WEBVTT - Traders Eye US Inflation Data, Oracle Benefits from AI

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<v Speaker 1>This is Bloomberg day Break Asia for his Tuesday June

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<v Speaker 1>thirteenth in Hong Kong, Monday June twelfth in New York

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<v Speaker 1>and coming up today.

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<v Speaker 2>Markets are way key US inflation data in front of

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<v Speaker 2>the Fed's next decision.

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<v Speaker 1>Google and Microsoft face new competition issues, and.

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<v Speaker 2>Oracle's cloud business benefits from AI demand.

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<v Speaker 3>Miami Max's upsecurity for Trump surrender tomorrow. China deny spy

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<v Speaker 3>base in Cuba, US blames Trump administration for not stopping it.

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<v Speaker 3>New York Police commissioner to resign. I'm at Baxter with

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<v Speaker 3>Global News.

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<v Speaker 4>That's all straight ahead on Bloomberg Daybreak Asia, the business

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<v Speaker 4>news you need to start your day in just one

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<v Speaker 4>fifteen minute podcast available on Apples, Spotify, the Bloomberg Business App,

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<v Speaker 4>and everywhere you get your podcasts.

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<v Speaker 1>Good morning, I'm deg Prisner and I'm Brian Curtiz. Here

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<v Speaker 1>are the stories we're following today. FED officials with their

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<v Speaker 1>eye on the key inflation data tomorrow in the United

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<v Speaker 1>States and that meeting of course.

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<v Speaker 5>This week will get the CPI.

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<v Speaker 1>Dated at eight thirty in the morning, Wall Street Time,

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<v Speaker 1>Bloomberg's Michael McKee has a preview.

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<v Speaker 6>Economists say consumer price inflation slowed in May, led lower

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<v Speaker 6>by falling energy and automobile prices. This inflation in rent

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<v Speaker 6>may finally show up, holding down the core rate. Meanwhile,

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<v Speaker 6>base effects high inflation a year ago mean a big

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<v Speaker 6>drop in overall inflation this year. At least that's the forecast.

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<v Speaker 6>If analysts are wrong, however, watch out higher than anticipated

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<v Speaker 6>inflation will change expectations for the FED policy decision due Wednesday,

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<v Speaker 6>with officials divided over whether to raise rates or make

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<v Speaker 6>no change. An inflation surprise would lead to big market moves.

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<v Speaker 6>Michael McKee, Bloomberg Daybreak Asia.

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<v Speaker 2>After the bell, we heard from Oracle. The company reported

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<v Speaker 2>fourth quarter sales rising seventeen percent. So we have a

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<v Speaker 2>top line of thirteen point eight billion dollars that is

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<v Speaker 2>one hundred million above estimates. Revenue growth was led by

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<v Speaker 2>oracles cloud applications and infrastructure businesses, and a boom in

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<v Speaker 2>generative AI may be boosting demand for its cloud technology

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<v Speaker 2>going forward. Here is Bloomberg's anarog runner.

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<v Speaker 7>AI workloads require a lot of power, a lot of

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<v Speaker 7>You could say, you know the engine and storage to

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<v Speaker 7>run those, and you really can't do that. I mean,

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<v Speaker 7>I would say only a handful of companies around the

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<v Speaker 7>world would be able to do this internally in their

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<v Speaker 7>own data center, so you really need a public cloud

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<v Speaker 7>to run that. So, whether that's you know, Microsoft, Amazon, Google,

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<v Speaker 7>and now most recently Oracle, which is really making strides

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<v Speaker 7>with their cloud product, I think all of these companies

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<v Speaker 7>will benefit as people develop more AI application.

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<v Speaker 2>That is Bloomberg's anerog Ruana Now. So far this year,

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<v Speaker 2>shares an Oracle are up more than forty two percent

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<v Speaker 2>stock right now in late US trading, Hire by three

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<v Speaker 2>point four percent ran Well.

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<v Speaker 1>The Federal Trade Commission has sued Microsoft in federal core.

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<v Speaker 1>This was in an effort to block Microsoft's big acquisition

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<v Speaker 1>sixty nine billion dollar acquisition of Activision Blizzard.

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<v Speaker 5>Bloomberg's and Kate says the story.

