WEBVTT - Bloomberg Wall Street Week - July 14th, 2023 0:00:00.240 --> 0:00:02.440 This is Bloomberg Wall Street Week. 0:00:02.480 --> 0:00:04.400 I mean may not have an overall recession. We're having 0:00:04.400 --> 0:00:06.960 a rolling recession. To Kanye Roll looks pretty strongly when 0:00:07.000 --> 0:00:07.680 it comes to jobs. 0:00:07.720 --> 0:00:09.840 The financial story is that shape our work. 0:00:09.920 --> 0:00:13.640 Three major regional bank failures send shockwaves through the banking system. 0:00:13.680 --> 0:00:15.480 We're all trying to figure out what to make of 0:00:15.600 --> 0:00:17.400 generative AI through. 0:00:17.160 --> 0:00:19.320 The eyes of the most influential voices. 0:00:19.440 --> 0:00:22.400 Welcome down, Doctor Paul Krugman, Ryan moynihan, Bank of America, 0:00:22.560 --> 0:00:25.360 deebro Lair of the Paulson Institute, Len Hubbard of the 0:00:25.360 --> 0:00:26.240 Columbia Business. 0:00:26.000 --> 0:00:30.120 School, Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:00:30.200 --> 0:00:32.880 The big rally in Wall Street this week? Who gets 0:00:32.880 --> 0:00:36.120 the credit? The Fed, banks or big Tech? This is 0:00:36.200 --> 0:00:39.000 Wall Street Week. I'm Romaine Bossic in for David Weston. 0:00:39.960 --> 0:00:42.320 This week, Catherine Judge of Columbia Law School and what 0:00:42.440 --> 0:00:45.760 steper capital requirements will mean for banks and their willingness 0:00:45.760 --> 0:00:46.160 to lend. 0:00:46.360 --> 0:00:50.400 What we really want is more lending during periods of distress, 0:00:50.479 --> 0:00:54.080 and probably a little less lending when everything's going really well. 0:00:54.280 --> 0:00:58.200 Rock Creek CEO Asani Beschloss on why the economies on mainland, 0:00:58.280 --> 0:01:00.880 China and Taiwan are moving in different direction. 0:01:01.160 --> 0:01:03.760 One thing that President v has created which will be 0:01:03.880 --> 0:01:06.800 hard to undo is uncertainty. 0:01:06.319 --> 0:01:09.679 And former CNN president John Klein on the disruptive effect 0:01:09.720 --> 0:01:11.679 of AI on the business of media. 0:01:12.040 --> 0:01:15.840 AI can be a very useful tool. On the other hand, 0:01:16.040 --> 0:01:31.880 it can result in efficiencies for the studios. 0:01:33.200 --> 0:01:35.440 The FED appeared to score one of its first victories 0:01:35.480 --> 0:01:39.440 in the fight against inflation core CPI, posting its smallest 0:01:39.440 --> 0:01:42.480 increase in June since twenty twenty one, but the FED 0:01:42.680 --> 0:01:43.560 may hike again. 0:01:43.720 --> 0:01:47.040 In July, it was very clear that inflation was and 0:01:47.120 --> 0:01:50.040 still is at levels that are too high for their comfort. 0:01:50.320 --> 0:01:52.520 I do think that the narrative both for the FED 0:01:52.560 --> 0:01:55.200 and also for markets will now begin to change towards 0:01:55.240 --> 0:01:56.760 growth towards employment. 0:01:56.920 --> 0:02:01.440 Meanwhile, China faces a different problem, delytionary concerns, prompting the 0:02:01.440 --> 0:02:04.200 Central Bank to step in MEANINGSHIDA. 0:02:04.320 --> 0:02:07.360 Going forward, the People's Bank of China will continue to 0:02:07.360 --> 0:02:11.320 provide support for small, medium and private businesses. 0:02:11.560 --> 0:02:14.960 Media executives gathering in Sun Valley, Idaho, and One Big 0:02:15.000 --> 0:02:18.200 Deal was all the buzz a US court rejecting the 0:02:18.280 --> 0:02:21.959 US government's challenge of that Microsoft did the buy Activision. 