 4>as much as there is in dolly In. So you know,

0:13:23.960 --> 0:13:26.719
<v Speaker 4>if the you know, I'm not as close to say

0:13:26.720 --> 0:13:30.120
<v Speaker 4>that Japanese the Korean economy as the Japanese, but if

0:13:30.160 --> 0:13:34.000
<v Speaker 4>the the Korean economy does turn around, you know, and

0:13:34.440 --> 0:13:37.319
<v Speaker 4>any any time, say the next quarter, you might see

0:13:38.200 --> 0:13:41.680
<v Speaker 4>this that high of fourteen hundred, It might be, you know,

0:13:41.760 --> 0:13:44.040
<v Speaker 4>the equivalent of the one sixty for dolly In, and

0:13:44.080 --> 0:13:46.120
<v Speaker 4>we might not see there be there for a few days,

0:13:46.240 --> 0:13:46.880
<v Speaker 4>a few weeks.

0:13:47.040 --> 0:13:50.120
<v Speaker 3>Thank you, Michael. Michael Wilson joining US Bloomberg FX and Rates,

0:13:50.160 --> 0:14:01.440
<v Speaker 3>Markets Reporter and Strategies. Cherry Spath, Founder and Chief investment

0:14:01.480 --> 0:14:05.160
<v Speaker 3>Officer of Zoomo Wealth. Terry, great to have you on

0:14:05.200 --> 0:14:09.120
<v Speaker 3>the program. It seems like earnings and a patient fed

0:14:10.080 --> 0:14:12.640
<v Speaker 3>are enough, at least at the moment, to keep the

0:14:12.679 --> 0:14:16.000
<v Speaker 3>plate spinning here in markets. Not everyone agrees of course,

0:14:16.360 --> 0:14:19.560
<v Speaker 3>but the market has shrugged off this many correction that

0:14:19.600 --> 0:14:21.960
<v Speaker 3>we've had, and it's hard to argue with the markets.

0:14:22.000 --> 0:14:26.600
<v Speaker 3>I suppose, how would you characterize, you know, your arguments

0:14:26.640 --> 0:14:27.640
<v Speaker 3>on the path forward.

0:14:29.160 --> 0:14:32.320
<v Speaker 5>Yeah, thanks for having me on lots so on path

0:14:32.400 --> 0:14:35.880
<v Speaker 5>of that question, we are constructive on the US stock

0:14:36.000 --> 0:14:40.120
<v Speaker 5>market kind of as a broad statement, where I would

0:14:40.200 --> 0:14:48.520
<v Speaker 5>say definitely more constructive on large cap stocks versus small caps.

0:14:48.560 --> 0:14:50.840
<v Speaker 6>It's just been, you know, a large and in charge.

0:14:51.200 --> 0:14:53.560
<v Speaker 5>Kind of market, and you know, a lot of that,

0:14:53.720 --> 0:14:56.480
<v Speaker 5>as you pointed out, has been driven by earnings. We've

0:14:56.600 --> 0:14:59.840
<v Speaker 5>had some very strong earnings reports so far in Q one,

0:15:00.080 --> 0:15:02.920
<v Speaker 5>particularly in the tech sector as well as some of

0:15:02.960 --> 0:15:06.720
<v Speaker 5>the other sectors out there. I do think that you

0:15:06.880 --> 0:15:11.080
<v Speaker 5>need the bond, you know, the Federal reserve to be accommodative.

0:15:11.120 --> 0:15:15.560
<v Speaker 5>I don't think earnings quite enough to overcome you know,

0:15:16.840 --> 0:15:19.280
<v Speaker 5>some of these spears that have been floating around about

0:15:19.280 --> 0:15:23.280
<v Speaker 5>potential FED rate hikes. We don't think that's going to happen.

0:15:23.400 --> 0:15:28.520
<v Speaker 5>We're quite positive it's not. But that doesn't mean that

0:15:28.560 --> 0:15:30.400
<v Speaker 5>it's not a risk out there, and it's not a concern.

0:15:31.000 --> 0:15:34.440
<v Speaker 5>But overall, I mean, I think we're seeing really strong earnings.