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<v Speaker 8>The FTC wants a transaction put on hold until the

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<v Speaker 8>agency's in house court has a chance to rule on

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<v Speaker 8>the deal, with that trial schedule to begin in August.

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<v Speaker 8>The Microsoft Activision combination faces tough antitrust scrutiny in the US,

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<v Speaker 8>and the UK ruled against the takeover in April, determining

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<v Speaker 8>that titles like Activision's Call of Duty would bolster Microsoft's

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<v Speaker 8>edge over rivals in the small but growing cloud gaming market.

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<v Speaker 8>Microsoft is appealing that decision, which is globally binding in

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<v Speaker 8>Washington and Kate's Bloomberg day Break Asia.

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<v Speaker 2>Meantime, Google is set to be hit with another round

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<v Speaker 2>of antitrust charges by officials in Europe. That story from

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<v Speaker 2>Bloomberg's tom Busby.

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<v Speaker 9>Google, already facing more than eight billion euros and fines

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<v Speaker 9>by officials in the European Union, may soon be facing

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<v Speaker 9>billions more. As early as Wednesday, a so called statement

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<v Speaker 9>of objections expected to be filed by officials there, targeting

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<v Speaker 9>Google's biggest money maker, its digital advertising unit. The new

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<v Speaker 9>charges from the European Commission, the EU's anti trust watchdogs,

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<v Speaker 9>takes aim at the alphabet unit's ad tech business model,

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<v Speaker 9>which collects user data which then allows advertisers to target

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<v Speaker 9>specific ads and to sell adspace and technology directly to advertisers.

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<v Speaker 9>Google has not responded to the Bloomberg's request for comment

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<v Speaker 9>tom buzzby Bloomberg Daybreak Asia.

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<v Speaker 1>Google did trade higher in the session today, up on

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<v Speaker 1>one point two percent, but that was slight underperformance than

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<v Speaker 1>Asdek itself put on one.

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<v Speaker 5>And a half percent.

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<v Speaker 1>Well in upcoming testimony, US Treasury Secretary Janet Yellen will

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<v Speaker 1>cast the IMF and the World Bank as important counterweights

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<v Speaker 1>to China.

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<v Speaker 5>Bloomberg's Joan Wong has that from.

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<v Speaker 10>Hong Kong, Yellen will tell the House Financial Services Committee

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<v Speaker 10>the International Monetary Fund and the World Bank reflect American

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<v Speaker 10>values and that they can counter China's influence in the

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<v Speaker 10>developing world. And the prepared remarks, Yellen says the institutions

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<v Speaker 10>provide real resources to counter non transparent, unsustainable lending. Yellen

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<v Speaker 10>will be looking to garner congressional support for US financial

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<v Speaker 10>b acting also slenders, but she's likely to be countered

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<v Speaker 10>by Republicans and the back and forth. Later today, our

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<v Speaker 10>time could get testy and Hong Kong. I'm joined Walt

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<v Speaker 10>Bloomberg day Brogasia.

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<v Speaker 1>I'm Brian Curtis along with Doug Christners. So Dog, we

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<v Speaker 1>hit the balance scale out this week to weigh up

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<v Speaker 1>inflation versus recession, at least from the Fed's point of view.

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<v Speaker 1>And you know which one weighs on the economy more.

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<v Speaker 1>Which is the bigger concern most likely? I would guess

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<v Speaker 1>it's inflation, and we'll get the information on Now we'll

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<v Speaker 1>get the dot plot the commentary by Jerown Powell, The

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<v Speaker 1>Fan of the Grateful Dead.

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<v Speaker 2>You know, David Kelly, the chief global strategist over at

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<v Speaker 2>JP Morgan Asset Management, was putting his finger exactly on

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<v Speaker 2>that issue, the FED having to weigh progress on fighting

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<v Speaker 2>inflation against the risk of recession. Now Kelly feels that

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<v Speaker 2>the numbers that we will see going forward here will

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<v Speaker 2>not support any further tightening. And if he is right,

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<v Speaker 2>he is saying now that the investment environment in which

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<v Speaker 2>we find ourselves could support lower long term interest rates,

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<v Speaker 2>a lower dollar, and further gains and equity prices.

