Speaker 1: This is Bloomberg Day Break Asia for It's Wednesday, June
Speaker 1: seventh in Hong Kong, Tuesday June sixth in New York
Speaker 1: and coming up today.
Speaker 2: Coinbase is being sued by the sec for allegedly breaking
Speaker 2: US securities rules.
Speaker 1: Sequoia Capital will split into three firms by next March.
Speaker 2: And China's biggest banks have reportedly been asked by authorities
Speaker 2: to lower their deposit rates.
Speaker 3: Reports of high level talks in the coming weeks between
Speaker 3: the foreign ministers of the US and China. Ukraine and
Speaker 3: Russia blame each other for the breach of a critical
Speaker 3: dam in Ukraine. Chris Christian, I'm at Baxter with Global News.
Speaker 4: That's all straight ahead on Bloomberg day Break Asia, the
Speaker 4: business news you need to start your day in just
Speaker 4: one fifteen minute podcast available on Apples, Spotify, the Bloomberg
Speaker 4: Business app and everywhere you get your podcasts.
Speaker 2: Good morning, I'm Doug Chrisner and I'm Brian Curtiz.
Speaker 1: Here are the stories we're following today. The US Securities
Speaker 1: in Exchange Commission and filing that lawsuit over Coinbase Global.
Speaker 1: The regulator alleged that the company has been running an
Speaker 1: illegal exchange. The SEC accused Coinbase of evading its rules
Speaker 1: for years by letting users trade numerous crypto tookens tokens
Speaker 1: that were actually unregistered securities. This comes a day after
Speaker 1: the regulator sued Crypto Exchange Finance for breaking securities rules
Speaker 1: as well. SEC chair Gary Gensler has repeatedly argued that
Speaker 1: most cryptotokens are subject to his agency's oversight. Is Gensler,
Speaker 1: speaking earlier on Bloomberg, I think.
Speaker 5: The crypto industry more broadly, if it's going to have
Speaker 5: any success going forward, has to come into compliance with
Speaker 5: basic public policy about disclosure, about avoiding conflicts, about segregating properly,
Speaker 5: segregating customer funds, and guarding against fraud manipulation.
Speaker 1: Gensler said the SEC worked with ten states to bring
Speaker 1: its complaint against Coinbase, and he said that the agency's
Speaker 1: efforts to clamp down on crypto are designed to protect
Speaker 1: investors and the US market integrity. Gwenbe shares finished down
Speaker 1: twelve percent in New York.
Speaker 2: Well Brian teed it up a moment ago. The PGA
Speaker 2: Tour and Saudi backed Live Golf have agreed to a
Speaker 2: shocking merger. Now, under terms of this deal, the PGA Tour,
Speaker 2: Live Golf and the dp World Tour, as well as
Speaker 2: the European Golf Circuit, will combine their golf related businesses
Speaker 2: and rights into a new commercial entity, VISA VI and LLC.
Speaker 2: Now financial terms were not disclosed. Live has spent millions
Speaker 2: trying to lure away some of the biggest players on
Speaker 2: the PGA Tour, and this new accord will bring an
Speaker 2: end to all litigation between both sides. We heard earlier
Speaker 2: today from Bloomberg's Jason Kelly.
Speaker 6: What happened is basically this was not going to be sustainable.
Speaker 6: These were like blood rivals in a lot of ways,
Speaker 6: lawsuits back and forth, and Live really put a dent,
Speaker 6: at least sort of theoretically in what the PGA was doing.
Speaker 6: Now they're going to come together and be really the
Speaker 6: most dominant voices in golf.
Speaker 2: That is Bloomberg's Jason Kelly. By the way, this deal
Speaker 2: also marks a significant victory for Saudi Arabia, which backed
Speaker 2: Live Golf through its sovereign wealth Fund. The kingdom is
Speaker 2: now assured of having a prominent voice in a major
Speaker 2: sport as it deploys oil riches to try to increase
Speaker 2: its global influence.
