Speaker 1: This is Bloomberg day Break Asia for this Wednesday, June
Speaker 1: twenty first in Hong Kong, Tuesday June twentieth in New
Speaker 1: York and coming up today.
Speaker 2: US equities decline as the market looks ahead to FED
Speaker 2: share Jay Powell's testimony on Capitol Hill.
Speaker 1: Rivian adopts Tesla's electric vehicle charging ports into its existing
Speaker 1: EV models.
Speaker 2: And Jack Maw's longest serving lieutenants return to power at
Speaker 2: Ali Baba to oversee a tough restructuring.
Speaker 3: The search continues for the submersible that went down diving
Speaker 3: on the Titanic. Hunter Biden will plead guilty to two
Speaker 3: tax crimes and to be blanket and Chinese officials meet
Speaker 3: yet again. On Ben Schwartzman, I'll have your news coming up.
Speaker 4: That's all straight ahead on Bloomberg day Break Asia, the
Speaker 4: business news you need to start your day, and just
Speaker 4: one fifteen minute podcast available on Apple, Spotify, the Bloomberg
Speaker 4: Business App, and everywhere you get your podcasts.
Speaker 1: Good morning, I'm Doug Prisner and I'm Brian Curtis. Here
Speaker 1: are the stories we're following today.
Speaker 5: Chair J.
Speaker 1: Powell will deliver the FED semi Annual Monetary Policy Report
Speaker 1: to the House tomorrow. Bloomberg's Michael McKee has a preview.
Speaker 6: In the House, the Fed chairman will have the opportunity
Speaker 6: to clarify what some feel was a confusing message on
Speaker 6: the path for interest rates. What would lead central bankers
Speaker 6: to raise rates again something their own forecasts suggests will happen.
Speaker 6: Does inflation have to rise, does unemployment or does it
Speaker 6: just have to remain flat? What is the ultimate end rate?
Speaker 6: And how soon after that might they begin the rate
Speaker 6: cuts they foresee for twenty twenty four. There will also
Speaker 6: be questions about the impact of March's bank failures and
Speaker 6: on possible regulatory changes for the industry. Michael McKee, Bloomberg Daybreak.
Speaker 1: Asia Powell will also testify before the US Senate the
Speaker 1: following day.
Speaker 6: On Thursday, after.
Speaker 2: The bell, we heard from FedEx. The company gave a
Speaker 2: profit outlook for twenty twenty four below analyst estimates. FedEx
Speaker 2: has been dealing with a drop in packaged demand, and
Speaker 2: that's kind of a reversal from two years of surging
Speaker 2: demand from online shopping during the pandemic. We heard earlier
Speaker 2: from Bloomberg's Lee Cascou.
Speaker 7: There's a lot of uncertainty out there. You know, there's
Speaker 7: still a risk of a US recession. There's still we
Speaker 7: don't really know what's going on with China. You know,
Speaker 7: are they going to increase stimulus. Is that going to
Speaker 7: you know, help that economy. Cutex is pretty big in China,
Speaker 7: so you know, that's been a kind of a drag
Speaker 7: on their results, kind of the slow reopening of China
Speaker 7: in the related Asian market.
Speaker 2: That is Bloomberg's League class cow. By the way, FedEx
Speaker 2: also reported for the fourth quarter revenue of twenty one
Speaker 2: point nine billion, missing the mark the street was looking
Speaker 2: for twenty two point seven billion. FedEx will try to
Speaker 2: continue and improve margins with its accelerated cost cutting plan
Speaker 2: that was announced back in December. The company is hoping
Speaker 2: to save about four billion dollars by fiscal twenty twenty
Speaker 2: five and shares in FedEx right now the ticker fd
Speaker 2: I see the stock down about two percent of the
Speaker 2: late US trading.