0:15:34.480 --> 0:15:36.840
<v Speaker 5>We were going to continue to see strong earnings. We're

0:15:36.840 --> 0:15:41.960
<v Speaker 5>seeing a breath widening in large cap side of the

0:15:42.080 --> 0:15:44.360
<v Speaker 5>US stock market, and so you know, we'll have to

0:15:44.440 --> 0:15:46.840
<v Speaker 5>keep watching the Fed as we have been for a

0:15:46.880 --> 0:15:48.560
<v Speaker 5>long time now as investors.

0:15:48.920 --> 0:15:52.240
<v Speaker 2>Yeah, yesterday Chair Powell seem to take the notion of

0:15:52.280 --> 0:15:55.280
<v Speaker 2>a rate hike off the table, which is not the

0:15:55.320 --> 0:15:57.840
<v Speaker 2>same thing as saying that we may not get a

0:15:57.920 --> 0:16:01.520
<v Speaker 2>rate cut this year. Would that if the Fed doesn't

0:16:01.560 --> 0:16:07.520
<v Speaker 2>adopt a policy easing stance before the end of the year, Well, yeah.

0:16:07.520 --> 0:16:09.320
<v Speaker 6>It would. I mean, I do think it's time to.

0:16:11.000 --> 0:16:13.200
<v Speaker 5>Take a little off and to trim a little bit

0:16:13.200 --> 0:16:16.040
<v Speaker 5>from these you know, two decade highs that we've seen

0:16:16.440 --> 0:16:17.600
<v Speaker 5>very quickly.

0:16:17.320 --> 0:16:18.520
<v Speaker 6>In interest rates.

0:16:18.560 --> 0:16:22.320
<v Speaker 5>On an absolute level, the interest rate level is still fine,

0:16:22.760 --> 0:16:25.280
<v Speaker 5>but it's it went up so sharply and such a

0:16:25.360 --> 0:16:28.320
<v Speaker 5>level that hasn't been seen, you know, twenty years, that

0:16:28.320 --> 0:16:32.080
<v Speaker 5>that is going to play through in the economy, and

0:16:32.720 --> 0:16:35.280
<v Speaker 5>and I think sometimes it can take a little bit

0:16:35.280 --> 0:16:38.480
<v Speaker 5>longer than people expect it to. But I do think

0:16:38.480 --> 0:16:42.480
<v Speaker 5>that that we'll see cuts this year. And it's not

0:16:42.600 --> 0:16:44.840
<v Speaker 5>just you know, Terry sort of you know, putting that

0:16:45.000 --> 0:16:47.000
<v Speaker 5>out there. I mean, when you look at the yield curve,

0:16:47.040 --> 0:16:50.280
<v Speaker 5>it is still inverted, meaning that the short end of

0:16:50.320 --> 0:16:54.080
<v Speaker 5>the yeal curve, ninety day treasuries are paying higher level

0:16:54.120 --> 0:16:57.040
<v Speaker 5>than ten year treasuries and even two year and when

0:16:57.080 --> 0:17:00.440
<v Speaker 5>that that's what that's saying to us pretty loudly, is

0:17:00.480 --> 0:17:02.520
<v Speaker 5>that we're going to see a cut, and we'll probably

0:17:02.520 --> 0:17:02.880
<v Speaker 5>see it.

0:17:02.960 --> 0:17:03.880
<v Speaker 6>You know, I would be.

0:17:03.880 --> 0:17:05.680
<v Speaker 5>Very surprised if we don't see a couple of cuts

0:17:05.720 --> 0:17:08.399
<v Speaker 5>by the end of this year. We're still we're still

0:17:08.400 --> 0:17:10.600
<v Speaker 5>expecting that. We think the data supports it, and certainly

0:17:10.640 --> 0:17:13.359
<v Speaker 5>the yell curve is telling us that as well.