0:02:22.200 --> 0:02:25.160 The company is now moving forward with some additional measures 0:02:25.160 --> 0:02:28.560 to appease UK regulators and finally close out that deal. 0:02:29.040 --> 0:02:32.359 On the one hand, everyone was talking about the Microsoft's 0:02:32.360 --> 0:02:37.040 activision deal, the efforts the FTC went to appeal the 0:02:37.480 --> 0:02:40.160 decision by US district courts. 0:02:39.600 --> 0:02:42.680 But strikes did loom over the annual gathering, members of 0:02:42.760 --> 0:02:46.160 the sag AFTRA Actors Union joining writers who have been 0:02:46.160 --> 0:02:49.160 on strike since May, making it the first time that 0:02:49.360 --> 0:02:53.960 actors and writers have together walked out since nineteen sixty. 0:02:54.440 --> 0:02:57.400 Back then, Ronald Reagan was president of the Actors Guild 0:02:57.440 --> 0:03:00.359 and Marilyn Monroe was still gracing the screen. 0:03:00.720 --> 0:03:05.240 You cannot change the business model as much as it 0:03:05.320 --> 0:03:09.080 has changed, and not expect the contract to change. 0:03:09.120 --> 0:03:11.080 Two and earnings kick off with a bit of a 0:03:11.120 --> 0:03:13.639 sigh of relief on Wall Street. JP Worg and Wells 0:03:13.680 --> 0:03:16.800 Fargo and City Group leading the big bank Earnings on 0:03:16.840 --> 0:03:19.320 a high note, getting a big boost from the Fed's 0:03:19.400 --> 0:03:21.000 recent rate heights, But we hit. 0:03:20.919 --> 0:03:23.639 A hard landing. It's going to be very difficult for 0:03:23.720 --> 0:03:26.440 the banks, including JP Morgan, but that doesn't appear to 0:03:26.440 --> 0:03:27.680 be the case at least today. 0:03:29.360 --> 0:03:31.720 A goldilocks type of week for the economy, a bit 0:03:31.720 --> 0:03:34.320 of an everything rally for equities, the S and P 0:03:34.480 --> 0:03:36.480 five hundred jumping more than two percent on the week, 0:03:36.520 --> 0:03:39.080 the Nasdaq surging more than three and the Russell two 0:03:39.080 --> 0:03:42.160 thousand index of small cap stocks coming close to a 0:03:42.200 --> 0:03:45.400 four percent game. Discretionary stocks helping to lead the advance, 0:03:45.440 --> 0:03:48.400 so too did big tech, and so too did homebuilders 0:03:48.520 --> 0:03:50.680 Pulti Group and Toll Brothers, closing out the week at 0:03:50.720 --> 0:03:53.720 an all time high, Microsoft finishing a fraction of a 0:03:53.760 --> 0:03:57.200 percent away from a fresh record itself. But the biggest 0:03:57.240 --> 0:04:00.400 moves cross asset wise, we're in treasuries, commodities, and dollar, 0:04:00.640 --> 0:04:04.200 the US currency weakening to a fifteen month low versus 0:04:04.240 --> 0:04:07.040 a global basket of its peers, and two year treasury 0:04:07.080 --> 0:04:10.440 yields swinging more than thirty basis points from peak to 0:04:10.480 --> 0:04:13.640 trough this week, a volatility in that space that is 0:04:13.680 --> 0:04:17.239 expected to say as long as the Fed remains in play. 0:04:17.600 --> 0:04:19.840 The big catalyst for these market moves came in the 0:04:19.839 --> 0:04:22.760 form of two big economic reports this week to show 0:04:22.960 --> 0:04:26.400 US inflation reverting back to its lowest levels in at 0:04:26.520 --> 0:04:29.279 least two years. And that is where we start today. 0:04:29.440 --> 0:04:32.480 Mona Maha John joining us right now, senior investment strategists 0:04:32.480 --> 0:04:35.480 at Edward Jones and Dennis de Busher, chief market strategists 0:04:35.520 --> 0:04:39.039 over at twenty two V Research and Mona. I'll start 0:04:39.040 --> 0:04:41.440 with you. You look at that inflation report, particularly when 0:04:41.480 --> 0:04:45.360 it comes to consumer prices, airfares down, used car prices down, 0:04:45.440 --> 0:04:47.800 eight prices, which we've all been obsessing over for the 0:04:47.880 --> 0:04:50.680 last couple of years, finally dropping back to sound down 0:04:50.720 --> 0:04:52.720 to something that's somewhat more reasonable. 