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<v Speaker 1>We keep thinking that we'll add an inflection point and

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<v Speaker 1>that you know, we'll get information I We've got the

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<v Speaker 1>CPI and the FED this week, and that you know

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<v Speaker 1>that will really tell the story, and then you know,

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<v Speaker 1>nothing really changes all that much.

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<v Speaker 5>We just keep grinding higher.

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<v Speaker 1>I thought it was interesting that you had the big

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<v Speaker 1>strategist from the biggest institutions all out on the same

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<v Speaker 1>day today Goldman Sachs David Costin says he thinks the

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<v Speaker 1>gains will continue because some of the other sectors besides

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<v Speaker 1>tech will catch up. Morgan Stanley's Michael Wilson harkened back

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<v Speaker 1>to the nineteen forties when the S and P five

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<v Speaker 1>hundred rallied twenty four percent before then returning to a

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<v Speaker 1>new low. And you also had Marko Kolanovitch over at

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<v Speaker 1>JP Morgan saying this is going to fall apart. The

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<v Speaker 1>move higher in cyclical stocks is likely to prove fleeting,

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<v Speaker 1>as many of the same arguments, the lag effect of

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<v Speaker 1>the of the interest rate hikes and the fact that

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<v Speaker 1>we've had so many already that that will threaten the economy.

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<v Speaker 2>And speaking of stocks that are particularly sensitive to the economy,

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<v Speaker 2>look at energy today. Now we had the Goldman call

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<v Speaker 2>we were talking about this yesterday on the program, with

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<v Speaker 2>the cut in the forecast for Brent crude now about

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<v Speaker 2>to eighty six bucks by December. By the way, this

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<v Speaker 2>is the third time in the last six months that

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<v Speaker 2>Goldman has revised lower its forecast for oil. Today in

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<v Speaker 2>New York. This is not Brent, this is WTI. We

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<v Speaker 2>were down nearly four and a half percent. We closed

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<v Speaker 2>around sixty seven to twelve, and that took with it

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<v Speaker 2>that lower oil price took a lot of the energy

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<v Speaker 2>stocks down as well.

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<v Speaker 1>And energy really hasn't rallied. I mean it's just kind

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<v Speaker 1>of missed out on this bowl. It's one of the

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<v Speaker 1>most underweight sectors. If you avoid recession, is that an

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<v Speaker 1>area where you can play catchup. We'll have to wait

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<v Speaker 1>and see.

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<v Speaker 5>Lot is still out there. It's time now for Global News.

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<v Speaker 1>Miami says it's ready to handle crowd control as Donald

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<v Speaker 1>Trump surrenders to police tomorrow. At back to with Global

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<v Speaker 1>News from the nine to sixty news room in San Francisco.

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<v Speaker 3>Ed, Yeah, right, Brian, they say they're ready. Authorities are

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<v Speaker 3>downplaying any threats as well. Polite trief Manny Morales says

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<v Speaker 3>no perceived crisis coming.

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<v Speaker 11>There has been a lot of post none that I'm

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<v Speaker 11>aware that can cause any concern of any type of credibility.

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<v Speaker 11>But make no mistake about it, we're taking this event

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<v Speaker 11>extremely serious. We know that there is a potential of

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<v Speaker 11>things taking a turn for the worst, but that's not

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<v Speaker 11>the Miami Way.

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<v Speaker 3>And Mayor Francis Suarez says, Carrot and Stick.

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<v Speaker 12>Obviously believe in the constitution, believe that people should have

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<v Speaker 12>the right to express themselves.

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<v Speaker 5>But we also believe in law.

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<v Speaker 11>And order, and we know that and we hope that tomorrow.

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<v Speaker 4>Will be peaceful.

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<v Speaker 3>Yeah, Meanwhile, reports are Donald Trump boarded his private jet

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<v Speaker 3>for Florida earlier today alone now tomorrow, after the arrangement,

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<v Speaker 3>Bloomberg's Nancy Cook says, Trump goes back to Bedminster for

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<v Speaker 3>a rally.

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<v Speaker 12>What he's going to do around eight to fifteen at

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<v Speaker 12>night is give remarks. I'm expecting those remarks to be

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<v Speaker 12>shorter than the remarks he gave after his first indictment

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<v Speaker 12>when the Manhattan DA indicted him. And then he's going

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<v Speaker 12>to have a fundraiser at Bedminster. They're hoping to raise

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<v Speaker 12>two million dollars, and his.