Speaker 4: Right.
Speaker 1: This one was really a big surprise. I heard and
Speaker 1: saw a lot of players quoted just saying no way,
Speaker 1: they couldn't believe it. So how they kept it quiet
Speaker 1: too is interesting.
Speaker 4: Well.
Speaker 1: Venture capital powerhouse Sequoia Capital said it is breaking up
Speaker 1: into three distinct entities around the world. The company has
Speaker 1: been an umbrella brand for three already largely independent ventures.
Speaker 1: One is focused on China, another on the US in Europe,
Speaker 1: and a third on India and Southeast Asia. Sequoya said
Speaker 1: a future split would occur no later than the end
Speaker 1: of March next year. We get more from Bloomberg'sed Ludlow.
Speaker 7: What the partners of each regional unit said in the
Speaker 7: statement is that they're running decentralized organizations with a centralized
Speaker 7: back office and it just isn't making any sense, particularly
Speaker 7: when you consider the competing policy standpoints of the United
Speaker 7: States and China right now and the difficulty not just
Speaker 7: the difficulty, but the debate around deploying US originated capital
Speaker 7: into Chinese startups.
Speaker 1: And when the split occurs, the Sequoya China business will
Speaker 1: retain its existing name in Chinese and adopt the name
Speaker 1: hong Shan in English. Suquoya India and Southeast Asia meanwhile
Speaker 1: will become Peak fifteen Partners with fifteen in Roman numerals,
Speaker 1: and the US and europe venture capital business will continue
Speaker 1: to be known as Suquoya Capital.
Speaker 2: Well, there is a new problem for America's largest aircraft manufacturer,
Speaker 2: Bloomberg's tom Busby as More.
Speaker 8: Bowing has to delay deliveries of its massive long range
Speaker 8: seven eighty seven Dreamliner JED after finding flawed parts in
Speaker 8: the horizontal stabilizer during production. That means it'll have to
Speaker 8: inspect and repair if necessary, ninety already built Dreamliners waiting
Speaker 8: to be delivered, as well as the ones now when
Speaker 8: its assembly lines in South Carolina. It's the latest snafu
Speaker 8: for Boeing's Dreamliner production at that aircraft shut down for
Speaker 8: nearly two years after defects were found in how sections
Speaker 8: of its fuselage were joined before it got the all
Speaker 8: clear from the FAA last August. Tom Buzzby Bloomberg Daybreak Asia.
Speaker 1: China's biggest banks have reportedly been asked by authorities to
Speaker 1: lower their deposit rates. Bloomberg's Joan Wong has More.
Speaker 9: Bank of China, ICBC and Bank of Communications were said
Speaker 9: to be advised to cut rates on a range of products.
Speaker 9: Sources say that includes on demand deposits by five basis
Speaker 9: points and three year and five year time deposits by
Speaker 9: at least ten basis points. Were told the cut may
Speaker 9: happen as soon as this week, and this will be
Speaker 9: the second time in less than a year a right
Speaker 9: es have been seeking to do so lending to bolster
Speaker 9: us lowing economy. Cutting deposit rates with lower costs for
Speaker 9: the banks. In theory, that would allow them to reduce
Speaker 9: lending rates over time, and by extension, it would be
Speaker 9: more attractive for consumers and businesses to borrow. That said,
Speaker 9: lower deposit rates would make it less attractive for ordinary
Speaker 9: consumers to parks or cash at the banks in Hong Kong.
Speaker 9: Joined one Bloomberg Day Brigasia.
Speaker 1: I'm Brian Curtis along with Doug Krisner. Rashad Salama will
Speaker 1: join us in a few moments. Cutting deposit rates by
Speaker 1: five basis points doesn't sound too much, but demand deposits
Speaker 1: only pay twenty five basis points at the moment, so
Speaker 1: that's a step in a certain direction.
Speaker 4: Doug. Yeah.