0:04:53.760 --> 0:04:56.400 Yeah, remain Look, it was a nice week in markets 0:04:56.400 --> 0:04:59.880 for the bulls and certainly for investors and consumers broadly. 0:05:00.000 --> 0:05:02.200 You know, I'll highlight three quick things, and one, of course, 0:05:02.640 --> 0:05:05.320 is that CPI report that you mentioned, and in fact, 0:05:05.440 --> 0:05:09.000 inflation broadly surprised to the downside in both the CPI 0:05:09.120 --> 0:05:12.200 and PPI prints. But the good news was in CPI 0:05:12.640 --> 0:05:15.080 not only headline inflation, but we did see a bit 0:05:15.120 --> 0:05:18.680 of cooling in core inflation as well, driven by downward 0:05:18.680 --> 0:05:21.960 pressure in the housing market, and even that non housing 0:05:22.000 --> 0:05:25.440 services inflation that the FED is tracking carefully started to 0:05:25.480 --> 0:05:28.400 ease as well. Number two is the Fed itself. You know, 0:05:28.440 --> 0:05:30.760 I think markets are now looking for perhaps one more 0:05:30.839 --> 0:05:33.040 rate height coming out of the FED and maybe they 0:05:33.040 --> 0:05:36.240 can stept to the sidelines after that. That is welcome news. 0:05:36.279 --> 0:05:39.080 After putting upward pressure on interest rates for the past 0:05:39.080 --> 0:05:43.920 sixteen months, raising borrowing costs for consumers and corporations, we 0:05:44.000 --> 0:05:47.760 are seeing a resilient consumer and an economy that's holding in. There, 0:05:47.800 --> 0:05:50.760 so we have a backdrop of lower inflation, perhaps a 0:05:50.800 --> 0:05:53.800 FED moving to the sideline, and an economy that's holding up. 0:05:53.839 --> 0:05:55.280 That's good news for markets broadly. 0:05:55.400 --> 0:05:57.039 Well, Dennis, I want to get your thoughts here on 0:05:57.080 --> 0:05:59.080 those economic t leads. I mean, because these are kind 0:05:59.080 --> 0:06:02.160 of the two big components of this economic narrative, right, 0:06:02.360 --> 0:06:05.280 whether inflation is coming down to a reasonable enough level, 0:06:05.320 --> 0:06:08.560 but also whether the economy is still unstable enough condition 0:06:08.920 --> 0:06:12.000 following five percentage points of rate hikes out of the FED. 0:06:13.160 --> 0:06:15.200 Yeah, you bring up a really important point. 0:06:15.320 --> 0:06:18.120 And if we have to go back to why markets 0:06:18.120 --> 0:06:20.400 have done so well, we know that. 0:06:20.360 --> 0:06:21.160 Inflation is coming down. 0:06:21.240 --> 0:06:24.000 The inflation appears to be coming down for now at least, 0:06:24.200 --> 0:06:25.279 not the hardware. 0:06:26.040 --> 0:06:27.480 You know, it can come down to the two ways. 0:06:27.480 --> 0:06:29.719 An easy way which would be associated with the soft landing, 0:06:29.800 --> 0:06:32.640 but the hard way, which be assiliunting obviously for the recession, 0:06:33.200 --> 0:06:35.160 and so it is clear that it's coming down the 0:06:35.200 --> 0:06:37.800 East way. For now, it's achieved. And part of the 0:06:37.839 --> 0:06:40.240 reason we saw this big shift in the internals in 0:06:40.279 --> 0:06:43.120 the market, so small capital performing like you know at 0:06:43.440 --> 0:06:46.599 the top of the show, retail stocks out warming deeper, 0:06:46.600 --> 0:06:50.279 cipples balancing is because the housing data stable plods and 0:06:50.360 --> 0:06:53.080 the housing data stabilize it. Because that is the tip 0:06:53.120 --> 0:06:54.960 of the sphere when it comes to interest rate policy. 