WEBVTT - Powell Says Fed Should do More, Adani Crisis Continues

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<v Speaker 1>This is Bloomberg Daybreak Asia for this Wednesday, February eighth

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<v Speaker 1>in Hong Kong, Tuesday February seven in New York, and

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<v Speaker 1>coming up today, US equities rally after fetchare J. Powell's.

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<v Speaker 1>The remarks were less aggressive than feared by traders. Pallas's

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<v Speaker 1>interest rates need to keep rising if a strong labor

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<v Speaker 1>market persists, and Zoom will cut fifteen percent of its

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<v Speaker 1>workers as the service adapts to slower growth. The US

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<v Speaker 1>has China, refuses a call to discuss the balloon bounding

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<v Speaker 1>Biden to address China and the US economy and state

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<v Speaker 1>of the Union. Turkeeper claims emergency powers and the wake

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<v Speaker 1>of the twin quakes. I'm at Baxter with Global News.

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<v Speaker 1>The liv Golf series reveals some stunning financial news. Dan

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<v Speaker 1>Schwartz been I'll have that story more coming up in

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<v Speaker 1>Bloomberg Sports. That's all Straight Ahead on Bloomberg Daybreak Asia

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<v Speaker 1>on Bloomberg eleven and three on New York, Bloomberg Washington,

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<v Speaker 1>d C, Bloomberg one O six one, Boston, Bloomberg nine sixties,

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<v Speaker 1>sent frances Go Syrius Exam one nineteen and around the

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<v Speaker 1>world on Bloomberg Radio dot Com and via the Bloomberg

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<v Speaker 1>Business app. Good morning, I'm Doug Prisoner and I'm Brian Curtiz.

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<v Speaker 1>Here are the stories we're following today. The market seemingly

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<v Speaker 1>a little bit out of step with exactly what j

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<v Speaker 1>Pali said. He said that additional rate hikes will be

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<v Speaker 1>needed to bring down inflation, and he said the Fed's

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<v Speaker 1>key rate, the terminal rate, may need to peak above

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<v Speaker 1>a level previously expected. Here's Pal speaking with David Rubinstein

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<v Speaker 1>at the Economic Club of Washington. The labor market report

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<v Speaker 1>for January, it kind of shows you why we think

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<v Speaker 1>that this will be a process that takes a significant

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<v Speaker 1>period of time. The labor markets extraordinarily strong. If we

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<v Speaker 1>continue to get, for example, strong labor market reports or

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<v Speaker 1>higher higher inflation reports, it may well be the case

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<v Speaker 1>that we have to do more in race Hight likes

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<v Speaker 1>more than this price. Then. Pal also said that we

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<v Speaker 1>are seeing the early stages of disinflation. However, he acknowledged

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<v Speaker 1>he's probably going to be a bumpy ride ahead. Pal

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<v Speaker 1>said he will likely take until next year for the

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<v Speaker 1>FED to reach its two percent inflation target. And before

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<v Speaker 1>the Powell interview, the head of the Minneapolis Fed, Neil Cash,

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<v Speaker 1>Cary was saying policymakers need to keep hiking rates. Here's

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<v Speaker 1>cash Cary speaking on CNBC two. Were surprised by the

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<v Speaker 1>big jobs number. It tells me that so far we're

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<v Speaker 1>not seeing much of an imprint of our tightening to

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<v Speaker 1>date on the labor market. There's some evidence that it's

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<v Speaker 1>having some effect, but it's pretty muted so far. So

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<v Speaker 1>I haven't seen anything yet to lower my rate path.

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<v Speaker 1>Right now, I'm still at around five point four percent.

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<v Speaker 1>If I had to pick a number today, I'll do

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<v Speaker 1>where I was in December, alright, five point four and

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<v Speaker 1>cash Cary went on to say no one should overreact

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<v Speaker 1>to any singular report. He also said the underlying strength

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<v Speaker 1>of the services sector he is still very robust. We

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<v Speaker 1>were talking about the I s M Services Index coming

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<v Speaker 1>in way above estimates US Friday. Cash Cary thinks that's

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<v Speaker 1>where many FED officials are now focusing their attention. Brian

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<v Speaker 1>to Corporate News, a company that benefited from pandemic air

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<v Speaker 1>lockdowns is now slashing jobs. That story from Bloombridge Tom Busby.