Speaker 2: If you look at the weekly activity index from Bloomberg Economics,
Speaker 2: if you consider the fact that things like car and
Speaker 2: home sales, online searches for jobs, everything that we're seeing
Speaker 2: right now in terms of high frequency data where China
Speaker 2: is concerned, really indicating that the recovery has stalled or
Speaker 2: did stall in the month of May. In fact, the
Speaker 2: Bloomberg Weekly Activity Index brian and is back below levels
Speaker 2: we saw in twenty nineteen. That seems hard to believe.
Speaker 1: Yeah, and it's also interesting, is the same thing happening
Speaker 1: in the United States, because it's also been a little
Speaker 1: bit of a transition here of late. It's pretty early
Speaker 1: in this strange phenomenon that has developed where you get
Speaker 1: some cyclicals Doug playing ketchup to the s and P
Speaker 1: five hundred. But it's definitely been happening in June. And
Speaker 1: you know, it seems odd if the US economy is
Speaker 1: actually slowing to the point where it could conceivably drift
Speaker 1: into recession.
Speaker 2: Yeah, and so what you're saying there reminds me of
Speaker 2: a comment made today by the CEO of Apollo Global Management,
Speaker 2: Mark Rowan. He was saying, the US is having a
Speaker 2: non recession recession, so financial markets feel some pain while
Speaker 2: the underlying economy does remain strong. Look at the employment
Speaker 2: report that we had just last week.
Speaker 1: Yeah, it's a very peculiar environment. It's not easy to
Speaker 1: draw lessons from history. You can imagine that there's some
Speaker 1: frustration creeping into investors who piled into short term treasuries
Speaker 1: getting four and a half to five percent, And now
Speaker 1: the Nasdaq one hundred has returned thirty three percent year today.
Speaker 1: Now that's not just one stock, that's an index of
Speaker 1: one hundred well known names. So if you've got bearish
Speaker 1: and conservative, well you're not getting a lot of love
Speaker 1: at your dinner party, now.
Speaker 4: Are you.
Speaker 2: And then you have the FED meeting next week. I
Speaker 2: think the market right now is convinced that the FED
Speaker 2: will go on hold, although create maybe an option, some
Speaker 2: optionality for a rate hike later on this year. Today, though,
Speaker 2: the former a vice chair of the FED, Richard Clarter,
Speaker 2: was saying he's thinking it's unlikely that the FED will
Speaker 2: begin cutting rates until twenty twenty four.
Speaker 1: Yeah, that might be a good thing for the bulls,
Speaker 1: you know, cutting rates, say in a few months, that
Speaker 1: would send some bad signs.
Speaker 10: I suppose.
Speaker 1: All right, we are here at ten minutes past the hour.
Speaker 1: It's time for global news reports emerging that high level
Speaker 1: China US talks will happen in the coming weeks and
Speaker 1: back to with Global News in the nine to sixty
Speaker 1: newsroom in San Francisco.
Speaker 3: And yeah, that's right, Brian, this is a US looks
Speaker 3: to resume the high level talks. Bloomberg sources say he
Speaker 3: will meet with other high level officials, Bloomberg's and Marie
Speaker 3: hor Durn.
Speaker 11: He'll be meeting with officials, likely his counterpart. But there's
Speaker 11: also the possibility, and this would really be the win
Speaker 11: for the Biden administration and potentially also as well for
Speaker 11: the Chinese Communist Party, is he'll be meeting potentially possibly
Speaker 11: with Shijing Ping.
Speaker 3: Yeah, Ed Anne Marie says. The hope then, too is
Speaker 3: that it will open the door for others. Others have
Speaker 3: expressed desire to go, and of course Bloomberg's Wendy Benjaminson says,
Speaker 3: the US has political implications as well.
Speaker 12: Going into the election. I think it will be who
Speaker 12: can be the most hawkish on China. But I also
Speaker 12: think voters want to see a steady hand, responsible hand,
Speaker 12: and not war, so they will they even if they're
Speaker 12: being hawkish. I think they will try. The Democrats are
Speaker 12: being hawkish. I think they will try to sound reasonable
Speaker 12: and resent.
