Speaker 1: This is Bloomberg day Break Asia for this Tuesday May
Speaker 1: sixteenth in Hong Kong, Monday May fifteenth in New York
Speaker 1: and coming up today.
Speaker 2: Markets wait for clarity on whether Washington lawmakers will be
Speaker 2: able to reach a deal to avert a US default.
Speaker 1: Microsoft sixty nine billion dollar takeover of Activision Blizzard winds.
Speaker 1: European Union approval.
Speaker 3: Big Five meeting on death ceiling confirmed, despite mixed messages
Speaker 3: on any possible progress. Zelenski gets pledge of continued support
Speaker 3: from UK. Could China envoy visiting Russia be a good
Speaker 3: thing for a ceasefire? I'm at Baxter with Global News.
Speaker 4: That's all straight ahead on Bloomberg Daybreak Asia, the business
Speaker 4: news you need to start your day, and just one
Speaker 4: fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App,
Speaker 4: and everywhere you get your podcasts.
Speaker 2: Good morning, I'm Doug Prisner and I'm Brian Curtiz.
Speaker 1: Here are the stories we're following today. Traders waiting for
Speaker 1: clarity on whether Washington lawmakers will get a deal to
Speaker 1: avert a US default. Treasury Secretary Janet Yellen is sticking
Speaker 1: with her warning that the department could run out of
Speaker 1: cash as soon as June first. This is according to
Speaker 1: a letter that was written by Yellen to congressional leaders.
Speaker 1: More from Bloomberg's Kaylee lines, Jannet.
Speaker 5: Yellen is really doubling down on what potentially the window
Speaker 5: is here, but she does have language in this letter
Speaker 5: talking about the idea of cutting it too close. She
Speaker 5: said they have learned from past debt limit impasses that
Speaker 5: waiting until the last minute to suspend or increase the
Speaker 5: debt limit can have serious harm to businesses and consumer confidence.
Speaker 1: Yellen's warning comes during negotiations over the debt ceiling between
Speaker 1: the White House staff and AIDS to congressional leaders. Today,
Speaker 1: how Speaker Kevin McCarthy said that the ongoing talks were
Speaker 1: yielding little progress. President Biden has announced some plans to
Speaker 1: meet with congressional leaders tomorrow.
Speaker 2: Well Fed officials offered some differing views today on the
Speaker 2: path of rate hikes. For one, we heard from the
Speaker 2: head of the Chicago FED, Austin Goolsby. He advocated for
Speaker 2: being extra mindful on the impact of those rate hikes
Speaker 2: and the impact that they could have on credit conditions.
Speaker 2: At the same time, the head of the Atlanta FED,
Speaker 2: Raphael Bostik, was pushing back on the idea of more
Speaker 2: rate hikes this year. Here's Bostic speaking earlier on Bloomberg.
Speaker 6: If I had to have a vote right now, I'd
Speaker 6: probably vote to hold. We got two more inflation readings,
Speaker 6: We have a jobs number, a jobs report that's got
Speaker 6: to come out. There's a lot more information we're going
Speaker 6: to have as to what's going on.
Speaker 2: On the other hand, the head of the Minneapolis Fed,
Speaker 2: Neil cash Kari, did warn the Fed will probably tighten
Speaker 2: more this year. He said the Fed needs to finish
Speaker 2: the job to lower inflation. By the way, the next
Speaker 2: monetary policy meeting is on June thirteenth.
Speaker 1: Bran Well hearing that the US is preparing to buy
Speaker 1: up to three million barrels of sour crude oil to
Speaker 1: begin refilling the depleted Strategy Petroleum Reserve. Let's get that
Speaker 1: story from Bloomberg's Charlie Pillett.
Speaker 7: After selling more than two hundred million barrels from the
Speaker 7: emergency stockpile last year in part to curb high energy prices,
Speaker 7: the Energy Department plans to solicit offers to replenish the reserve,
Speaker 7: which has fallen to the lowest since nineteen eighty three.
