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Speaker 1: This is Bloomberg day Break Asia for this Tuesday May

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Speaker 1: sixteenth in Hong Kong, Monday May fifteenth in New York

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Speaker 1: and coming up today.

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Speaker 2: Markets wait for clarity on whether Washington lawmakers will be

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Speaker 2: able to reach a deal to avert a US default.

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Speaker 1: Microsoft sixty nine billion dollar takeover of Activision Blizzard winds.

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Speaker 1: European Union approval.

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Speaker 3: Big Five meeting on death ceiling confirmed, despite mixed messages

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Speaker 3: on any possible progress. Zelenski gets pledge of continued support

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Speaker 3: from UK. Could China envoy visiting Russia be a good

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Speaker 3: thing for a ceasefire? I'm at Baxter with Global News.

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Speaker 4: That's all straight ahead on Bloomberg Daybreak Asia, the business

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Speaker 4: news you need to start your day, and just one

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Speaker 4: fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App,

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Speaker 4: and everywhere you get your podcasts.

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Speaker 2: Good morning, I'm Doug Prisner and I'm Brian Curtiz.

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Speaker 1: Here are the stories we're following today. Traders waiting for

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Speaker 1: clarity on whether Washington lawmakers will get a deal to

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Speaker 1: avert a US default. Treasury Secretary Janet Yellen is sticking

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Speaker 1: with her warning that the department could run out of

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Speaker 1: cash as soon as June first. This is according to

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Speaker 1: a letter that was written by Yellen to congressional leaders.

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Speaker 1: More from Bloomberg's Kaylee lines, Jannet.

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Speaker 5: Yellen is really doubling down on what potentially the window

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Speaker 5: is here, but she does have language in this letter

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Speaker 5: talking about the idea of cutting it too close. She

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Speaker 5: said they have learned from past debt limit impasses that

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Speaker 5: waiting until the last minute to suspend or increase the

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Speaker 5: debt limit can have serious harm to businesses and consumer confidence.

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Speaker 1: Yellen's warning comes during negotiations over the debt ceiling between

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Speaker 1: the White House staff and AIDS to congressional leaders. Today,

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Speaker 1: how Speaker Kevin McCarthy said that the ongoing talks were

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Speaker 1: yielding little progress. President Biden has announced some plans to

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Speaker 1: meet with congressional leaders tomorrow.

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Speaker 2: Well Fed officials offered some differing views today on the

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Speaker 2: path of rate hikes. For one, we heard from the

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Speaker 2: head of the Chicago FED, Austin Goolsby. He advocated for

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Speaker 2: being extra mindful on the impact of those rate hikes

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Speaker 2: and the impact that they could have on credit conditions.

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Speaker 2: At the same time, the head of the Atlanta FED,

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Speaker 2: Raphael Bostik, was pushing back on the idea of more

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Speaker 2: rate hikes this year. Here's Bostic speaking earlier on Bloomberg.

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Speaker 6: If I had to have a vote right now, I'd

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Speaker 6: probably vote to hold. We got two more inflation readings,

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Speaker 6: We have a jobs number, a jobs report that's got

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Speaker 6: to come out. There's a lot more information we're going

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Speaker 6: to have as to what's going on.

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Speaker 2: On the other hand, the head of the Minneapolis Fed,

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Speaker 2: Neil cash Kari, did warn the Fed will probably tighten

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Speaker 2: more this year. He said the Fed needs to finish

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Speaker 2: the job to lower inflation. By the way, the next

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Speaker 2: monetary policy meeting is on June thirteenth.

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Speaker 1: Bran Well hearing that the US is preparing to buy

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Speaker 1: up to three million barrels of sour crude oil to

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Speaker 1: begin refilling the depleted Strategy Petroleum Reserve. Let's get that

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Speaker 1: story from Bloomberg's Charlie Pillett.

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Speaker 7: After selling more than two hundred million barrels from the

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Speaker 7: emergency stockpile last year in part to curb high energy prices,

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Speaker 7: the Energy Department plans to solicit offers to replenish the reserve,

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Speaker 7: which has fallen to the lowest since nineteen eighty three.