Speaker 3: Yeah, so coming weeks, they say. Both Ukraine and Russia
Speaker 3: are blaming each other for the breach of the Novakoki
Speaker 3: of A dam and the Dnepro River. It threatens power
Speaker 3: supplies and also the Zappaforia nuclear power plant nearby. National
Speaker 3: Security Coordinator John Kirby says that US is definitely watching.
Speaker 11: You know, there are casualties, including likely many deaths, though
Speaker 11: these are early reports and we cannot quantify them right now.
Speaker 3: Yes, leaves more for Ukraine to manage well in the
Speaker 3: midst of a counter offensive. House Speaker Kevin McCarthy meanwhile,
Speaker 3: as opposed to push by fellow Republican Hawks to expedite
Speaker 3: more funding for Ukraine. He also says he will block
Speaker 3: any bill that undercuts the new caps on US spending.
Speaker 3: He says he has not ruled out further funding, that
Speaker 3: there is no need for a rush, and President Joe
Speaker 3: Biden heading into a cabinet meeting today.
Speaker 13: Today we're going to discuss the progress for making investing
Speaker 13: in America and the steps each agency around the table
Speaker 13: here is taken to build on that progress and finish
Speaker 13: the job.
Speaker 3: Because we're not finished yet. We have more to do,
Speaker 3: and that's the US. He says that there will be
Speaker 3: continued support for Ukraine as well, and on a much
Speaker 3: lighter note, the President. Over the golf weekend, Yeah, PGA Live,
Speaker 3: mister President. A former in New Jersey governor Chris Christi
Speaker 3: will formally announce his run for President's schedule for about
Speaker 3: half an hour in New Hampshire. He has taken out
Speaker 3: the papers. Republican strategist in Bloomberg contributor Lisa Cabuso Miller
Speaker 3: says Christie brings something new. He will not be afraid
Speaker 3: to go after Donald Trump.
Speaker 10: He really does cut through a lot of that nonsense
Speaker 10: and calls up what the facts really are and that
Speaker 10: I think of all the strategists that I see on
Speaker 10: these campaigns, the team that he is assembling are amongst
Speaker 10: the best Republican operatives I know. They are some of
Speaker 10: the sharpest. They know how to build a campaign in
Speaker 10: a way that others perhaps haven't in the past.
Speaker 3: Christie putting a lot of chips in a good showing
Speaker 3: in New Hampshire, and China's cracked down to entertainment even
Speaker 3: now hit the gay Pride events, first wave of last
Speaker 3: mint of concert cancelations and gathering started last month continuing
Speaker 3: now Global News powered by more than twenty seven hundred
Speaker 3: journalists and analysts in over one hundred and twenty countries.
Speaker 3: In San Francisco, I'm Ed Baxter, and this is Bloomberg.
Speaker 1: I'm Brian Curtis in Hong Kong, along with Rashad Salamat,
Speaker 1: and our guest is Ann Maletti, head of Active Equity
Speaker 1: at all Spring Global Investments. And so looking at the
Speaker 1: Wall Street here, we're not exactly performing like a bull
Speaker 1: market given some of the inner metrics, but then not
Speaker 1: exactly like a bear market either. Of twenty percent over
Speaker 1: seven eight months and higher lows every time we get
Speaker 1: a dip. How do you see things moving here over
Speaker 1: the next three to nine months.
Speaker 14: Well, I think you ask a really important question. It
Speaker 14: is a confusing market for many investors today, and I
Speaker 14: think what we're doing is really looking bottom up and
Speaker 14: looking at company by company and trying to find the
Speaker 14: best opportunities out there. And they do, but you have
Speaker 14: to look carefully, as you suggest it. Those companies at
Speaker 14: the top, some would call them the magnificence in seven
Speaker 14: have really taken the news by storm and really controlled
Speaker 14: the narrative those are.
Speaker 1: Sure, but I know, I know people really think that.