Speaker 7: In addition to direct purchases. The agency has said part
Speaker 7: of its strategy for refilling the reserve includes a return
Speaker 7: of oil from previous exchanges and avoiding quote unnecessary sales
Speaker 7: unrelated to supplied disruptions in New York. Charlie Pellett, Bloomberg,
Speaker 7: Daybreak Asia.
Speaker 2: Microsoft's takeover of Activision Blizzard has won approval from the
Speaker 2: European Union. This comes just weeks after regulators in the
Speaker 2: UK blocked this sixty nine billion dollar deal on competition concerns.
Speaker 2: We have more from Bloomberg's d Ludlow.
Speaker 8: So in the European Commission's analysis, they state that this
Speaker 8: steal would not hurt market competition. They're particularly looking at
Speaker 8: cloud based gaming, which is one to three percent of
Speaker 8: the market. The EU Anti Trust chief Market Vesta is
Speaker 8: saying that the deal is pro competitive and in the
Speaker 8: EU's judgment, it would kick start a growth period for
Speaker 8: cloud gaming.
Speaker 2: Now the veto by UK regulators I mean this deal
Speaker 2: does still face massive obstacles. They include Microsoft winning some
Speaker 2: legal challenges not only in the US but the UK
Speaker 2: as well, and those are likely to be brian an
Speaker 2: uphill task.
Speaker 1: Well, it brings us to China China's economy likely grew
Speaker 1: rapidly in April, but data out today might obscure a
Speaker 1: loss of momentum in the recovery. Bloomberg's Joan Wong has
Speaker 1: more from Hong Kong.
Speaker 9: The biggest headline is likely to come from retail sales.
Speaker 9: Economists forecast that sales jumped twenty two percent in April
Speaker 9: from the previous year. That's largely due to weakness last
Speaker 9: year from the Shanghai lockdowns. China's industrial production is a
Speaker 9: also expected to have spiked. A Bloomberg poll of economists
Speaker 9: sees a gain of ten point eight percent from a
Speaker 9: year ago. That's much stronger than a three point nine
Speaker 9: percent expansion in March. Infrastructure investment probably helped, as local
Speaker 9: governments issued special bonds to boost activity. Fixed as an investment.
Speaker 9: It's forecasts to have risen five point seven percent in
Speaker 9: the first four months of the year in Hong Kong.
Speaker 9: Joined one Bloomberg day Brigaisia Doug.
Speaker 1: The bearish scenario is pretty well supported here.
Speaker 3: Still.
Speaker 1: It's what we hear a lot of on this program.
Speaker 1: Sticky inflation, weakening data now and you mentioned some of
Speaker 1: it there. Tighter bank lending standards, the dead sealing saga,
Speaker 1: and the FED trying to rebuild its reputation, which has
Speaker 1: been an ongoing struggle. The bullish argument just seems to
Speaker 1: be that well, the economy, earnings, and the market are
Speaker 1: hanging in there. That's not a real persuasive, ringing endorsement,
Speaker 1: is it.
Speaker 2: And no, it's not at all. And I think part
Speaker 2: of the bullish scenario, Brian, is also this idea that
Speaker 2: the FED will be inclined to cut rates before the
Speaker 2: end of the year. And you and I have talked
Speaker 2: about this and how hotly debated. I think that's a
Speaker 2: fair way of putting it. It has been in the market.
Speaker 1: Yeah, it just seems like all of a sudden now
Speaker 1: we have to start thinking about another hike again, and
Speaker 1: that maybe we'll start seeing these bets play out. In
Speaker 1: terms of the market, the S and P five hundred
Speaker 1: is flat over the last month. You'll still hear people say, well,
Speaker 1: you know, the market's doing so well, Well, it's really
Speaker 1: flat for the past month. It is up seven percent
Speaker 1: year to date. I think we need to say that's
Speaker 1: pretty good. I mean, historically speaking, it's not bad. Maybe
Speaker 1: it's not great after the big losses last year, and
Speaker 1: it's certainly not egregious exuberance.