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Speaker 7: In addition to direct purchases. The agency has said part

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Speaker 7: of its strategy for refilling the reserve includes a return

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Speaker 7: of oil from previous exchanges and avoiding quote unnecessary sales

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Speaker 7: unrelated to supplied disruptions in New York. Charlie Pellett, Bloomberg,

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Speaker 7: Daybreak Asia.

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Speaker 2: Microsoft's takeover of Activision Blizzard has won approval from the

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Speaker 2: European Union. This comes just weeks after regulators in the

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Speaker 2: UK blocked this sixty nine billion dollar deal on competition concerns.

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Speaker 2: We have more from Bloomberg's d Ludlow.

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Speaker 8: So in the European Commission's analysis, they state that this

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Speaker 8: steal would not hurt market competition. They're particularly looking at

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Speaker 8: cloud based gaming, which is one to three percent of

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Speaker 8: the market. The EU Anti Trust chief Market Vesta is

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Speaker 8: saying that the deal is pro competitive and in the

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Speaker 8: EU's judgment, it would kick start a growth period for

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Speaker 8: cloud gaming.

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Speaker 2: Now the veto by UK regulators I mean this deal

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Speaker 2: does still face massive obstacles. They include Microsoft winning some

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Speaker 2: legal challenges not only in the US but the UK

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Speaker 2: as well, and those are likely to be brian an

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Speaker 2: uphill task.

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Speaker 1: Well, it brings us to China China's economy likely grew

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Speaker 1: rapidly in April, but data out today might obscure a

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Speaker 1: loss of momentum in the recovery. Bloomberg's Joan Wong has

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Speaker 1: more from Hong Kong.

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Speaker 9: The biggest headline is likely to come from retail sales.

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Speaker 9: Economists forecast that sales jumped twenty two percent in April

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Speaker 9: from the previous year. That's largely due to weakness last

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Speaker 9: year from the Shanghai lockdowns. China's industrial production is a

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Speaker 9: also expected to have spiked. A Bloomberg poll of economists

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Speaker 9: sees a gain of ten point eight percent from a

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Speaker 9: year ago. That's much stronger than a three point nine

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Speaker 9: percent expansion in March. Infrastructure investment probably helped, as local

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Speaker 9: governments issued special bonds to boost activity. Fixed as an investment.

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Speaker 9: It's forecasts to have risen five point seven percent in

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Speaker 9: the first four months of the year in Hong Kong.

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Speaker 9: Joined one Bloomberg day Brigaisia Doug.

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Speaker 1: The bearish scenario is pretty well supported here.

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Speaker 3: Still.

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Speaker 1: It's what we hear a lot of on this program.

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Speaker 1: Sticky inflation, weakening data now and you mentioned some of

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Speaker 1: it there. Tighter bank lending standards, the dead sealing saga,

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Speaker 1: and the FED trying to rebuild its reputation, which has

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Speaker 1: been an ongoing struggle. The bullish argument just seems to

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Speaker 1: be that well, the economy, earnings, and the market are

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Speaker 1: hanging in there. That's not a real persuasive, ringing endorsement,

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Speaker 1: is it.

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Speaker 2: And no, it's not at all. And I think part

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Speaker 2: of the bullish scenario, Brian, is also this idea that

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Speaker 2: the FED will be inclined to cut rates before the

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Speaker 2: end of the year. And you and I have talked

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Speaker 2: about this and how hotly debated. I think that's a

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Speaker 2: fair way of putting it. It has been in the market.

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Speaker 1: Yeah, it just seems like all of a sudden now

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Speaker 1: we have to start thinking about another hike again, and

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Speaker 1: that maybe we'll start seeing these bets play out. In

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Speaker 1: terms of the market, the S and P five hundred

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Speaker 1: is flat over the last month. You'll still hear people say, well,

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Speaker 1: you know, the market's doing so well, Well, it's really

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Speaker 1: flat for the past month. It is up seven percent

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Speaker 1: year to date. I think we need to say that's

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Speaker 1: pretty good. I mean, historically speaking, it's not bad. Maybe

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Speaker 1: it's not great after the big losses last year, and

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Speaker 1: it's certainly not egregious exuberance.