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<v Speaker 1>With so many more workers back at the office, there's

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<v Speaker 1>not as much demand for video conferencing calls and now

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<v Speaker 1>Zoom Video Communication says it's cutting thirteen hundred jobs that's

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<v Speaker 1>about fift of its workforce because of slowing growth, and

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<v Speaker 1>CEO Eric Yuan, who said in a blog post that

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<v Speaker 1>he's accountable for the company's recent struggles, says they'll take

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<v Speaker 1>a pay cut and forego his annual bonus. Shares of

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<v Speaker 1>Zoom rose nearly ten percent in trading on Tuesday. Tom

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<v Speaker 1>Busby Bloomberg Daybreak Asia. We are told at Meta Platforms

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<v Speaker 1>is asking many of its managers and directors to transition

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<v Speaker 1>to jobs as individual contributors or leave the company. We

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<v Speaker 1>have more from Bloomberg's Charlie Pellett. Those sources say the

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<v Speaker 1>process is known internally as a flattening. Higher level managers

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<v Speaker 1>are sharing the directive with their subordinates incoming weeks, separate

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<v Speaker 1>from the company's regular performance reviews that are currently underway. Meata,

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<v Speaker 1>which owns Facebook and Instagram, fired thirtent of its workforce

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<v Speaker 1>in November during its first major layoff, and sources say

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<v Speaker 1>in the months since, staff of faced intense anxiety about

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<v Speaker 1>the potential for future cuts. In New York, Charlie Pellett

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<v Speaker 1>Bloomberg Daybreak Asia, Soft Bank posted a net loss of

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<v Speaker 1>seven eighty three point four billion yen or five point

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<v Speaker 1>nine billion dollars for the December quarter. Analysts had been

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<v Speaker 1>projecting profit of more than two hundred five billion yen

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<v Speaker 1>more from Bloomberg's David and Glaze. The key factor was

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<v Speaker 1>the Vision Fund. It has reported losses for four straight quarters.

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<v Speaker 1>The fund lost six hundred sixty billion yen on declining

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<v Speaker 1>valuations for companies in its investment portfolio. Now, to make

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<v Speaker 1>matters worse, the founder Masayoshi saw On skipped the earnings

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<v Speaker 1>call for the first time one record first off bank.

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<v Speaker 1>One of the keys to reigniting investment activity lies in

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<v Speaker 1>a successful I p O for ARM, that's the chip

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<v Speaker 1>design firm Sawn acquired back in. Saan says he wants

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<v Speaker 1>to focus on that task and that's why he'd skipped

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<v Speaker 1>the call. Analysts are skeptical. Saan says he still thinks

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<v Speaker 1>ARM can become the largest I p O by a

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<v Speaker 1>chip company ever. In Hong Kong. I'm David and Glass

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<v Speaker 1>bloom brig Day Brick Asia coming up in a few moments.

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<v Speaker 1>We will be chatting with Kin Pung, who is investment

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<v Speaker 1>strategies that city Private Bank Asia Pacific with us right

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<v Speaker 1>here in our studios in Hong Kong, Doug. I like

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<v Speaker 1>that data point you brought out about the earnings that

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<v Speaker 1>would seem to be a little bit positive for the bulls.

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<v Speaker 1>Here's another interesting read that if you look at inflation

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<v Speaker 1>year on year, it really doesn't tell you all that

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<v Speaker 1>much because you know who cares really what was happening

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<v Speaker 1>last year. The rolling three month core CPI is ump

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<v Speaker 1>about three at an annualized rate, and that's almost a two.

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<v Speaker 1>And remember what cash Cary had to say the lag

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<v Speaker 1>effect here on the FED rate hikes that are already

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<v Speaker 1>in the pipeline. A lot of this has not really

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<v Speaker 1>impacted the labor market yet. Information tech, I know we've

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<v Speaker 1>talked about it. It's been very hard hit. I think

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<v Speaker 1>that the total number of job cuts in the information

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<v Speaker 1>tech space since the beginning of the year right now

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<v Speaker 1>is probably just under around seventy thousand. There will be

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<v Speaker 1>more job losses, guarantee it. And we just cannot know,

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<v Speaker 1>um what the future holds in terms of the data.