Speaker 1: Brian Rivian has agreed to incorporate Tesla's electric vehicle charging
Speaker 1: ports into its existing EV models. We're hearing that the
Speaker 1: new agreement will give Rivian drivers access to more than
Speaker 1: twelve thousand Tesla superchargers right across the United States and
Speaker 1: Canada beginning from next year. More from Bloomberg's Ed Ludlow.
Speaker 8: And it was really interesting because it's probably a bitter
Speaker 8: pill for Rivian to swallow. You know, they wanted to
Speaker 8: be their own person, their own electric vehicle startup. They're
Speaker 8: actually building out their own CCS charging network, which they
Speaker 8: say they're committed to. But the news is that from
Speaker 8: next year, Rivian owners can use the Tesla charging network
Speaker 8: with an adaptor, and then from twenty twenty five they'll
Speaker 8: start building their vehicles modified to reflect that Tesla standard.
Speaker 1: Rivian's announcement follows similar moves by Ford and General Motors.
Speaker 1: The availability and reliability of charging infrastructure is seen as
Speaker 1: a critical factor for broader EV adoption. Standard could give
Speaker 1: consumers greater confidence as they consider a plug in purchase.
Speaker 1: Tesla's charging network has a reputation for reliability that ranks
Speaker 1: the highest in a recent jd Power survey of EV drivers,
Speaker 1: and as mentioned, Tesla stock was up more than five
Speaker 1: percent today and Rivian stock was up five and a
Speaker 1: half percent well.
Speaker 2: Speaking of Tesla, talks between the company and the Government
Speaker 2: of India on a new EV plant may gain momentum.
Speaker 2: Prime Minister Narenvvermodi is visiting the US and we hear
Speaker 2: an important meeting maybe on the agenda this evening here
Speaker 2: in New York. We have more from Bloomberg's Tom Busby.
Speaker 5: Mody slated to meet with Tesla's CEO Elon Musk as
Speaker 5: India tries to lure the automaker to produce its electric
Speaker 5: cars there. This meeting, which could also include upwards of
Speaker 5: two dozen high profile participants, comes after Tesla and India
Speaker 5: revived talks to build an assembly plant there in May,
Speaker 5: following a year long standoff. Asia's third largest economy now
Speaker 5: trying to position itself as an alternate destination for Teesch
Speaker 5: and other companies that want to limit their exposure to
Speaker 5: China or at least diversify their sourcing of autoparts and production.
Speaker 5: Tom buzzby Bloomberg day Break Asia.
Speaker 1: Ali Baba shares fell after it announced an unexpected shakeup
Speaker 1: at the top. Bloomberg's Yvon Mann has more from Hong Kong.
Speaker 9: Ali Baba's US traded shares fell four and a half
Speaker 9: percent in New York. The company's surprise investors with this move,
Speaker 9: Eddie Wu and Joseph Say will replace Daniel Jong as
Speaker 9: CEO and executive chairman, respectively. Both Wu and Hi are
Speaker 9: longtime confidants of co founder Jack ma. John's unexpected departure
Speaker 9: comes after Ali Baba announced a six way restructuring. He
Speaker 9: will still remain as the head of the cloud business
Speaker 9: to potentially sharpen opportunities in AI. Ali Baba hopes a
Speaker 9: Newbury shuffle will help guide the company through a tough
Speaker 9: restructuring in Hong Kong. I'm yvon Mann Bloomberg Day Break Asia.
Speaker 1: It's quite interesting that Ali Baba traded down so much
Speaker 1: more in the New York session that it did in
Speaker 1: Hong Kong yesterday. This news was out early in the
Speaker 1: day yesterday and Ali Baba was only down one and
Speaker 1: a half percent. But I suppose when you look at
Speaker 1: this story, Doug, it just any sort of trouble at
Speaker 1: the top, or any sort of big moves at the
Speaker 1: top will unnerve some investors. And this is still a
Speaker 1: complicated process of separating this company into six different parts.