0:17:13.680 --> 0:17:16.560
<v Speaker 3>I think it's a really interesting environment because you have

0:17:16.840 --> 0:17:19.800
<v Speaker 3>almost in equal parts here people who think the Fed

0:17:19.840 --> 0:17:22.919
<v Speaker 3>should cut to get out in front of a weakening economy,

0:17:23.480 --> 0:17:26.600
<v Speaker 3>and that's versus those who sort of like the idea

0:17:26.640 --> 0:17:29.160
<v Speaker 3>of keeping rates steady, and then you have those who

0:17:29.200 --> 0:17:33.120
<v Speaker 3>think higher rates are absolutely needed to find inflation. I'm

0:17:33.160 --> 0:17:35.520
<v Speaker 3>not sure if it says more about well, it's always

0:17:35.560 --> 0:17:37.720
<v Speaker 3>hard to predict the future, or if it says more

0:17:37.760 --> 0:17:41.040
<v Speaker 3>about this complicated environment that we seem to have gotten into.

0:17:41.240 --> 0:17:41.840
<v Speaker 3>What do you think?

0:17:42.560 --> 0:17:45.480
<v Speaker 5>Yeah, I think that's really interesting debate, and I think

0:17:45.480 --> 0:17:48.960
<v Speaker 5>it's a you know, it's a complicated issue. When you

0:17:48.960 --> 0:17:52.760
<v Speaker 5>look at inflation, it's it's above what the FEDS has

0:17:52.920 --> 0:17:56.000
<v Speaker 5>you know, clearly said is there two percent target, and

0:17:56.040 --> 0:17:58.480
<v Speaker 5>that's there, you know, I don't think it's quite their mandate,

0:17:58.520 --> 0:18:01.120
<v Speaker 5>but they publicly said a lot, very long.

0:18:00.960 --> 0:18:02.560
<v Speaker 6>Time that two percent is their target.

0:18:02.600 --> 0:18:05.080
<v Speaker 5>We're above that, we're you know, a three percent. And

0:18:05.160 --> 0:18:07.760
<v Speaker 5>you know, as you mentioned leading up to this show,

0:18:07.800 --> 0:18:10.200
<v Speaker 5>you're gonna be looking for our you know, at the

0:18:10.320 --> 0:18:14.360
<v Speaker 5>earnings at average hourly earnings in the jobs report tomorrow

0:18:14.359 --> 0:18:16.840
<v Speaker 5>because that's going to give us some good insight as to,

0:18:16.920 --> 0:18:19.800
<v Speaker 5>you know, our how far above this two percent level

0:18:20.280 --> 0:18:25.560
<v Speaker 5>are we And as much as it's important to the

0:18:25.600 --> 0:18:29.520
<v Speaker 5>Fed to get inflation down to two percent, I think

0:18:29.560 --> 0:18:32.680
<v Speaker 5>that they can cut before kind of you know, they

0:18:32.760 --> 0:18:35.920
<v Speaker 5>actually see that print. And so I don't think they

0:18:35.960 --> 0:18:38.760
<v Speaker 5>need to keep raising rates. I don't think there's areas

0:18:38.800 --> 0:18:41.640
<v Speaker 5>of clear overheating anywhere in the market. I don't think

0:18:41.640 --> 0:18:43.879
<v Speaker 5>the labor markets are overheating. And I think when you

0:18:43.960 --> 0:18:46.960
<v Speaker 5>have interest rates go up as sharply as they have recently,

0:18:47.000 --> 0:18:48.440
<v Speaker 5>that's going to slam the brakes.

0:18:48.840 --> 0:18:51.040
<v Speaker 6>So, you know, we do think that.

0:18:51.800 --> 0:18:55.400
<v Speaker 5>Inflation's in control and it's moving in the right direction.

0:18:55.920 --> 0:18:59.680
<v Speaker 5>There's no areas of overheating, and so it's safe to

0:19:00.640 --> 0:19:03.040
<v Speaker 5>certainly to keep rates where they are and to you know,

0:19:03.200 --> 0:19:06.959
<v Speaker 5>just give a little bit back to to investors.

0:19:07.160 --> 0:19:09.880
<v Speaker 2>So if the economy slows down and the Fed has

0:19:09.960 --> 0:19:13.600
<v Speaker 2>leeway to begin easing as you expect. I'm wondering why

0:19:13.640 --> 0:19:16.280
<v Speaker 2>the bond market is not a buy here. You're saying,

0:19:16.880 --> 0:19:19.800
<v Speaker 2>perhaps it's not the best opportunity to go into the

0:19:19.800 --> 0:19:21.680
<v Speaker 2>bond market here. I mean, I'm wondering why.