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<v Speaker 1>And it was interesting to hear Pal talking about how

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<v Speaker 1>he's basically responding to the data and we all should

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<v Speaker 1>be doing that and not not placed too much hope

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<v Speaker 1>in what we expect the future holds all right, it

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<v Speaker 1>is time now for global news. The Pentagon says China

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<v Speaker 1>has cut off communication regarding the balloon downing by US

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<v Speaker 1>forces at Baxter has global news in the nine sixty

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<v Speaker 1>News from San Francisco, and yeah, that's exactly right, Brian.

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<v Speaker 1>The Pentagon saying that try has rebuffed all efforts by

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<v Speaker 1>Defense Secretary Lloyd Austin, especially when he tried to set

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<v Speaker 1>up a call with Defence Minister Wave Fun. The Pentagon

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<v Speaker 1>says the call was made right after the shootdown, but

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<v Speaker 1>in a statement now, it says the PCR has declined

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<v Speaker 1>any requests. The US says it wants to maintain open

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<v Speaker 1>lines of communication in his State of the Union addressed,

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<v Speaker 1>and I President Joe Biden will of course have to

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<v Speaker 1>address foreign relations, the war in Ukraine, which coincidentally broke

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<v Speaker 1>out right before last year's speech, and then the international

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<v Speaker 1>balloon incident with China. Republican Congressman Steve Sleey says that

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<v Speaker 1>Republicans are watching with a very critical eye, saying the

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<v Speaker 1>Bid administration acted much too late on the balloon. It

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<v Speaker 1>was still flying on its path, so it was getting

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<v Speaker 1>some kind of data from somewhere to nowhere to go?

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<v Speaker 1>Are you telling me it wasn't also sending information back

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<v Speaker 1>during that path? Should have never been allowed to complete

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<v Speaker 1>its mission. It's never been allowed to start its mission.

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<v Speaker 1>The Biden administration's past responses that it couldn't be shot

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<v Speaker 1>down over land. We'll watched for tonight. He's also expected

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<v Speaker 1>to to call for a minimum tax on billionaires and

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<v Speaker 1>to quadruple the levy on stock buybacks. He's intending to

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<v Speaker 1>walk the line addressing public concerns in the US and

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<v Speaker 1>trying to install a feeling of optimism about the future.

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<v Speaker 1>Congresswoman Deborah Ross, Democrat from North Carolina, on Bloomberg's Balance

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<v Speaker 1>of Power Today, says the address will show the president

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<v Speaker 1>is a dynamic fighter. We were in the middle of

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<v Speaker 1>a global pandemic. We had an insurrection at the Capitol.

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<v Speaker 1>I mean, when has that happened? Both of those things

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<v Speaker 1>at the same time. But despite that, the Biden administration

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<v Speaker 1>really fought back to get people back to work, back

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<v Speaker 1>to school. She says, accomplishments and plans for the future.

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<v Speaker 1>A Bloomberg coverage begins at eight thirty Wall Street Time

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<v Speaker 1>on all Bloomberg platforms. We will have it for you,

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<v Speaker 1>of course. On Daybreak Asia sounds of frantic searchers looking

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<v Speaker 1>for possible survivors in the quake in Turkey. The latest

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<v Speaker 1>death toll count now is over six thousand, with more

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<v Speaker 1>than eleven thousand buildings damaged, with people still trapped in

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<v Speaker 1>freezing temperatures. Thirteen point four million people live in the

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<v Speaker 1>areas affected by the quakes, and Turkey has declared a

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<v Speaker 1>three month state of emergency rules and although not disclosing

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<v Speaker 1>any specific threat for the super Bowl, Homeland Security Secretary

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<v Speaker 1>Alejandro Majorca says they prepare for and an imaginable scenario.

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<v Speaker 1>We have our personnel from our countering weapons of mass

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<v Speaker 1>destruction office, chemical and biological threats have depleted. The individuals

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<v Speaker 1>have deployed uh their equipment to make sure that the

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<v Speaker 1>air is save in secure. He says, no specific credible

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<v Speaker 1>threat against the super Bowl, but they need to be

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<v Speaker 1>prepared in every way. Global News powered by more than

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<v Speaker 1>journalists and analysts and over one d twenty countries in

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<v Speaker 1>San Francisco, I'm d Baxter and this is Bloomberg. This

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<v Speaker 1>is Bloomberg Break Asia and Brian Curtis along with Rashad

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<v Speaker 1>Salama and our guest is Kinpung, investment strategist at City

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<v Speaker 1>Private Bank Asia Pacific. So can for the markets, the

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<v Speaker 1>FED was your adversary last year. This year, it's not

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<v Speaker 1>except that premise or rejected. I think that's acceptable. Um.