Speaker 2: Yeah, and we were talking about the fact that Jack
Speaker 2: May is still involved maybe in making these decisions or
Speaker 2: helping to guide the company going forward. Kind of underscores
Speaker 2: the fact that he remains the spiritual leader of BABA.
Speaker 2: And I'm wondering, Brian, given the price action that we
Speaker 2: saw in New York and the ADRs, whether some of
Speaker 2: this has to do with a bigger macro story in China.
Speaker 2: The disappointment we were talking about earlier with the cut
Speaker 2: in the five year loan prime rate by only ten
Speaker 2: basis points, A lot of economists were looking for something
Speaker 2: maybe in the neighborhood of fifteen doesn't sound like a
Speaker 2: big difference, but I'm thinking about the psycho logical impact
Speaker 2: and the message that consumers may be getting when they
Speaker 2: get news like this.
Speaker 1: Yeah, I think that's I think that's an accurate comment.
Speaker 1: In fact, it's something that we heard from you. Remember
Speaker 1: our old colleague vasern Lang, who used to work at
Speaker 1: Bloomberg Intelligence now as a managing director at UBP, and
Speaker 1: he said, basically, in terms of looking at Ali Baba,
Speaker 1: it's such a China proxy that is really dragged down
Speaker 1: by the geopolitics and by China's economy. Never mind you
Speaker 1: some of this restructuring. What's interesting is you have two
Speaker 1: very cool stories of corporates getting changed here, one from
Speaker 1: the inside out, and the other from the outside in.
Speaker 1: I'm speaking first of Ali Baba, which we've just talked about,
Speaker 1: and the other Perelli, and that's a move that was
Speaker 1: really prompted by the Italian government.
Speaker 2: Yeah, that is a very interesting story. But to get
Speaker 2: back to Boba very quickly here, I think it's also
Speaker 2: fair to point out that the company has been facing
Speaker 2: increasing competition. I'm thinking of Pindwo Duo as one example, right,
Speaker 2: and I think that's part of the struggle here for
Speaker 2: the company to get back on track in the face
Speaker 2: of a very very different landscape than when Baba first
Speaker 2: showed up however, many years ago.
Speaker 1: And that's the way it should be. I mean, there
Speaker 1: should be a lot of competition, and I think this
Speaker 1: move to separate into six parts will allow each company
Speaker 1: to try to become nimble and the best performer in
Speaker 1: the respective area. And Daniel Jong, the existing CEO who
Speaker 1: has had his position change, is not leaving. He's going
Speaker 1: to head up the cloud division, as we talked about earlier,
Speaker 1: and that might be the most important in that it
Speaker 1: will embrace AI. So there's a lot coming up on
Speaker 1: this story. Now it's time for Global News. The search
Speaker 1: continues for the missing submersible, and Dan Schwartzman has more
Speaker 1: from the New York newsroom.
Speaker 3: Dan, Yeah, it's like a bad movie, to say the
Speaker 3: least Brian. They've now shifted underwater with that search. As
Speaker 3: air efforts did not find the craft, which has five
Speaker 3: passengers on board. As say that the crew has around
Speaker 3: forty hours of oxygen left. That was pretty much as
Speaker 3: of earlier this afternoon, based on the design of the craft,
Speaker 3: which is supposed to have an oxygen supply of ninety
Speaker 3: six hours in case of an emergency. The New York
Speaker 3: Times saying that passengers pay a quarter of a million
Speaker 3: dollars to Ocean Gate expeditions to go down to the
Speaker 3: wreck aboard the diving vessel called Titan. US Coast Guard
Speaker 3: were Admiral John Mayer says teams are using everything available
Speaker 3: in this search.
Speaker 10: Our crews in the Coast Guard and partners across both
Speaker 10: the US government and within Canada and the private sector
Speaker 10: have been working around the clock to bring all capabilities
Speaker 10: that we have to bear on finding the submersibon locating
Speaker 10: the people.