Speaker 2: Is it not at all? Look at Apple, though, one
Speaker 2: of the standout performers so far this year. The stock
Speaker 2: is up thirty two percent. We had a story today
Speaker 2: on the Bloomberg terminal indicating the market cap of Apple
Speaker 2: has now surpassed that of the entire Russell two thousand
Speaker 2: for two weeks running. So Apple a two point seven trillion,
Speaker 2: the Russell two thousand market cap at around two six
Speaker 2: Here's the thing, though, I think this may be more
Speaker 2: about some of the weakness and regional banks, because if
Speaker 2: you look at the KBW Regional Bank Index, it's down
Speaker 2: thirty percent since the beginning of the year, and many
Speaker 2: of these regional lenders are members of the Russell two thousand.
Speaker 1: Yeah, it's a very good point, but it also is
Speaker 1: quite extraordinary that one company is bigger than two thousand
Speaker 1: small small companies that are considered, you know, essential for
Speaker 1: the US economy. So it sets up is a good
Speaker 1: day for chatting with our guests. We have Ryan Blangra
Speaker 1: coming up, managing principal and founder at Claro Advisors. Now
Speaker 1: it's time for global news. I'm Brian Curtis, along with
Speaker 1: Doug Krisner, and we've got Ed Baxter looking at newsd
Speaker 1: ed the White House confirming that the President and top
Speaker 1: legislative leaders will meet tomorrow on the debt ceiling and
Speaker 1: will they solve everything?
Speaker 3: Well, I was going to say this still later, but
Speaker 3: the quote, great, great philosopher, Annie tomorrow tomorrow, maybe tomorrow
Speaker 3: never comes. It's hard to tell exactly, Brian, what's going on.
Speaker 3: President Joe Biden saying everything is positive and peachy, that
Speaker 3: progress has been made, and then House Speaker Kevin McCarthy
Speaker 3: very distinctively says no progress. Bloomberg's Kaylee lines.
Speaker 5: Here he said that there is no agreement on anything.
Speaker 5: The meetings have not been productive at all, and they're
Speaker 5: nowhere near coming to a conclusion. So quite a striking
Speaker 5: difference in tone between these two ahead of tomorrow's meeting.
Speaker 3: And Bloomberg's Wendy Benjaminson says McCarthy does need to portray
Speaker 3: a sense of toughness for his caucus, especially the right
Speaker 3: end of it.
Speaker 1: Now.
Speaker 3: Bloomberg's Wendy does say that some proposals have been made.
Speaker 10: Democrats offered some to close some tax loopholes, Republicans rejected
Speaker 10: that out of hand Republicans were rejecting or Democrats rejected,
Speaker 10: you know, the spending cuts that the Republicans have. Last
Speaker 10: time we were here, we thought the staff had worked.
Speaker 3: This all out, And Kaylee says, McCarthy is walking a
Speaker 3: tight rope.
Speaker 5: Several members of his party that won everything that was
Speaker 5: included in that bill in an ultimate deal. So it
Speaker 5: does raise the question of how much he can keep
Speaker 5: his caucus in line, whether his failure to do so
Speaker 5: may ultimately cost him his speakership. But of course, when
Speaker 5: we're talking about a deal that in theory would be
Speaker 5: agreed to by both McCarthy and the White House, in theory,
Speaker 5: you get enough Democrats in line that you ned just
Speaker 5: need some of the Republican Party to get it over
Speaker 5: the finish line.
Speaker 3: So yeah, let's wait tomorrow. Tomorrow. Ukraine's President Vladimer Zelenski
Speaker 3: has gotten assurance from UK Prime Minister Rishi Sunak that
Speaker 3: there will be continuing support. They have met in London, and.
Speaker 8: It's important for the Kremlin to also know that we're
Speaker 8: not going away.
Speaker 9: We are here for the long term.
Speaker 8: We remain steadfast in wanting to defend Ukraine.
Speaker 1: We'll discuss for important and urgent support for Ukraine and security.
Speaker 1: I think not only for Ukraine, it's important for all
Speaker 1: the Europe.
Speaker 3: Zolenski there has visited Germany, France and now the UK. Meanwhile,
Speaker 3: China's upcoming envoy to Ukraine could be a positive thing
Speaker 3: question mark well. That's according to the US State Department
Speaker 3: spokesman vend Patel.