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<v Speaker 1>We've seen Chairman Powell UM do some flip flops over

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<v Speaker 1>the years. Right. Remember you know quantitative tightening was on autopilot.

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<v Speaker 1>Remember inflation was transitory, and so so this is UM

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<v Speaker 1>an opportunity for him to do so again. And I

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<v Speaker 1>think by March the level of CPI will be below

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<v Speaker 1>that of the fit funds, right, and that I think

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<v Speaker 1>opens up a little window. UM. As we go through

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<v Speaker 1>the second quarter, the level of his CPI will become

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<v Speaker 1>significantly below that of the fit funds rate. So I

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<v Speaker 1>think now that doesn't necessarily encourage him to cut rates,

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<v Speaker 1>but I think it definitely opens up the room to

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<v Speaker 1>pause again. Absolutely, And you know, you look at that

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<v Speaker 1>job's reports to really throw the spanner in the works

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<v Speaker 1>and just showing the ser strength of the US econing,

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<v Speaker 1>which he acknowledged in that interview that he conducted that Tuesday.

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<v Speaker 1>And the point being if we do get let's say

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<v Speaker 1>we went fifty basis points next in March. We're not

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<v Speaker 1>gonna feel that for a year because the transmission mechanisms

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<v Speaker 1>and have got such a lag between the tight monetary

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<v Speaker 1>policy and what we're seeing. That's right, Well, if he

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<v Speaker 1>will fifty, I think we'll feel feel pretty immediately. Um

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<v Speaker 1>But but I think I think, yeah, you're right that

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<v Speaker 1>the type the amount of tiding that was done last year,

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<v Speaker 1>it's not fully reflected in um in markets, in the

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<v Speaker 1>econ economic data just yet. And also with regards to

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<v Speaker 1>that payrolls reports, I think what the pandemic has done

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<v Speaker 1>is to make a lot of these seasonal adjustments obsolete, right.

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<v Speaker 1>Um So, so in the last month in January there

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<v Speaker 1>was actually one have million job losses, but seasonal just

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<v Speaker 1>been added three million, and so you know we're probably

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<v Speaker 1>going to see some payback of that in February when

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<v Speaker 1>season adjustment will subtract a million, and this is probably

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<v Speaker 1>gonna be fewer unadjusted job gains. So in any case,

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<v Speaker 1>I feel the five seventeen thousand was was was kind

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<v Speaker 1>of absurdly strong and we shouldn't be taking that at

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<v Speaker 1>its um you know, phase value. So you're actually pretty bullish,

0:12:22.040 --> 0:12:24.480
<v Speaker 1>you like the China recovery. You like a bear market

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<v Speaker 1>in the dollar to continue or to push forward, and

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<v Speaker 1>you like investment grade bonds. Um, let me put a

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<v Speaker 1>data point out there that Doug mentioned, which is kind

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<v Speaker 1>of interesting that more than half of the companies in

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<v Speaker 1>the SMP five reported and earnings have dropped. They've dropped

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<v Speaker 1>two point eight percent though from a year earlier, and

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<v Speaker 1>that's less than the three point three percent that was

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<v Speaker 1>expected before the earning season began. It's by no means

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<v Speaker 1>great because earnings are coming down, but uh and they're

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<v Speaker 1>coming down at a time when rates are still going up.

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<v Speaker 1>But it's not the big story that we thought it

0:12:57.840 --> 0:13:04.200
<v Speaker 1>would be. Right. Um, So rewind to last October, the

0:13:04.280 --> 0:13:09.920
<v Speaker 1>consensus for fourth quarter earnings was plus four something like that.