Speaker 3: The search area is the size of Connecticut. President Biden's
Speaker 3: son Hunter will plead guilty to two misdemeanor tax crimes.
Speaker 3: Biden will also enter into an agreement with prosecutors to
Speaker 3: avoid charges of possessing a firearm while addicted to an
Speaker 3: illegal drug. The deal comes on the heels of a
Speaker 3: five year investigation, will likely with Hunter Biden avoiding jail time.
Speaker 3: Biden is expected to participate in a federal diversion program,
Speaker 3: which could lead to the weapons charges being dropped if
Speaker 3: he complies with certain conditions over a specific time period.
Speaker 3: Republican Senator Lindsay Graham questions the charges.
Speaker 11: Sorry, he's had problems.
Speaker 10: You know, I don't wish that own any family, But
Speaker 10: this has taken over four years, and to wind up
Speaker 10: with tax evation and a gun charge, there'll be a
Speaker 10: lot of questions.
Speaker 3: Graham was speaking in South Carolina. A non bailable arrest
Speaker 3: warrant has been issued against cricket star turned former Prime
Speaker 3: Minister of Pakistan Imran Khan, an anti terrorist cord in Lahore,
Speaker 3: giving the order at the prosecutor's request as con in
Speaker 3: some of his aides are allegedly linked to violence in
Speaker 3: the country last month. Protests broke out on May ninth
Speaker 3: after Cohn was briefly arrested on corruption allegations. Cohn has
Speaker 3: faced more than one hundred cases against him since being
Speaker 3: ousted from power last year, although he says they are
Speaker 3: all politically motivated. More than a week after the collapse
Speaker 3: of a section of Highway I ninety five in Philadelphia,
Speaker 3: temporary of lanes will be opening this weekend, Pennsylvania Governor
Speaker 3: Josh Shapiro saying permanent repairs were to follow after the
Speaker 3: June eleventh collapse due to a tractor trailer carrying gasoline
Speaker 3: flipping over an off ramp, leading to a fire that
Speaker 3: brought down the section of highway. More than one hundred
Speaker 3: and fifty thousand vehicles, including over fourteen thousand trucks, use
Speaker 3: that portion of I ninety five on a daily basis,
Speaker 3: Governor Shapiro, with details.
Speaker 12: And dot's already working on that.
Speaker 3: We're going to have three lanes nor A three lanes south.
Speaker 3: Traffic's going to be flowing while while that's happening, we'll
Speaker 3: be rebuilding the bridge from the outside in. There'll be
Speaker 3: no disruption to traffic.
Speaker 5: There'll always be six lanes moving during that process.
Speaker 3: Global News twenty fours a day, power by more than
Speaker 3: twenty seven hundred journalists and analysts in more than one
Speaker 3: hundred and twenty countries. I'm Dan Schwartzman. This is Bloomberg.
Speaker 1: I'm Brian Curtis in Hong Kong alongside Rashad Salamat here
Speaker 1: in our studios. And Catherine Kaminski joins US chief research
Speaker 1: strategist and portfolio manager at Alpha Simplex Group on with
Speaker 1: us from Brookline, Massachusetts. Well, Catherine, you probably noticed that
Speaker 1: Doug and I got through our chat without even talking
Speaker 1: about the FED for a moment, which I can take
Speaker 1: as progress. It's nice to set the macroside a little bit,
Speaker 1: of course, it's one of our top stories, and the
Speaker 1: chair will be speaking. Will he toughen up his language?
Speaker 1: Is that the sense you're getting?
Speaker 11: I think so.
Speaker 13: I mean, what's been interesting to us is that we've
Speaker 13: can continue to have short signals and fixed income and
Speaker 13: it feels sometimes like I'm the only one at the
Speaker 13: table saying that. And what it means is that I
Speaker 13: do really think there's going to be possibly one to
Speaker 13: two more hikes this year because let's just be honest,
Speaker 13: inflation is lower, but it's not low, so that's going
Speaker 13: to take some effort. On their point, they probably want
Speaker 13: to set expectations, so people don't get too optimistic.