0:06:55.600 --> 0:06:58.360 We heard from three big banks, JP, Morgan, City Group, 0:06:58.360 --> 0:07:01.440 and Wells Fargo officially kicked off the earning season with 0:07:01.520 --> 0:07:04.440 better than expected results all around. Is this a harbinger 0:07:04.480 --> 0:07:06.280 of things to come for the rest of the banking 0:07:06.320 --> 0:07:09.680 sector and more importantly for the rest of corporate America overall. 0:07:09.760 --> 0:07:12.040 Mona Mahajan is still with us over at Edward Jones 0:07:12.080 --> 0:07:14.880 and Dennis to Busher over at twenty two V Research 0:07:14.920 --> 0:07:17.160 and Dennis, I'll start with you. I think some of 0:07:17.160 --> 0:07:20.920 the estimates coming into this earning season certainly not bullish, 0:07:20.960 --> 0:07:22.920 but they certainly weren't as bearish as maybe what we 0:07:22.960 --> 0:07:25.520 saw in the previous quarters. 0:07:25.560 --> 0:07:27.640 Definitely not as parish previous quarters. 0:07:27.680 --> 0:07:30.120 Hope you're earnings revisions are still running around the twenty 0:07:30.160 --> 0:07:30.960 fifth percentile. 0:07:31.520 --> 0:07:33.880 So you've seen a little bit of acceleration that earnings 0:07:33.920 --> 0:07:35.239 revisions coming into the quarter. 0:07:35.600 --> 0:07:38.320 And typically when that happens, you beat five about two 0:07:38.320 --> 0:07:41.320 bucks relative to estimates, and I analize, right, they will 0:07:41.360 --> 0:07:44.720 get us somewhere in the two sixteen, two seventeen rings 0:07:44.800 --> 0:07:47.520 for the year, So you know, coming in a little 0:07:47.520 --> 0:07:50.320 bit low on the estimate side, that's not too out 0:07:50.360 --> 0:07:54.600 of bounds relative to history, but not as nearly as poor. 0:07:54.640 --> 0:07:57.040 And I was just saying early sentiment wise, not nearly 0:07:57.080 --> 0:07:57.960 as poor as we've seen. 0:07:58.280 --> 0:08:00.760 The last three or four earning season were really bad. 0:08:00.880 --> 0:08:01.480 En upcoming in. 0:08:02.160 --> 0:08:04.440 We got the banker in these earlier this morning, Dennis, 0:08:04.480 --> 0:08:06.920 or at least three of the big banks here. There 0:08:06.960 --> 0:08:09.920 were some upside surprises there. I'm wondering, what are you 0:08:10.000 --> 0:08:12.720 expecting overall to hear out of not just the banks, 0:08:12.760 --> 0:08:15.280 but overall the companies overall, in terms of how their 0:08:15.320 --> 0:08:16.480 businesses are holding up. 0:08:18.400 --> 0:08:19.600 Shopping lead well. 0:08:21.080 --> 0:08:23.320 Relative to what we've heard and the fears over the 0:08:23.400 --> 0:08:27.720 last I guess yeah, basically here and particularly since the 0:08:27.760 --> 0:08:31.040 banking crisis, when people thought following up there was going 0:08:31.080 --> 0:08:33.520 to be a significant type of financial conditions that was 0:08:33.559 --> 0:08:36.000 going to lead to a sharp curation in the economy. 0:08:36.440 --> 0:08:38.280 I think you're going to hear from companies that things 0:08:38.320 --> 0:08:42.880 are holding up pretty well, consistent with slower growth than 0:08:42.880 --> 0:08:47.239 what we've seen the last two years, but expansionary like economy. 0:08:47.720 --> 0:08:50.000 And we'll see what happens in the future with Ernie. 