Speaker 1: That's why I mentioned NASTAC one hundred itself isteen thirty
Speaker 1: three percent, So you know that's that is that is
Speaker 1: itself dominated by those name But still you can buy
Speaker 1: the cues easy.
Speaker 14: You can. And I do think what we're seeing is
Speaker 14: when you even ignore the large cap tech names, there
Speaker 14: is a lot of interesting companies that are performing underneath.
Speaker 14: And really what's Brian, what's most interesting is that instead
Speaker 14: of being driven by just Macro twenty twenty three, stocks
Speaker 14: are moving because of fundamentals, and that's really important and
Speaker 14: it actually bodes well for stock pickers and active management
Speaker 14: and our and our teams are doing really while this
Speaker 14: year because of that.
Speaker 15: Yeah, and this brings U nicey to talk about. How
Speaker 15: do you think that earnings are being reflected in the
Speaker 15: stock prices and do you think that the outlook for
Speaker 15: the second half of this year is looking rather optimistic?
Speaker 14: Well, you know, I think we do have some challenges ahead,
Speaker 14: and we've seen some of the challenges throughout this earning cycle.
Speaker 14: It wasn't easy for everyone. We've seen some margin compression,
Speaker 14: we've seen some blips, and that's why it's not the
Speaker 14: right time to own everything. It's the time to be
Speaker 14: really selective. Some companies are going to see continued challenges
Speaker 14: ahead and continued margin pressures. Others will be able to
Speaker 14: thrive and survive in this type of environment. But I
Speaker 14: think Forshad, You're right, I see more clouds in the
Speaker 14: sky and potentially storms ahead, and so investors are going
Speaker 14: to have to continue to be very, very thoughtful and
Speaker 14: careful about the names that they are investing in.
Speaker 1: It's tempting to think that you have this one big
Speaker 1: story of artificial intelligence that is so big. I mean
Speaker 1: it's like if you look at three big waves, the Internet,
Speaker 1: then mobile and cloud as the second one, and now AI.
Speaker 1: Is it big enough that it kind of changes the
Speaker 1: story going forward? And maybe, you know, if we didn't
Speaker 1: have the market telling us this, we might think we're
Speaker 1: drifting into recessions. So you know, make sure you have
Speaker 1: strong umbrella. But now you've got, you know, this kind
Speaker 1: of winning product that could change everything about the way
Speaker 1: the companies can do business, lower costs, improve their margins
Speaker 1: and such.
Speaker 14: Yeah, I do you know, when I talk to our
Speaker 14: investment professionals, it is clear that regenitive, regenitive AI. It's
Speaker 14: a real thing. This is not something that is going
Speaker 14: to go away overnight. That being said, it's not something
Speaker 14: that's going to change every company overnight. Either these things happen.
Speaker 14: It's not a smooth path. There's bumps along the road,
Speaker 14: and it changes the competitive landscape, which means there's going
Speaker 14: to be winners and there's going to be losers, and
Speaker 14: so it creates a lot more work and a lot
Speaker 14: more analysis to try to pick through who can be
Speaker 14: the winners and who are going to be the losers.
Speaker 14: And so don't expect it to be a smooth path.
Speaker 15: I just asks your chat GBT, who's.
Speaker 14: Surely I would love to know the answer exactly.
Speaker 1: But I just said, everybody's going to have chat, GPT
Speaker 1: or some sort of form of AI as their personal advisor,
Speaker 1: and it's going to tell you everything about how to
Speaker 1: improve things that you do. Every day you google it,
Speaker 1: you know, you get ten twenty thirty things you have
Speaker 1: to read through, and then you have to piece together
Speaker 1: and you have to compare and then finally come to
Speaker 1: a decision. Now somebody's going to do that for you.
Speaker 14: It's going to disintermediate, disintermediate a lot of businesses but
Speaker 14: it's not going to replace many others. Who is still
Speaker 14: going to come and do the plumbing in your house,
Speaker 14: Who's going to do the electrical work in your house?