0:13:10.000 --> 0:13:12.920
<v Speaker 1>So so basically the consensus number came down by seven

0:13:12.920 --> 0:13:18.560
<v Speaker 1>percentage points before this earning season started. And so you know, basically,

0:13:18.600 --> 0:13:21.200
<v Speaker 1>you know, before each earning season there's a few months

0:13:21.240 --> 0:13:25.920
<v Speaker 1>of downward adjustments to earning the expectations so that the

0:13:25.960 --> 0:13:28.600
<v Speaker 1>companies can actually beat by a little bit. The margin

0:13:28.679 --> 0:13:32.880
<v Speaker 1>of beats is the smallest for since the pandemics in

0:13:32.920 --> 0:13:35.920
<v Speaker 1>the initial pandemic, and uh far smaller than the average

0:13:35.960 --> 0:13:38.640
<v Speaker 1>one average beats that we've seen over the past ten

0:13:38.679 --> 0:13:41.880
<v Speaker 1>years or so. So so basically you know that there's

0:13:42.000 --> 0:13:45.040
<v Speaker 1>it's it's losing some someone, but the bears have hung

0:13:45.040 --> 0:13:46.600
<v Speaker 1>their hat on. You know, this is gonna be one

0:13:46.600 --> 0:13:48.319
<v Speaker 1>of the biggest drops in earning. You listen to Mike

0:13:48.360 --> 0:13:50.480
<v Speaker 1>Wilson and Morgan sound the biggest drop in earnings we've

0:13:50.480 --> 0:13:52.600
<v Speaker 1>ever seen and that sort of thing. That's not actually

0:13:52.679 --> 0:13:55.240
<v Speaker 1>what's happening. No, I wouldn't think it's gonna be the biggest. Uh.

0:13:55.360 --> 0:13:58.760
<v Speaker 1>We're looking like sometime percent drop um, probably not carried

0:13:58.760 --> 0:14:01.560
<v Speaker 1>over the full year um. But you know that's not

0:14:01.640 --> 0:14:07.600
<v Speaker 1>being factored into consensus expectations yet, right. Consensus expectations basically

0:14:07.600 --> 0:14:09.800
<v Speaker 1>looking for the media recovery in the first quarter, and

0:14:09.840 --> 0:14:13.200
<v Speaker 1>I think that's two optimistic still. It's about forward guidance,

0:14:13.600 --> 0:14:21.200
<v Speaker 1>and that has been really patchy in terms of positivity. Okay, okay,

0:14:21.240 --> 0:14:23.320
<v Speaker 1>let's talk a little bit about some some of the

0:14:23.400 --> 0:14:26.280
<v Speaker 1>moves out here in Asia. Interestingly, last week we had

0:14:26.280 --> 0:14:29.000
<v Speaker 1>to sell off in in some Chinese stocks. We had

0:14:29.040 --> 0:14:32.040
<v Speaker 1>the NaSTA Golden Dragon Index and also the Tech index

0:14:32.120 --> 0:14:36.440
<v Speaker 1>here in Hong Kong and basically MSCI China moving down

0:14:36.480 --> 0:14:38.840
<v Speaker 1>a little bit, so they were taking profits I suppose,

0:14:39.320 --> 0:14:42.680
<v Speaker 1>or were they expressing some fear about the reopening Ken No,

0:14:42.800 --> 0:14:44.920
<v Speaker 1>I think it's it's profit taking. I mean, you know,

0:14:45.080 --> 0:14:48.400
<v Speaker 1>prior to that little correction, we're almost six up, you

0:14:48.440 --> 0:14:51.880
<v Speaker 1>know when you're looking at MSCI China from the end

0:14:51.920 --> 0:14:54.880
<v Speaker 1>of October and so so that's that's quite quite a

0:14:54.920 --> 0:14:57.880
<v Speaker 1>lot to uh to take in. Um. I think the

0:14:57.920 --> 0:15:01.320
<v Speaker 1>recovery has just begun, right, we're seeing you know, for example,

0:15:01.360 --> 0:15:04.880
<v Speaker 1>after the Chinese New Year, the mobility indicators like road

0:15:04.920 --> 0:15:09.520
<v Speaker 1>traffic and subway ridership are back to basically pre pandemic

0:15:09.640 --> 0:15:13.680
<v Speaker 1>levels um and so so, so that momentum is still going.