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<v Speaker 3>Legal team will be working on other potential indictments that

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<v Speaker 3>could be coming down the pike. China today denying US

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<v Speaker 3>claims that it is has spy operations in Cuba, Chinese

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<v Speaker 3>Foreign Ministry sportsmen of Long Win Being saying that it

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<v Speaker 3>is false information. Says over the past few days he's

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<v Speaker 3>seen inconsistent information coming from the US. Now he is

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<v Speaker 3>right on the last point. The US has denied the

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<v Speaker 3>Wall Street Journal report last week and yesterday admitted there

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<v Speaker 3>were bases in Today, the US behind National Security Council

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<v Speaker 3>Coordinator John Kirby went on the verbal offensive.

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<v Speaker 5>This is not a new development.

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<v Speaker 1>That China has been trying to achieve some intelligence gathering

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<v Speaker 1>capabilities in Cuba and frankly elsewhere in hemisphere.

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<v Speaker 3>And defends the administration's reticence to talk about it, saying

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<v Speaker 3>it does no good publicly and causes harm to talk

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<v Speaker 3>about these kinds of sensitive matters in public. Meanwhile, Secretary

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<v Speaker 3>of St. Anthony Blinkin today says the Trump administration did

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<v Speaker 3>not do enough to counter the Chinese efforts to boost

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<v Speaker 3>intelligence gathering overseas after discovering that Beijing was operating in

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<v Speaker 3>Cuba in twenty nineteen. And Blinka also says that China

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<v Speaker 3>is not directly giving military aid to Russia at this point.

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<v Speaker 5>Today, we've not seen.

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<v Speaker 4>That line acrossed.

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<v Speaker 5>At the same time, we have concerns about private.

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<v Speaker 3>Companies, but says it is being closely monitored. Pennsylvania's governor

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<v Speaker 3>has declared disaster in Philadelphia after the collapse seven of

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<v Speaker 3>an I nine five overpass caused by a tanker fire,

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<v Speaker 3>and the Transportation Secretary Pete Budachich there today says it

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<v Speaker 3>has wide ranging effects.

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<v Speaker 6>This is not just about commutes, This is also about

0:10:52.920 --> 0:10:56.320
<v Speaker 6>supply chains. About one hundred and fifty thousand vehicles a

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<v Speaker 6>day and a good percentage of at its truckings.

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<v Speaker 3>And says all the way from Philadelphia up through New York,

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<v Speaker 3>but also south to Washington, DC supply lines. New York

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<v Speaker 3>City Police Commissioner Keyshaw Sewell is going to resign. There

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<v Speaker 3>had been talked for the past several days that she

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<v Speaker 3>had lost power and was having to clear all policy

0:11:14.600 --> 0:11:19.280
<v Speaker 3>moves through Mayor Eric Adams office. She has sent out

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<v Speaker 3>an email to her staff. Global News powered by more

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<v Speaker 3>than twenty seven hundred journalists and analysts in over one

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<v Speaker 3>hundred and twenty countries in San Francisco. I'm Ed Baxter.

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<v Speaker 3>This is Bloomberg.

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<v Speaker 1>I'm Brian Curtis, along with Rashad Salamat and our guest

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<v Speaker 1>is Lamar vieer portfolio manager with Vier and Company, to

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<v Speaker 1>take a look at markets. Lamar, thank you for joining us.

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<v Speaker 1>Does it feel like people are chasing here a little bit?

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<v Speaker 13>Certainly in some sectors. I mean, we think what's the

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<v Speaker 13>rebound in big tech has probably gone a little too far,

0:11:52.840 --> 0:11:55.600
<v Speaker 13>a little too fast. But you know, we still think

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<v Speaker 13>there are some pockets where you can get some quality

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<v Speaker 13>a reasonable prices. So you got to got to kind

0:12:00.440 --> 0:12:02.719
<v Speaker 13>of be picky and choosy as you look at the

0:12:02.760 --> 0:12:03.880
<v Speaker 13>opportunities out there.