Speaker 11: There is a role for the PRC and frankly any
Speaker 11: country for that matter, in supporting diplomatically an outcome that
Speaker 11: is consistent with the principles of sovereignty and territorial integrity.
Speaker 3: He says, as long as China understands how important Ukraine's
Speaker 3: sovereignty is as well. And Russia's Prime Minister Mikhail Mishustin
Speaker 3: will lead a government delegation to China next week to
Speaker 3: attend a business forum along with sanctioned tycoons as Moscow
Speaker 3: Lanes on China to help withstand international pressure regarding Ukraine.
Speaker 3: Global News powered by more than twenty seven hundred journalists
Speaker 3: and analysts in over one hundred and twenty countries. In
Speaker 3: San Francisco, I'm at Baxter and this is Bloomberg. I'm
Speaker 3: Brian Curtis. In Hong Kong along with Rashad Salama.
Speaker 1: This is Bloomberg Daybreak Asia and our guesst is Ryan Blanger,
Speaker 1: managing principal and founder at Claro Advisors, helping us with
Speaker 1: some clarity on the market markets. Ryan, thank you very
Speaker 1: much for joining us. Is the market getting the scenario
Speaker 1: that we described a few moments ago, the barriers scenario?
Speaker 1: Is the market getting it wrong or right?
Speaker 12: I think the market's really climbed the wallworry quite nicely here,
Speaker 12: surprising a lot of investors. We've taken an opportunity to
Speaker 12: kind of reduce some market exposure given the games that
Speaker 12: we've gotten. But you know, I'm surprises anybody else with
Speaker 12: the with the performance of the market so far this year.
Speaker 13: But I mean which rocket you tooking? But in particular,
Speaker 13: I mean equities, bonds or other assets.
Speaker 4: Good point.
Speaker 1: We talked a little bit about equities. How about how
Speaker 1: about the bond market.
Speaker 12: Yeah, the bar market's performing well. I mean, the bond
Speaker 12: mass here looks pretty good. It hasn't looked as good
Speaker 12: in use decades probably. I mean, it's just a nice,
Speaker 12: nice environment for savers. You can actually earn some yield
Speaker 12: on your on your bank saving so you can great
Speaker 12: money market yield. You can sit in a bond neutral
Speaker 12: fund or buy corporate bonds and collect five percent.
Speaker 11: Uh.
Speaker 12: You know, a lot of investors would be you know,
Speaker 12: pretty happy with that, and they just haven't had that
Speaker 12: opportunity in a lot of years.
Speaker 1: So to me, the.
Speaker 12: Worst is behind us. Even if you get another rate
Speaker 12: hiker two, you know, I think it's I think it's
Speaker 12: smooth sailing and bonds moving forward.
Speaker 1: You mentioned that you lightened up on some of your
Speaker 1: positions in the equity market. If you you know, if
Speaker 1: you're trying to get out performance now, I mean obviously
Speaker 1: you're not really getting it with four and a half
Speaker 1: percent yields in the bond market. Where would you look
Speaker 1: to try to get some alpha.
Speaker 12: Well, we've actually had a couple of clients who have
Speaker 12: taken the games this year. You know, say you're at
Speaker 12: five or six percent, They're they're flushing all their equities
Speaker 12: into bonds. They're going to collect you know, another three
Speaker 12: percent this year and they're just gonna grab almost the
Speaker 12: double digit guaranteed returns for the rest of the year.
Speaker 12: It's an interesting scenario. Then you start market timing, which
Speaker 12: which we of course don't really advocate. But but for
Speaker 12: someone who just doesn't want the uncertainty of the equity market,
Speaker 12: it's an interesting strategy, all right.
Speaker 13: You know, just going back to the equities side of things.
Speaker 13: In any season show that there is in earning recession,
Speaker 13: what did you make of it?
Speaker 12: Well, I mean, companies have been been pretty resilient to
Speaker 12: pass on, you know, a lot of these costs onto consumers.