0:15:13.920 --> 0:15:16.880
<v Speaker 1>And another thing that is very important is that last

0:15:16.960 --> 0:15:22.000
<v Speaker 1>year Chinese households accumulated some fifteen trillion woman buh. That's

0:15:22.040 --> 0:15:25.640
<v Speaker 1>like that's two and a half trillion US dollars worth

0:15:25.680 --> 0:15:28.640
<v Speaker 1>of new deposits. Right. Some of that money was supposed

0:15:28.680 --> 0:15:30.880
<v Speaker 1>to go to property, but then people are afraid of

0:15:30.960 --> 0:15:34.480
<v Speaker 1>incomplete projects. Some of that money came out of stocks

0:15:34.480 --> 0:15:37.040
<v Speaker 1>and bonds, and a lot of that money was meant

0:15:37.040 --> 0:15:40.000
<v Speaker 1>to be spent, but I couldn't, so all three of

0:15:40.040 --> 0:15:41.840
<v Speaker 1>those things what happened this year? Right though there will

0:15:41.880 --> 0:15:44.600
<v Speaker 1>be more spending, you've already seen some of that, um,

0:15:44.640 --> 0:15:49.040
<v Speaker 1>and I think more influence to equity markets, and so

0:15:49.120 --> 0:15:52.280
<v Speaker 1>we have not seen that yet. Again, Okay, they do

0:15:52.400 --> 0:15:56.400
<v Speaker 1>have all that money. The thing is Chinese uh consumes

0:15:56.480 --> 0:15:59.040
<v Speaker 1>our savers as well. Let's them forget that, the big

0:15:59.080 --> 0:16:01.520
<v Speaker 1>time savers. Sure, but you know the thing is you

0:16:01.560 --> 0:16:04.000
<v Speaker 1>mentioned households that you know, we've got a house. Perhaps

0:16:04.080 --> 0:16:07.080
<v Speaker 1>there's been a fundamental shift in household confidence in residential

0:16:07.120 --> 0:16:09.840
<v Speaker 1>real estate. I mean there's a declining population and then

0:16:10.040 --> 0:16:12.800
<v Speaker 1>we've got a real estate infantry with a hundred twenty

0:16:12.840 --> 0:16:15.760
<v Speaker 1>two million square meters available in the ten largest cities.

0:16:15.800 --> 0:16:18.080
<v Speaker 1>I mean, these things are good to be played out

0:16:18.160 --> 0:16:20.800
<v Speaker 1>in people's minds. They are aware of this and it

0:16:20.840 --> 0:16:24.480
<v Speaker 1>has a wealth effect. Yes, certainly so, um, those who

0:16:24.560 --> 0:16:27.480
<v Speaker 1>all have have had that a little bit hidden on

0:16:27.520 --> 0:16:30.280
<v Speaker 1>the on the price. It wasn't dramatic because there were

0:16:30.280 --> 0:16:33.520
<v Speaker 1>simply that that many transactions last year. UM. But now

0:16:33.640 --> 0:16:37.080
<v Speaker 1>these how to digest these inventories are basically convincing buyers

0:16:37.120 --> 0:16:39.040
<v Speaker 1>that they will be completed. I think that would be

0:16:39.080 --> 0:16:43.040
<v Speaker 1>a first good step. UM. Now, that's uh, developer financing

0:16:43.160 --> 0:16:47.360
<v Speaker 1>is back. I don't think that the incomplete projects is

0:16:47.360 --> 0:16:49.560
<v Speaker 1>going to be as big a problem this year. And

0:16:49.600 --> 0:16:52.360
<v Speaker 1>to be honest, you know, we thought that the real

0:16:52.520 --> 0:16:56.320
<v Speaker 1>estate sector was perhaps over capacity, you know, before the

0:16:56.320 --> 0:17:00.640
<v Speaker 1>pandemic hit um and and now that capacity has shrunk

0:17:00.680 --> 0:17:04.240
<v Speaker 1>by perhaps right. So so there there's a little bit

0:17:04.240 --> 0:17:06.800
<v Speaker 1>recovered to be done just to get back to something

0:17:06.880 --> 0:17:10.520
<v Speaker 1>that that that would have been considered normal. We talk

0:17:10.560 --> 0:17:13.680
<v Speaker 1>a lot about geopolitical tensions between the US and China.

0:17:13.760 --> 0:17:16.720
<v Speaker 1>I was looking over the trade numbers for last year

0:17:16.800 --> 0:17:21.280
<v Speaker 1>two record. Okay, it was pretty pretty astonishing, up close

0:17:21.280 --> 0:17:25.359
<v Speaker 1>to seven billion dollars in total trade between the two countries.