Speaker 14: You know, I mean when we talk about AI, it's
Speaker 14: going to add a lot of efficiency to a lot
Speaker 14: of businesses, but it's not going to replace everything. And
Speaker 14: again I'm talking about, you know, some very specific trades.
Speaker 14: But if it's just an easy way to think about it,
Speaker 14: it's not going to change everything overnight. I even think
Speaker 14: about the asset management business. It can create a lot
Speaker 14: of efficiencies in certain business models, maybe back in the
Speaker 14: operational side, et cetera. But is chat GDP really going
Speaker 14: to be able to pick stocks better than our active
Speaker 14: management better than our active managers? Probably not in the
Speaker 14: first couple of years at least, right And it's still
Speaker 14: is going to take human beings to teach, you know,
Speaker 14: the AI to be able to do this over.
Speaker 15: Time, it seems to and that you and just go
Speaker 15: back to your strategy here as well, that you know,
Speaker 15: you're more sort of bottom up than top down, So
Speaker 15: what do you look for and what have you been
Speaker 15: buying that? And are probably not going to be stock specific,
Speaker 15: but give us an idea of the industry groups.
Speaker 14: Yeah, well, one of the things, you know, we started
Speaker 14: the conversation by you know, some very large groups really
Speaker 14: controlling a big part of the market. And you know,
Speaker 14: if you just take for example, you know, Apple's market cap,
Speaker 14: it's approaching three trillion dollars, I know, something everybody's talking
Speaker 14: a lot about. If you take the entire Russell two
Speaker 14: thousand index, that index is less than the market cap
Speaker 14: of Apple today, and so if you look at all
Speaker 14: of the names underneath that, so kind of the small
Speaker 14: and mid cap space, I think there's a lot of
Speaker 14: opportunities still for investors there. I do think even the
Speaker 14: emerging markets are a place that have underperformed for a
Speaker 14: very long time. I know there's a lot of discussion
Speaker 14: around whether the US is the best place to be
Speaker 14: or not, but I do believe there's many emerging markets
Speaker 14: that are offering good risk reward here. And when I
Speaker 14: talk to our investment teams that manage those markets. Given
Speaker 14: the stability of the dollar and some pressure with the
Speaker 14: dollar that we've seen this year, I do think that
Speaker 14: that could be another opportunity place to invest.
Speaker 1: Just thirty seconds on China.
Speaker 14: You know, I you know, I know, I heard you
Speaker 14: earlier talking about the Chinese banks. I do think that
Speaker 14: is a sign that the government's a little bit worried
Speaker 14: about the uneven recovery that they've seen there, and so
Speaker 14: it is right, I think, to be a little bit
Speaker 14: cautious about China. But they're headed in the right direction
Speaker 14: by adding that stimulus. We're not going to see the
Speaker 14: same kind of stimulus that we get here, but it's
Speaker 14: the right direction.
Speaker 1: This is Bloomberg Daybreak Asia, your morning brief on the
Speaker 1: story's making news from Hong Kong to Singapore and Wall Street.
Speaker 2: Look for us on your podcast feed every day, on Apple, Spotify,
Speaker 2: and anywhere else you get your podcast.
Speaker 1: You can also listen live each day on bloom eleven
Speaker 1: three to zero in New York, Bloomberg ninety nine to
Speaker 1: one in Washington, Bloomberg one oh sixty one in Boston,
Speaker 1: and Bloomberg nine sixty in San Francisco.
Speaker 2: Our flagship New York station is also available on your
Speaker 2: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
Speaker 1: Plus listen coast to coast on the Bloomberg Business app.
Speaker 1: Sirius XM Channel one nineteen. The iHeartRadio app and on
Speaker 1: Bloomberg dot Com. I'm Brian Curtis.
Speaker 2: And I'm Doug Chrisner. Join us again tomorrow for all
Speaker 2: the news you need to start your day right here
Speaker 2: on Bloomberg Daybreak Asia