0:08:50.040 --> 0:08:52.280 We'll see what happens in the future with the economy, 0:08:52.360 --> 0:08:54.640 but for now, it seem relatively okay. 0:08:54.760 --> 0:08:57.079 Earnings consistent with an expansion mona. 0:08:57.120 --> 0:08:59.400 We've already started to see a lot of equity strategists 0:08:59.400 --> 0:09:02.600 and analysts are to ratchet up their expectations not only 0:09:02.640 --> 0:09:05.480 for overall aggregate earnings for the S and P five hundred, 0:09:05.520 --> 0:09:09.560 but of course you're twelve month price targets as well. 0:09:09.760 --> 0:09:12.640 Yeah, you know, look, I think the earnings recession that 0:09:12.679 --> 0:09:14.440 we went through, and really Q four and Q one 0:09:14.559 --> 0:09:16.880 came in negative year on year earnings growth for the 0:09:16.920 --> 0:09:20.079 S and P five hundred. Q Q two earnings, which 0:09:20.080 --> 0:09:23.439 we're getting right now, could also be the perhaps last 0:09:23.520 --> 0:09:25.760 quarter that we get a negative year on year number. 0:09:26.080 --> 0:09:28.199 And then we start to see improvement in Q three 0:09:28.280 --> 0:09:31.080 and Q four and really into twenty twenty four as well, 0:09:31.400 --> 0:09:33.920 and so as we head towards the next six to 0:09:33.920 --> 0:09:36.800 twelve months, we also know markets are pretty forward looking 0:09:37.200 --> 0:09:39.800 right now, twenty twenty four estimates are calling for double 0:09:39.800 --> 0:09:41.840 digit earnings growth. Now we will have to assess the 0:09:41.840 --> 0:09:44.800 backdrop as we head into twenty twenty four, but if 0:09:44.840 --> 0:09:47.720 we are in an environment where yields are moving lower 0:09:48.360 --> 0:09:50.959 and the economy is improving from any sort of softening, 0:09:51.360 --> 0:09:54.120 we could certainly see a rebound in earnings growth. So 0:09:54.160 --> 0:09:57.040 some of the momentum that we've seen in markets recently 0:09:57.320 --> 0:10:00.199 could be an expression of the direction of try level 0:10:00.240 --> 0:10:02.520 of earnings over the next six months as well, So 0:10:02.840 --> 0:10:06.120 we certainly see progress there. Of course, we've moved pretty far, 0:10:06.160 --> 0:10:09.440 pretty fast, as we noted, across equities now, and so 0:10:09.559 --> 0:10:12.559 we think some bird of consolidation makes sense. Perhaps we'll 0:10:12.600 --> 0:10:15.440 get some earnings figures over the next few weeks that 0:10:15.520 --> 0:10:18.360 give us some reason to pause, but we do think 0:10:19.000 --> 0:10:21.679 broadly the opportunity will come as we head towards the 0:10:21.720 --> 0:10:22.240 back half. 0:10:22.120 --> 0:10:22.520 Of this year. 0:10:22.720 --> 0:10:24.520 Yeah, and it'll be interesting to see whether some of 0:10:24.559 --> 0:10:26.720 the moves that we see in equity market actually start 0:10:26.760 --> 0:10:29.440 to broaden out just a little bit. Our appreciation to 0:10:29.480 --> 0:10:32.000 both of you monamaje On over at Edward Jones, Dennis 0:10:32.000 --> 0:10:34.880 the Busher over at twenty two V Research. 0:10:36.440 --> 0:10:40.120 Coming up. One China, But Two Economies. We talked with 0:10:40.160 --> 0:10:43.160 us Sonny Bechelist of Rock Creek about the disappointing performance 0:10:43.200 --> 0:10:46.240 of mainland China so far this year and how different 0:10:46.320 --> 0:10:47.400 it is from Taiwan. 0:10:48.040 --> 0:10:51.280 Who knew in the beginning of the year, that's with 0:10:51.880 --> 0:10:55.920 ais becoming so important and the Taiwan news market would 0:10:55.960 --> 0:10:56.600 do so well. 0:10:57.040 --> 0:10:59.160 That's next on Wall Street Week on Bloomberg. 0:11:01.760 --> 0:11:06.000 This is Bloomberg Wall Street Week with David Weston from 0:11:06.120 --> 0:11:07.040 Bloomberg Radio. 