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Speaker 2: Is it not at all? Look at Apple, though, one

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Speaker 2: of the standout performers so far this year. The stock

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Speaker 2: is up thirty two percent. We had a story today

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Speaker 2: on the Bloomberg terminal indicating the market cap of Apple

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Speaker 2: has now surpassed that of the entire Russell two thousand

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Speaker 2: for two weeks running. So Apple a two point seven trillion,

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Speaker 2: the Russell two thousand market cap at around two six

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Speaker 2: Here's the thing, though, I think this may be more

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Speaker 2: about some of the weakness and regional banks, because if

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Speaker 2: you look at the KBW Regional Bank Index, it's down

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Speaker 2: thirty percent since the beginning of the year, and many

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Speaker 2: of these regional lenders are members of the Russell two thousand.

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Speaker 1: Yeah, it's a very good point, but it also is

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Speaker 1: quite extraordinary that one company is bigger than two thousand

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Speaker 1: small small companies that are considered, you know, essential for

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Speaker 1: the US economy. So it sets up is a good

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Speaker 1: day for chatting with our guests. We have Ryan Blangra

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Speaker 1: coming up, managing principal and founder at Claro Advisors. Now

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Speaker 1: it's time for global news. I'm Brian Curtis, along with

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Speaker 1: Doug Krisner, and we've got Ed Baxter looking at newsd

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Speaker 1: ed the White House confirming that the President and top

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Speaker 1: legislative leaders will meet tomorrow on the debt ceiling and

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Speaker 1: will they solve everything?

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Speaker 3: Well, I was going to say this still later, but

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Speaker 3: the quote, great, great philosopher, Annie tomorrow tomorrow, maybe tomorrow

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Speaker 3: never comes. It's hard to tell exactly, Brian, what's going on.

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Speaker 3: President Joe Biden saying everything is positive and peachy, that

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Speaker 3: progress has been made, and then House Speaker Kevin McCarthy

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Speaker 3: very distinctively says no progress. Bloomberg's Kaylee lines.

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Speaker 5: Here he said that there is no agreement on anything.

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Speaker 5: The meetings have not been productive at all, and they're

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Speaker 5: nowhere near coming to a conclusion. So quite a striking

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Speaker 5: difference in tone between these two ahead of tomorrow's meeting.

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Speaker 3: And Bloomberg's Wendy Benjaminson says McCarthy does need to portray

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Speaker 3: a sense of toughness for his caucus, especially the right

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Speaker 3: end of it.

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Speaker 1: Now.

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Speaker 3: Bloomberg's Wendy does say that some proposals have been made.

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Speaker 10: Democrats offered some to close some tax loopholes, Republicans rejected

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Speaker 10: that out of hand Republicans were rejecting or Democrats rejected,

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Speaker 10: you know, the spending cuts that the Republicans have. Last

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Speaker 10: time we were here, we thought the staff had worked.

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Speaker 3: This all out, And Kaylee says, McCarthy is walking a

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Speaker 3: tight rope.

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Speaker 5: Several members of his party that won everything that was

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Speaker 5: included in that bill in an ultimate deal. So it

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Speaker 5: does raise the question of how much he can keep

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Speaker 5: his caucus in line, whether his failure to do so

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Speaker 5: may ultimately cost him his speakership. But of course, when

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Speaker 5: we're talking about a deal that in theory would be

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Speaker 5: agreed to by both McCarthy and the White House, in theory,

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Speaker 5: you get enough Democrats in line that you ned just

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Speaker 5: need some of the Republican Party to get it over

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Speaker 5: the finish line.

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Speaker 3: So yeah, let's wait tomorrow. Tomorrow. Ukraine's President Vladimer Zelenski

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Speaker 3: has gotten assurance from UK Prime Minister Rishi Sunak that

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Speaker 3: there will be continuing support. They have met in London, and.

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Speaker 8: It's important for the Kremlin to also know that we're

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Speaker 8: not going away.

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Speaker 9: We are here for the long term.

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Speaker 8: We remain steadfast in wanting to defend Ukraine.

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Speaker 1: We'll discuss for important and urgent support for Ukraine and security.

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Speaker 1: I think not only for Ukraine, it's important for all

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Speaker 1: the Europe.

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Speaker 3: Zolenski there has visited Germany, France and now the UK. Meanwhile,

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Speaker 3: China's upcoming envoy to Ukraine could be a positive thing

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Speaker 3: question mark well. That's according to the US State Department

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Speaker 3: spokesman vend Patel.