0:19:22.560 --> 0:19:25.120
<v Speaker 5>Yeah, I think that's a good question, and it's one

0:19:25.119 --> 0:19:27.480
<v Speaker 5>that we've been wrestling with. I mean kind of you know,

0:19:27.560 --> 0:19:29.320
<v Speaker 5>at the start of the year, we did a lot

0:19:29.359 --> 0:19:31.879
<v Speaker 5>of pencil to paper to do we want a lengthen

0:19:31.960 --> 0:19:36.200
<v Speaker 5>duration in what meaning specifically, do we want to kind

0:19:36.200 --> 0:19:38.640
<v Speaker 5>of lock in these rates that we're seeing now because

0:19:38.800 --> 0:19:40.399
<v Speaker 5>a year from now, two years from now, we're going

0:19:40.440 --> 0:19:42.919
<v Speaker 5>to look back and say, you know, wasn't that grand

0:19:42.960 --> 0:19:44.440
<v Speaker 5>back when we could get five percent?

0:19:44.560 --> 0:19:45.840
<v Speaker 6>Now we can't get it anymore.

0:19:46.880 --> 0:19:49.720
<v Speaker 5>What we really are doing in the bond market is

0:19:49.760 --> 0:19:52.040
<v Speaker 5>just looking at what the market is telling us right

0:19:52.080 --> 0:19:54.200
<v Speaker 5>now and where we're seeing the best opportunity is still

0:19:54.240 --> 0:19:56.640
<v Speaker 5>in the very short end, and you know, keeping that

0:19:56.680 --> 0:20:01.359
<v Speaker 5>five percent just kind of constantly rolling that over and

0:20:01.440 --> 0:20:04.040
<v Speaker 5>over again and not taking any risk in our portfolios

0:20:04.080 --> 0:20:06.520
<v Speaker 5>in terms of the fixed income side of things. So

0:20:06.560 --> 0:20:09.639
<v Speaker 5>that's really why we haven't been, I guess, backing up

0:20:09.680 --> 0:20:13.240
<v Speaker 5>the drug and buying duration and looking for gains there.

0:20:13.920 --> 0:20:15.840
<v Speaker 3>On the intellectual level, what do you make of Bill

0:20:15.880 --> 0:20:19.040
<v Speaker 3>Gross's comments about the sort of total return approach that

0:20:19.080 --> 0:20:22.639
<v Speaker 3>he championed for so long of buying bonds is now defunct.

0:20:23.080 --> 0:20:26.240
<v Speaker 3>Basically he says that yields draw it lower and it

0:20:26.280 --> 0:20:28.959
<v Speaker 3>doesn't give you really all that much room for price appreciation.

0:20:29.080 --> 0:20:32.359
<v Speaker 5>Your thoughts quickly, Oh, I think that there can be

0:20:32.440 --> 0:20:34.920
<v Speaker 5>room for price appreciation, but that's just not really where

0:20:34.920 --> 0:20:37.639
<v Speaker 5>we want to take risk in the portfolios. And I

0:20:37.680 --> 0:20:40.200
<v Speaker 5>think that, you know, the bond market is saying that clearly,

0:20:40.240 --> 0:20:42.479
<v Speaker 5>and that's how we've got things positioned. You know, you're

0:20:42.520 --> 0:20:45.480
<v Speaker 5>going to make money and on the large cap tech

0:20:45.560 --> 0:20:48.920
<v Speaker 5>side of things on energy right now and then keep

0:20:48.960 --> 0:20:51.399
<v Speaker 5>some fixed income safe for the bad days and the

0:20:51.440 --> 0:20:52.000
<v Speaker 5>bad weeks.

0:20:52.520 --> 0:20:55.159
<v Speaker 3>All right, Terry, thanks so much for joining us. Terry Spath,

0:20:55.280 --> 0:20:58.040
<v Speaker 3>founder and chief investment officer of Zoomawealth.

0:21:00.119 --> 0:21:03.000
<v Speaker 2>This has been the Bloomberg Daybreak Asia podcast, bringing you

0:21:03.080 --> 0:21:06.200
<v Speaker 2>the stories making news and moving markets in the Asia Pacific.

0:21:06.680 --> 0:21:09.800
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