Speaker 1: I almost think that the market has kind of moved
Speaker 1: beyond it in a sense that the market just seems
Speaker 1: investors just don't seem to be that concerned whether you
Speaker 1: get another one or two rate hikes, have already had
Speaker 1: so many to get to five percentage points.
Speaker 13: I'd agree, And I think the main focus has really
Speaker 13: been just how much the equity markets have been up,
Speaker 13: and once we started to see that there was a
Speaker 13: potential for a pause, there's just been this fervor that
Speaker 13: people have just been not wanting to miss the boat,
Speaker 13: you know, sort of a foamo trade that's sort of
Speaker 13: been very strong for the last three weeks. So it
Speaker 13: seems as if they're kind of forgetting about the FED
Speaker 13: for a little bit.
Speaker 11: But that might change tomorrow, depends on what he says.
Speaker 12: Well, Captain, it's got lots going to depend on what
Speaker 12: earnings are looking like, and some of called an earnings recession,
Speaker 12: and we've still got this amazing rally going on. Give
Speaker 12: us a sense of what is going on there.
Speaker 13: Well, what's interesting to me is this rally is massive,
Speaker 13: and what's even stranger what you were just talking about
Speaker 13: with what's going on in China is that it's not
Speaker 13: a consistent rally. It's particularly definitely in the AI sector.
Speaker 13: It's more us than in other areas across the globe.
Speaker 13: And I think the thing that's been the most interesting
Speaker 13: is I think a lot of people are surprised at how.
Speaker 11: Strong the rally's been.
Speaker 13: I mean, let's just take an example, the nastas up
Speaker 13: almost ten percent in the last two and a half weeks.
Speaker 13: I mean that's a lot. And so I think that's
Speaker 13: what's really been surprising to me. And I think people
Speaker 13: today showed that example, they're worried about taking profit. They're
Speaker 13: thinking about will this keep going or is this just fervor?
Speaker 1: Yeah, you know. About a month ago, I noted that
Speaker 1: one of the biggest bears on Wall Street, Savita Supermanian
Speaker 1: at Bank of America, had turned positive, had turned bullish,
Speaker 1: and she said she expected the equal weight part of
Speaker 1: the S and P to rally and to take up
Speaker 1: the slack, and that the megacaps MC go sideways or
Speaker 1: they might drift around a little bit. And this is
Speaker 1: something we've actually seen happen. Now you can say it's
Speaker 1: not a trend yet, it's just a move. Maybe it's
Speaker 1: a relief rally, but the cyclicals and the industrial or
Speaker 1: the industrials and the material and the transports have rallied
Speaker 1: seven to ten percent over the past month, and that
Speaker 1: has to be good to the bulls as saying, look,
Speaker 1: the breadth is coming, do you buy it?
Speaker 13: I would agree that I would agree a little bit
Speaker 13: as well, because we've tended to be a little more
Speaker 13: bearish as well, and you've really seen one of the
Speaker 13: few things that were short signals was the Russell, and
Speaker 13: the Russell has definitely turned around as well.
Speaker 11: And so I'd say that.
Speaker 13: General optimism has spread from a simple tech story to
Speaker 13: a things might be okay and that there may be
Speaker 13: opportunities if things are on the right path going forward.
Speaker 13: I think it's a little tricky with how strong it's been.
Speaker 13: That's generally the sentiment I've heard from others.
Speaker 12: What is the equity market telling us about the economy,
Speaker 12: And on top of that, how I mean it does
Speaker 12: seem it also depends where you look on the on
Speaker 12: the yield curve what the bond market is saying, because
Speaker 12: that different stories coming out there.