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Speaker 11: There is a role for the PRC and frankly any

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Speaker 11: country for that matter, in supporting diplomatically an outcome that

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Speaker 11: is consistent with the principles of sovereignty and territorial integrity.

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Speaker 3: He says, as long as China understands how important Ukraine's

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Speaker 3: sovereignty is as well. And Russia's Prime Minister Mikhail Mishustin

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Speaker 3: will lead a government delegation to China next week to

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Speaker 3: attend a business forum along with sanctioned tycoons as Moscow

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Speaker 3: Lanes on China to help withstand international pressure regarding Ukraine.

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Speaker 3: Global News powered by more than twenty seven hundred journalists

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Speaker 3: and analysts in over one hundred and twenty countries. In

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Speaker 3: San Francisco, I'm at Baxter and this is Bloomberg. I'm

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Speaker 3: Brian Curtis. In Hong Kong along with Rashad Salama.

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Speaker 1: This is Bloomberg Daybreak Asia and our guesst is Ryan Blanger,

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Speaker 1: managing principal and founder at Claro Advisors, helping us with

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Speaker 1: some clarity on the market markets. Ryan, thank you very

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Speaker 1: much for joining us. Is the market getting the scenario

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Speaker 1: that we described a few moments ago, the barriers scenario?

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Speaker 1: Is the market getting it wrong or right?

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Speaker 12: I think the market's really climbed the wallworry quite nicely here,

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Speaker 12: surprising a lot of investors. We've taken an opportunity to

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Speaker 12: kind of reduce some market exposure given the games that

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Speaker 12: we've gotten. But you know, I'm surprises anybody else with

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Speaker 12: the with the performance of the market so far this year.

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Speaker 13: But I mean which rocket you tooking? But in particular,

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Speaker 13: I mean equities, bonds or other assets.

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Speaker 4: Good point.

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Speaker 1: We talked a little bit about equities. How about how

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Speaker 1: about the bond market.

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Speaker 12: Yeah, the bar market's performing well. I mean, the bond

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Speaker 12: mass here looks pretty good. It hasn't looked as good

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Speaker 12: in use decades probably. I mean, it's just a nice,

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Speaker 12: nice environment for savers. You can actually earn some yield

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Speaker 12: on your on your bank saving so you can great

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Speaker 12: money market yield. You can sit in a bond neutral

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Speaker 12: fund or buy corporate bonds and collect five percent.

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Speaker 11: Uh.

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Speaker 12: You know, a lot of investors would be you know,

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Speaker 12: pretty happy with that, and they just haven't had that

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Speaker 12: opportunity in a lot of years.

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Speaker 1: So to me, the.

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Speaker 12: Worst is behind us. Even if you get another rate

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Speaker 12: hiker two, you know, I think it's I think it's

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Speaker 12: smooth sailing and bonds moving forward.

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Speaker 1: You mentioned that you lightened up on some of your

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Speaker 1: positions in the equity market. If you you know, if

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Speaker 1: you're trying to get out performance now, I mean obviously

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Speaker 1: you're not really getting it with four and a half

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Speaker 1: percent yields in the bond market. Where would you look

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Speaker 1: to try to get some alpha.

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Speaker 12: Well, we've actually had a couple of clients who have

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Speaker 12: taken the games this year. You know, say you're at

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Speaker 12: five or six percent, They're they're flushing all their equities

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Speaker 12: into bonds. They're going to collect you know, another three

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Speaker 12: percent this year and they're just gonna grab almost the

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Speaker 12: double digit guaranteed returns for the rest of the year.

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Speaker 12: It's an interesting scenario. Then you start market timing, which

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Speaker 12: which we of course don't really advocate. But but for

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Speaker 12: someone who just doesn't want the uncertainty of the equity market,

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Speaker 12: it's an interesting strategy, all right.

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Speaker 13: You know, just going back to the equities side of things.

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Speaker 13: In any season show that there is in earning recession,

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Speaker 13: what did you make of it?

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Speaker 12: Well, I mean, companies have been been pretty resilient to

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Speaker 12: pass on, you know, a lot of these costs onto consumers.