0:11:15.440 --> 0:11:19.000 One China, but Two Economies. The United States continues to 0:11:19.040 --> 0:11:22.120 go out of its way to underscore its One China policy, 0:11:22.360 --> 0:11:25.080 as Secretary of State Blincoln did during his recent visit 0:11:25.120 --> 0:11:29.000 to Beijing. Our reiterated the long standing US One China policy. 0:11:29.200 --> 0:11:32.560 That policy has not changed. We do not support Taiwan independence. 0:11:32.600 --> 0:11:35.280 We were made opposed to any unilateral changes to the 0:11:35.320 --> 0:11:38.280 statis quo by either side, even as the United States 0:11:38.280 --> 0:11:41.760 seeks to compete with that one China without coming to blows. 0:11:42.280 --> 0:11:46.199 I also believe that the United States in China should 0:11:46.280 --> 0:11:51.640 seek a relationship of healthy economic competition that is not 0:11:52.080 --> 0:11:56.720 winner take all, but with a fair set of rules, 0:11:57.120 --> 0:11:59.920 we benefit both our countries over time. 0:12:00.640 --> 0:12:03.800 But recently the economies of mainland China and Taiwan have 0:12:03.840 --> 0:12:07.240 been headed in very different directions. As the mainland finds 0:12:07.280 --> 0:12:10.439 it's harder than expected to come back from the COVID lockdown. 0:12:10.800 --> 0:12:13.080 I have been a. 0:12:13.080 --> 0:12:16.440 Little surprised with the degree of how quickly it's moderated. 0:12:16.800 --> 0:12:19.480 China is going to need to do more stimulus. 0:12:19.240 --> 0:12:22.880 Leading Beijing this week to undertake new stimulus measures, particularly 0:12:22.920 --> 0:12:24.760 to help its struggling property market. 0:12:25.000 --> 0:12:28.040 There's a lot of expectation that there will be more 0:12:28.120 --> 0:12:30.640 coming from Beijing to help the property sector, but the 0:12:30.760 --> 0:12:33.640 question is what can the government actually do when there 0:12:33.720 --> 0:12:36.120 is so much debt at the local government level. 0:12:36.320 --> 0:12:39.920 While Taiwan continues to thrive economically with the move to 0:12:40.000 --> 0:12:44.840 AI spurring on chip manufacturer TSMC and lifting the entire market. 0:12:45.080 --> 0:12:47.120 So why is Taiwan and this bull run and can 0:12:47.200 --> 0:12:47.680 it last? 0:12:48.200 --> 0:12:48.680 One things? 0:12:48.679 --> 0:12:51.960 For sure, stocks have been riding on this AI wave, 0:12:52.440 --> 0:12:53.199 but the head. 0:12:53.040 --> 0:12:55.680 Of the Taiwan Stock Exchange says it's not just Ai 0:12:55.920 --> 0:12:58.320 that is driving market strength, as. 0:12:58.280 --> 0:13:03.040 The pace of the US is His high stowing and 0:13:03.080 --> 0:13:08.920 also the Girlball economy remain the statues. I think mostly investors, 0:13:09.440 --> 0:13:14.440 we all pay attentions. Again, I'm Peter A. Bresse and 0:13:14.520 --> 0:13:17.680 the kesh In Frost. I expect it in the second 0:13:17.760 --> 0:13:19.080 half of this year. 0:13:19.040 --> 0:13:21.920 All of which makes the geopolitics across the Taiwan Strait 0:13:22.240 --> 0:13:27.439 just that much more complicated. And to take us through 0:13:27.480 --> 0:13:31.559 the geopondse and the economics of mainland China and its environs, 0:13:31.559 --> 0:13:33.400 we welcome to somebody who knows it terribly well. She 0:13:33.480 --> 0:13:35.840 is a Sunny bachelist. She is the CEO of Rock 0:13:35.840 --> 0:13:38.400 Creek of Sanae. You come on regular. We really value 0:13:38.440 --> 0:13:40.480 you on Wall Street. We thank you for being here. 0:13:40.679 --> 0:13:42.800 As I say, you've spent a lot of your career 0:13:42.920 --> 0:13:46.160 dealing with and around China. Start with what I would 0:13:46.200 --> 0:13:48.880 call mainland China right now, I think that if you 0:13:48.920 --> 0:13:50.600 go back to the first of the year, people expect 0:13:50.600 --> 0:13:54.199 it to really be a rebound year for China, given 0:13:54.240 --> 0:13:56.360 what had happened with COVID doesn't seem to be playing 0:13:56.400 --> 0:13:56.920 out that way. 0:13:57.480 --> 0:13:59.760 You're so right. Stated in the beginning of the year 0:14:00.080 --> 0:14:04.000 markets went up twenty percent. People expected markets to be 0:14:04.120 --> 0:14:07.640 up another ten to twenty percent in mainland China with 0:14:07.800 --> 0:14:11.280 all the geopolitical issues going on. If anyone had guessed, 0:14:11.320 --> 0:14:14.560 you would think Taiwan would be down and the rest 0:14:14.600 --> 0:14:17.280 of Asia would be sort of so so, and Asian 0:14:17.360 --> 0:14:21.280 would be doing relatively well. And if you look actually today, 0:14:21.840 --> 0:14:25.160 it's a very very different story. Number one, what you 0:14:25.400 --> 0:14:30.120 saw is as China came out of COVID, it has 0:14:30.200 --> 0:14:33.680 been taking much longer. Chinese consumers were supposed to be 0:14:33.720 --> 0:14:37.760 the big fource carrying us out of COVID and sort 0:14:37.800 --> 0:14:41.480 of creating this huge growth in the economy, and they 0:14:41.560 --> 0:14:45.960 have been really scared because they went through their savings 0:14:46.040 --> 0:14:49.360 during three years and they are trying to save more. 0:14:49.800 --> 0:14:54.240 And the uncertainties that have been created both internally and 0:14:54.320 --> 0:14:58.800 by geopolitics is getting the Chinese consumer to save more 0:14:59.080 --> 0:15:03.240 and spend less now At the same time, I should say, 0:15:04.560 --> 0:15:08.400 what happened also is that in Taiwan, for example, where 0:15:08.400 --> 0:15:11.440 we did not necessarily expect this kind of rise of 0:15:11.480 --> 0:15:16.680 like twenty two percent year to date. Who knew in 0:15:16.760 --> 0:15:21.800 the beginning of the year that with ai becoming so important, 0:15:21.880 --> 0:15:25.360 the micro chip that is made in Taiwan would become 0:15:25.560 --> 0:15:28.920 even more important and the Taiwanese a market would do 0:15:29.040 --> 0:15:32.520 so well. Last but not least. Of course, you've seen 0:15:32.600 --> 0:15:36.480 a lot of outflows from US and European and other 0:15:36.520 --> 0:15:40.760 global investors going out of China. If anything, the flows 0:15:40.760 --> 0:15:44.840 seem to be increasing coming into July than getting reduced, 0:15:45.360 --> 0:15:48.600 and a lot of very interesting phenomena going on on 0:15:48.680 --> 0:15:49.280 that point. 0:15:49.560 --> 0:15:51.920 So, Sonny, as a longtime investor, you're the first one 0:15:51.960 --> 0:15:54.120 to know that markets go up, markets go down. You 0:15:54.160 --> 0:15:57.160 can't overreact to short term developments. When you look at 0:15:57.200 --> 0:15:59.760 mainland again, i'll call it mainland China for the moment, 0:16:00.160 --> 0:16:02.040 how much of this is a short term thing, do 0:16:02.080 --> 0:16:05.479 you think? And how much are there larger underlying structural 0:16:05.560 --> 0:16:09.480 factors that may hold back mainland China from the remarkable 0:16:09.520 --> 0:16:10.960 growth we've seen or the last generation. 