Speaker 13: I would agree, and I mean I think we tend
Speaker 13: to kind of we were, you know, I was thinking
Speaker 13: about this today. It feels a little bit like the
Speaker 13: bond market is in somewhat of a disconnect. And it's
Speaker 13: tricky because you're also seeing a lot of rebalancing, and
Speaker 13: you're seeing people moving into money market funds, for example,
Speaker 13: because they're interested in higher yield, but yet at the
Speaker 13: same time they're buying fixed income with potential signal for
Speaker 13: rate hikes later this year. We tend to think that
Speaker 13: the yield curve is not really pricing in, so there's
Speaker 13: a disconnect between what those higher rates might be for
Speaker 13: the curve and where the curve is today.
Speaker 12: I just sort of get a sense of, you know,
Speaker 12: with equity markets in the US doing so well, and
Speaker 12: you know, you're looking at a Nasdaq one hundred up
Speaker 12: about thirty seven percent so far this year, you've got
Speaker 12: to say to yourself, hang on, there's got to be
Speaker 12: a gut check, that's got to be a down draft,
Speaker 12: you know, and then maybe I can buy on the
Speaker 12: dip later on. But you know, how did that make
Speaker 12: you look at em and what part of them, if anywhere?
Speaker 13: Well, this is definitely some of the divergence we've seen
Speaker 13: from a technical perspective.
Speaker 11: You've seen massive rallies.
Speaker 13: In Japan, but you've seen em lagging to some degree,
Speaker 13: and particularly China.
Speaker 11: And this really goes with the narrative.
Speaker 13: That certain economies are just moving in very different directions
Speaker 13: more than we've seen in recent periods. And I think
Speaker 13: those signals have been moderate. But you know, nowhere in
Speaker 13: the same.
Speaker 11: Ballpark is what you've seen in Japan or tech in
Speaker 11: the US.
Speaker 13: So that's an interesting you know, cross you cross geographical
Speaker 13: opportunity sets, and so it's kind of an interesting time
Speaker 13: to be an equity investor in that sense.
Speaker 1: I'm kind of sensing though that you're a bond girl
Speaker 1: or a bond woman perhaps is more proper in that
Speaker 1: some of the notes that you've got here about shorting
Speaker 1: fixed income, it seems like you're still into that that
Speaker 1: you see yields moving up and so there's still some
Speaker 1: money to be made shorting some of these some of
Speaker 1: these bonds.
Speaker 13: Yeah, we've seen short signals across the board and fixed income,
Speaker 13: and we tend to be the only person kind of
Speaker 13: pointing out if inflation is sticky, it's.
Speaker 11: Going to be difficult for long term cash flows.
Speaker 13: And I think most people have this disconnect where they
Speaker 13: just say, well, hey, rates are higher, who cares? And
Speaker 13: I think for us, who are much more in a
Speaker 13: frequency that's a shorter term frequency, we're thinking higher rates
Speaker 13: negative MPV.
Speaker 11: This is an interesting opportunity for a potential.
Speaker 13: Steepener, and you might have some more interesting opportunities as
Speaker 13: a short.
Speaker 11: Bond trader like you did last year.
Speaker 13: I mean, let's just be honest, that was the best
Speaker 13: trade last year, and I think it still has some
Speaker 13: room to run.
Speaker 1: So short the short end of sovereigns and also credit.
Speaker 11: So credit's a little trickier.
Speaker 13: We are not as exposed to credit just because we
Speaker 13: primarily focus in the futures markets. I think credit has
Speaker 13: been moving a little bit disjointed with what we're seeing.
Speaker 13: I think that is not something that I would have
Speaker 13: a comment on. But I filiam seeing short positioning on
Speaker 13: the long end of the curve as well, so I
Speaker 13: think that's where there could be something interesting if we
Speaker 13: have a strong steepener.
Speaker 1: This is Bloomberg Daybreak Asia, your morning brief on the
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Speaker 9: How can you do