0:17:26.880 --> 0:17:29.359
<v Speaker 1>That's not adjusted for inflation, but but that's still a

0:17:29.400 --> 0:17:31.960
<v Speaker 1>pretty big number at a time when relations are not

0:17:32.040 --> 0:17:33.960
<v Speaker 1>all that good. Is that a good sign or does

0:17:33.960 --> 0:17:36.359
<v Speaker 1>it mean that we moved down from here? It just

0:17:36.440 --> 0:17:38.800
<v Speaker 1>means that divorces are very always difficult. Sorry, and then

0:17:38.840 --> 0:17:40.480
<v Speaker 1>it's just it's it's kind of hard to figure out

0:17:40.480 --> 0:17:43.120
<v Speaker 1>exactly which ties to keep, which ones do to sever,

0:17:43.720 --> 0:17:47.040
<v Speaker 1>um and so so I think this is a testament

0:17:47.200 --> 0:17:49.720
<v Speaker 1>that's um, well, you saw a little bit of increasing

0:17:50.160 --> 0:17:52.720
<v Speaker 1>in US exports of China and quite a bit of

0:17:52.760 --> 0:17:57.640
<v Speaker 1>increasing Chinese Chinese exports to the US. So basically that

0:17:57.720 --> 0:18:03.520
<v Speaker 1>the the exports that China would have absorbed are not

0:18:03.560 --> 0:18:06.840
<v Speaker 1>allowed to happen. And so so I think this is um,

0:18:07.600 --> 0:18:11.680
<v Speaker 1>it's not really inconsistent with about geo political situation. UM,

0:18:11.720 --> 0:18:15.440
<v Speaker 1>but I do think that um, it's a good thing.

0:18:15.600 --> 0:18:19.680
<v Speaker 1>That's this divorce, this decoupling is uh is more difficult

0:18:19.680 --> 0:18:23.560
<v Speaker 1>to achieve. Ken, what's your biggest concern that you get

0:18:23.600 --> 0:18:26.400
<v Speaker 1>from clients and tell me how do you then responded

0:18:26.440 --> 0:18:29.720
<v Speaker 1>and what is the strategy? Very very briefly, sure, So

0:18:30.000 --> 0:18:32.480
<v Speaker 1>the concern with regards to the U S is that is,

0:18:32.600 --> 0:18:35.840
<v Speaker 1>are we really getting into a recession? What if rates

0:18:35.920 --> 0:18:38.399
<v Speaker 1>have to go much higher? Um? Well, I think I

0:18:38.440 --> 0:18:44.000
<v Speaker 1>think that's that's a big, an important question. But I

0:18:44.040 --> 0:18:48.360
<v Speaker 1>think we aside from payrolls, just about every other indicator

0:18:48.640 --> 0:18:51.520
<v Speaker 1>is pointing that's the U S economy is weakening and

0:18:51.560 --> 0:18:56.640
<v Speaker 1>the later um, this recession hits, uh, it'll probably be deeper. Right.

0:18:56.680 --> 0:18:59.520
<v Speaker 1>So so so I think I think the um, uh,

0:18:59.720 --> 0:19:02.399
<v Speaker 1>you know, I think that's that's the that's that's the

0:19:02.440 --> 0:19:05.600
<v Speaker 1>first message we have is basically the FED needs to

0:19:05.640 --> 0:19:08.199
<v Speaker 1>pause and UM, and that will be positive for the

0:19:08.280 --> 0:19:11.040
<v Speaker 1>for the boom market. Final question in thirty seconds or so,

0:19:11.080 --> 0:19:13.360
<v Speaker 1>we didn't get to investment grade bonds. You like them

0:19:13.400 --> 0:19:16.879
<v Speaker 1>where and in what industry? Sure? I think this is

0:19:18.000 --> 0:19:21.960
<v Speaker 1>basically we we like the in the investment grade space

0:19:22.560 --> 0:19:27.040
<v Speaker 1>UM above above the triple beast right because in a

0:19:27.200 --> 0:19:29.560
<v Speaker 1>in a potential recession, we're likely to see more downgrades

0:19:30.040 --> 0:19:35.040
<v Speaker 1>UM and the potential for UM for short term right

0:19:35.320 --> 0:19:39.840
<v Speaker 1>three year and under yields to fall is significant, and

0:19:39.880 --> 0:19:43.639
<v Speaker 1>so we like that segment of the curve. This is

0:19:43.680 --> 0:19:46.439
<v Speaker 1>Bloomberg Daybreak Asia, your morning brief on this story is

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