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Speaker 12: And if you look at the consumer package companies, the

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Speaker 12: nine big ones in the US and in Europe, they've

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Speaker 12: got pricing pricing up eleven percent with volumes down too,

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Speaker 12: and so they've been able to hang on to these

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Speaker 12: you know, pretty strong earnings. But how long is that

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Speaker 12: gonna last? I mean, how long are people not gonna

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Speaker 12: be affected by the pricing increases at various different places

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Speaker 12: they shop? And when are they're going to start trading down?

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Speaker 12: We haven't really seen that. I suspect the cards spending

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Speaker 12: data that will be coming out in the next couple

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Speaker 12: of weeks we'll sort of start to reflect that people

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Speaker 12: are starting to fall behind. Spending will come down. You'll

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Speaker 12: see the thirty day delinquencies starting to reach, you know,

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Speaker 12: crop up, and I think that's when people start you know,

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Speaker 12: getting a little bit nervous about their ability to continue

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Speaker 12: to pay for the goods and services at these elevated prices,

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Speaker 12: and then the consumers. I mean that the companies have

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Speaker 12: to really adjust at that point. And I think, yeah,

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Speaker 12: you know, Q three, Q four, we'll see that adjustment

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Speaker 12: take place.

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Speaker 1: And so we've been wondering for a long time about

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Speaker 1: when jobs might crack, when the data might seriously weaken.

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Speaker 1: The Empire State manufacturing data was was very weak today,

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Speaker 1: and the jobless claims was a number that was a

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Speaker 1: little surprising too. Do you think that we're kind of

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Speaker 1: add an inflection point on the economy cracking a bit here?

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Speaker 8: We could be?

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Speaker 12: I mean, we went back on launch, we're still you know,

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Speaker 12: the job opening are still you know, higher than they

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Speaker 12: excuse me, the job openings are still lower than they

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Speaker 12: typically would be pre pandemic, and the layoffs are still higher,

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Speaker 12: and so you typically get more layouts than we have.

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Speaker 12: We've had a lot of headlines coming out with big layouts,

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Speaker 12: but typically we average, you know, on the one point

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Speaker 12: seven one point eight millions, and we're you know, we

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Speaker 12: just haven't really broke those levels. So I just thinks

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Speaker 12: historically the look the pandemic really turned things upset out.

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Speaker 12: It's hard to evaluate a lot of this data, so

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Speaker 12: you know, we're just do you do your best to

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Speaker 12: parse it out. But I think I do think the

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Speaker 12: recession is inevitable. It's it's it's a popular belief at

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Speaker 12: this point. I think our view is that rates probably

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Speaker 12: are going to have to go a little bit higher,

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Speaker 12: uh than what the market is forecasting.

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Speaker 13: Well, well, no doubt. From an equity perspective, it's a

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Speaker 13: good idea to be defensive, and I think you got

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Speaker 13: some stock ideas here as well. Meta platforms are one thing.

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Speaker 13: Describing it as a very mature business, I suppose it is.

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Speaker 13: You know, you don't reready think of it.

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Speaker 1: Up one hundred here to day if you want out performance.

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Speaker 12: Yeah, I know that one's you know, we we've been

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Speaker 12: talking about that one for a while. That reminded me,

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Speaker 12: uh you know back in the winter. That was reminding

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Speaker 12: me of Apple about six or seven years ago, when

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Speaker 12: it was trading at ten times learning. No one could

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Speaker 12: figure out what this what the growth of the company

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Speaker 12: was going to be, you know, beyond cell phones, and

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Speaker 12: then the multiple just expanded and it went from ten

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Speaker 12: to twenty five, and you know, I think that's probably

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Speaker 12: what's happening with Meta. You know, it's got billions of

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Speaker 12: active daily users. It's a mature company that knows how

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Speaker 12: to grow their business and reach an audience. And I

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Speaker 12: think the market that is, you know, finally reflecting that.

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Speaker 12: And so you know, it's not the probably the stafest

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Speaker 12: place to hide out. I think it's a far safer

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Speaker 12: places and consumer staples and other defensive companies if you

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Speaker 12: just want to take cover, if you're thinking in inflation

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Speaker 12: is coming about. But we you know, we like Meta

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Speaker 12: for long sum investors.

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