0:12:04.920 --> 0:12:06.720
<v Speaker 14>Absolutely, but you've got to be abso to be a

0:12:06.760 --> 0:12:09.720
<v Speaker 14>cognizant of us some which are cheap for a reason.

0:12:09.840 --> 0:12:12.960
<v Speaker 13>Correct, that's right. No, we we definitely don't think you

0:12:13.000 --> 0:12:16.559
<v Speaker 13>want to be buying into value traps, but there are

0:12:16.679 --> 0:12:18.760
<v Speaker 13>you know, like I said, it's it's when you get

0:12:18.760 --> 0:12:22.800
<v Speaker 13>the big tech to megacap guys, they've they've really just

0:12:22.840 --> 0:12:26.040
<v Speaker 13>the pendulum has swung right back to what we would

0:12:26.120 --> 0:12:29.840
<v Speaker 13>argue is a little overheated. There's a lot of folks

0:12:29.840 --> 0:12:31.720
<v Speaker 13>that will just buy those, or even just buy an

0:12:31.720 --> 0:12:34.959
<v Speaker 13>index fund and not realize that they're buying a really

0:12:35.200 --> 0:12:39.240
<v Speaker 13>a tech dominated fund and and really piling into some

0:12:39.280 --> 0:12:40.920
<v Speaker 13>of the richer evaluations out there.

0:12:42.040 --> 0:12:45.280
<v Speaker 1>I mentioned the comment from Marko Kolonovich at JP Morgan

0:12:45.760 --> 0:12:51.480
<v Speaker 1>about cyclical stocks that ultimately the gains will be fleeting,

0:12:51.520 --> 0:12:55.000
<v Speaker 1>and that the lag effect of the of the rate

0:12:55.080 --> 0:12:56.920
<v Speaker 1>hikes that we've already seen and the fact that we

0:12:56.960 --> 0:13:01.120
<v Speaker 1>may see more. I mean, there's no, there's no notion.

0:13:01.400 --> 0:13:03.600
<v Speaker 1>I don't think at the moment that we're stopping here

0:13:03.720 --> 0:13:06.880
<v Speaker 1>pausing maybe, but do you agree with that or do

0:13:06.880 --> 0:13:08.880
<v Speaker 1>you think that there is room for you know, there

0:13:08.960 --> 0:13:10.120
<v Speaker 1>to be more bread than the market.

0:13:10.960 --> 0:13:13.680
<v Speaker 13>I think I'm more in team Goldman, I guess than

0:13:13.720 --> 0:13:14.160
<v Speaker 13>team JP.

0:13:14.320 --> 0:13:18.800
<v Speaker 1>Morgan is okay, so you're a little positive then, yeah, exactly.

0:13:18.880 --> 0:13:21.680
<v Speaker 13>We think, you know, there's there's some room the rest

0:13:21.679 --> 0:13:24.679
<v Speaker 13>of this year, and we're actually, uh, we we think

0:13:24.720 --> 0:13:27.920
<v Speaker 13>there's still some good opportunities, specifically in the consumer sector.

0:13:28.000 --> 0:13:31.200
<v Speaker 13>So we think the consumer from everything we're saying, you've

0:13:31.200 --> 0:13:34.600
<v Speaker 13>got Wall Street on the one hand, terrified that the

0:13:34.600 --> 0:13:37.200
<v Speaker 13>consumer is getting ready to fall apart, but every single

0:13:37.720 --> 0:13:40.800
<v Speaker 13>bit of data we've seen has really been positive. So

0:13:41.200 --> 0:13:44.079
<v Speaker 13>you know, the Fed obviously has done some tightening. It

0:13:44.200 --> 0:13:47.240
<v Speaker 13>looks like they're not going to do anything, uh you know,

0:13:47.320 --> 0:13:50.840
<v Speaker 13>on Wednesday. But you know, we think that the consumer

0:13:50.880 --> 0:13:54.720
<v Speaker 13>is strong and and you know, with with most of

0:13:54.760 --> 0:13:56.920
<v Speaker 13>the data points that we're looking at, we think there's

0:13:57.040 --> 0:13:59.840
<v Speaker 13>there's still some room to run and some decent opportunities.