Speaker 12: And if you look at the consumer package companies, the
Speaker 12: nine big ones in the US and in Europe, they've
Speaker 12: got pricing pricing up eleven percent with volumes down too,
Speaker 12: and so they've been able to hang on to these
Speaker 12: you know, pretty strong earnings. But how long is that
Speaker 12: gonna last? I mean, how long are people not gonna
Speaker 12: be affected by the pricing increases at various different places
Speaker 12: they shop? And when are they're going to start trading down?
Speaker 12: We haven't really seen that. I suspect the cards spending
Speaker 12: data that will be coming out in the next couple
Speaker 12: of weeks we'll sort of start to reflect that people
Speaker 12: are starting to fall behind. Spending will come down. You'll
Speaker 12: see the thirty day delinquencies starting to reach, you know,
Speaker 12: crop up, and I think that's when people start you know,
Speaker 12: getting a little bit nervous about their ability to continue
Speaker 12: to pay for the goods and services at these elevated prices,
Speaker 12: and then the consumers. I mean that the companies have
Speaker 12: to really adjust at that point. And I think, yeah,
Speaker 12: you know, Q three, Q four, we'll see that adjustment
Speaker 12: take place.
Speaker 1: And so we've been wondering for a long time about
Speaker 1: when jobs might crack, when the data might seriously weaken.
Speaker 1: The Empire State manufacturing data was was very weak today,
Speaker 1: and the jobless claims was a number that was a
Speaker 1: little surprising too. Do you think that we're kind of
Speaker 1: add an inflection point on the economy cracking a bit here?
Speaker 8: We could be?
Speaker 12: I mean, we went back on launch, we're still you know,
Speaker 12: the job opening are still you know, higher than they
Speaker 12: excuse me, the job openings are still lower than they
Speaker 12: typically would be pre pandemic, and the layoffs are still higher,
Speaker 12: and so you typically get more layouts than we have.
Speaker 12: We've had a lot of headlines coming out with big layouts,
Speaker 12: but typically we average, you know, on the one point
Speaker 12: seven one point eight millions, and we're you know, we
Speaker 12: just haven't really broke those levels. So I just thinks
Speaker 12: historically the look the pandemic really turned things upset out.
Speaker 12: It's hard to evaluate a lot of this data, so
Speaker 12: you know, we're just do you do your best to
Speaker 12: parse it out. But I think I do think the
Speaker 12: recession is inevitable. It's it's it's a popular belief at
Speaker 12: this point. I think our view is that rates probably
Speaker 12: are going to have to go a little bit higher,
Speaker 12: uh than what the market is forecasting.
Speaker 13: Well, well, no doubt. From an equity perspective, it's a
Speaker 13: good idea to be defensive, and I think you got
Speaker 13: some stock ideas here as well. Meta platforms are one thing.
Speaker 13: Describing it as a very mature business, I suppose it is.
Speaker 13: You know, you don't reready think of it.
Speaker 1: Up one hundred here to day if you want out performance.
Speaker 12: Yeah, I know that one's you know, we we've been
Speaker 12: talking about that one for a while. That reminded me,
Speaker 12: uh you know back in the winter. That was reminding
Speaker 12: me of Apple about six or seven years ago, when
Speaker 12: it was trading at ten times learning. No one could
Speaker 12: figure out what this what the growth of the company
Speaker 12: was going to be, you know, beyond cell phones, and
Speaker 12: then the multiple just expanded and it went from ten
Speaker 12: to twenty five, and you know, I think that's probably
Speaker 12: what's happening with Meta. You know, it's got billions of
Speaker 12: active daily users. It's a mature company that knows how
Speaker 12: to grow their business and reach an audience. And I
Speaker 12: think the market that is, you know, finally reflecting that.
Speaker 12: And so you know, it's not the probably the stafest
Speaker 12: place to hide out. I think it's a far safer
Speaker 12: places and consumer staples and other defensive companies if you
Speaker 12: just want to take cover, if you're thinking in inflation
Speaker 12: is coming about. But we you know, we like Meta
Speaker 12: for long sum investors.
Speaker 1: This is Bloomberg Daybreak Asia, your morning brief on the
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