0:13:59.840 --> 0:14:02.720
<v Speaker 14>And here I mean yes, if you look at the

0:14:02.760 --> 0:14:06.560
<v Speaker 14>top ten industry groups on the S and P five hundred,

0:14:06.840 --> 0:14:11.800
<v Speaker 14>consumer cyclicals and consumer staples and even discretionary and not

0:14:11.920 --> 0:14:13.880
<v Speaker 14>amongst them, does that surprise you?

0:14:15.559 --> 0:14:19.440
<v Speaker 13>It does? But you know it's tough the way we

0:14:19.560 --> 0:14:22.680
<v Speaker 13>categorize sectors we find to be less and less relevant.

0:14:22.720 --> 0:14:26.880
<v Speaker 13>So you know, calling Apple a tech stock is fine,

0:14:26.920 --> 0:14:29.920
<v Speaker 13>but it's arguably just as much or more of a

0:14:29.920 --> 0:14:35.080
<v Speaker 13>consumer stock, So it becomes very arbitrary, especially like we

0:14:35.120 --> 0:14:37.600
<v Speaker 13>said with big Tech. You know, is Netflix really a

0:14:37.640 --> 0:14:41.120
<v Speaker 13>technology stock? I would argue it's more driven by consumer

0:14:41.160 --> 0:14:43.920
<v Speaker 13>trends than what's going on in technology. So I think

0:14:43.920 --> 0:14:45.960
<v Speaker 13>the consumer sector is a lot bigger than we're given a.

0:14:45.880 --> 0:14:50.000
<v Speaker 1>Credit if we do manage to avoid recession. You probably

0:14:50.040 --> 0:14:51.960
<v Speaker 1>heard me mention with Doug a few moments ago that

0:14:52.160 --> 0:14:57.120
<v Speaker 1>energy could prove an interesting bet in that it's underperformed.

0:14:57.160 --> 0:14:58.040
<v Speaker 5>Do you see it that way?

0:14:58.840 --> 0:15:03.440
<v Speaker 13>We're actually not very bold on energy, and partially that's

0:15:03.480 --> 0:15:09.200
<v Speaker 13>because you know, the global supply is pretty high relative

0:15:09.240 --> 0:15:14.000
<v Speaker 13>to the demand. But but more importantly, you know, we

0:15:14.000 --> 0:15:16.240
<v Speaker 13>we kind of tend to shy away from energy just

0:15:16.280 --> 0:15:19.120
<v Speaker 13>because it's it is so difficult to predict what's going

0:15:19.200 --> 0:15:24.240
<v Speaker 13>going with the prices of oil and gas, and it's

0:15:24.320 --> 0:15:27.120
<v Speaker 13>we we think you're much better suited or much better

0:15:27.320 --> 0:15:31.280
<v Speaker 13>off picking the things that are a little more predictable

0:15:31.760 --> 0:15:34.120
<v Speaker 13>and where you can feel a little more comfortable in

0:15:34.160 --> 0:15:37.200
<v Speaker 13>your in your bats is about.

0:15:36.960 --> 0:15:39.040
<v Speaker 14>You know, okay, that's energy. But on the other side

0:15:39.040 --> 0:15:42.400
<v Speaker 14>of energies, of course, the decombonization. How does that inform

0:15:42.440 --> 0:15:43.800
<v Speaker 14>some of your investment decisions.

0:15:44.480 --> 0:15:47.320
<v Speaker 13>Well, that that is definitely part of it. As you

0:15:47.360 --> 0:15:51.520
<v Speaker 13>look at you know, the rise of the electric vehicles

0:15:51.560 --> 0:15:56.280
<v Speaker 13>and so forth. There's there's certainly going to be a

0:15:56.280 --> 0:15:58.440
<v Speaker 13>lot of pressure on demand down the road. Now, I

0:15:58.440 --> 0:15:59.920
<v Speaker 13>think it's still going to be a while before that

0:16:00.280 --> 0:16:03.600
<v Speaker 13>really has a meaningful impact, but it's being excited about

0:16:03.600 --> 0:16:07.720
<v Speaker 13>the long term prospects. Yeah, it's a little cloudy.

0:16:08.920 --> 0:16:11.760
<v Speaker 1>This is Bloomberg Daybreak Asia, your morning brief on this

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