0:16:11.400 --> 0:16:14.200 David, I think the fact that you have twenty percent 0:16:14.720 --> 0:16:19.560 youth unemployment is a very big factor. That's a long 0:16:19.680 --> 0:16:22.680 term issue and that is not going to get affected 0:16:22.800 --> 0:16:27.440 by short term monetary policy changes. So even though at 0:16:27.520 --> 0:16:32.640 the moment the monthly policy is trying to help push 0:16:32.640 --> 0:16:37.280 the economy forward, the job creation is much less, particularly 0:16:37.360 --> 0:16:41.280 because these jobs were in the tech sector, in services 0:16:41.280 --> 0:16:44.440 in areas that have got affected and have not been 0:16:44.880 --> 0:16:48.520 expanding as much as you would expect. The other area 0:16:48.600 --> 0:16:52.000 I think to look at in China that has been 0:16:52.040 --> 0:16:54.120 affected is sort of the old age population and the 0:16:54.160 --> 0:16:57.560 demographics that also, if you look long term, is a 0:16:57.560 --> 0:17:00.640 big issue with the aging of the population in China. 0:17:01.000 --> 0:17:04.960 With Secretary Yellans visit, we saw we went from decoupling 0:17:05.200 --> 0:17:08.040 to the risking and what the term she used last 0:17:08.040 --> 0:17:11.760 week while she was in China was diversifying. I think 0:17:11.840 --> 0:17:15.720 every country, having experienced the issues the supply chain issues 0:17:15.760 --> 0:17:20.120 that the experience, including the US during COVID, is diversifying 0:17:20.160 --> 0:17:24.159 its sources of input and trade, and we saw for 0:17:24.200 --> 0:17:28.560 example Mexico overtake China in terms of trade. Those I 0:17:28.600 --> 0:17:33.440 think are longer term issues as countries, including the US, 0:17:33.840 --> 0:17:38.840 diversify trade sources. There is one big positive though, looking 0:17:38.920 --> 0:17:41.480 at China, which is that they have continued to invest 0:17:41.520 --> 0:17:44.399 in their green economy, not as much as they could 0:17:44.520 --> 0:17:49.840 or should. In fact, Secretary in fact mister carry will 0:17:49.840 --> 0:17:53.280 be will be going there shortly and I think that 0:17:53.359 --> 0:17:56.560 meeting will be quite important. But even looking at their 0:17:56.920 --> 0:18:00.760 domestic economy, the Chinese are putting in a lot of 0:18:00.840 --> 0:18:05.040 resources and investments into ev into solar. As you know, 0:18:05.200 --> 0:18:09.919 they're still the biggest supplier to the world of solar 0:18:10.240 --> 0:18:14.760 facilities as well as now starting to become the largest producer. 0:18:14.440 --> 0:18:19.359 Of ev asny. You mentioned the demographics issues in China. 0:18:19.800 --> 0:18:23.159 Perhaps a related issue is for some time China was 0:18:23.200 --> 0:18:25.679 something of a talent magnet. I remember going over there 0:18:25.720 --> 0:18:28.919 a few years ago, and they're attracting Chinese American scientists 0:18:28.960 --> 0:18:32.879 back to mainland China to live with their families. Is 0:18:32.920 --> 0:18:35.960 there a risk of really not altogether turning around, but 0:18:36.040 --> 0:18:40.280 actually reducing the attraction of mainland China for talent from 0:18:40.280 --> 0:18:43.040 around the world because of some of the reforms as 0:18:43.040 --> 0:18:45.119 you would put it from presidency. 0:18:45.520 --> 0:18:48.919 I think we have about three hundred thousand Chinese students 0:18:48.960 --> 0:18:52.199 in the US, and a lot of them would go 0:18:52.359 --> 0:18:55.359 back to China, and there's a question mark as to 0:18:55.520 --> 0:18:58.160 whether that flow will be back to China or back. 0:18:58.560 --> 0:19:01.439 Some stay here, some go in to other countries for 0:19:01.600 --> 0:19:04.480 exactly the reason you said. For example, Ai, which is 0:19:04.480 --> 0:19:07.240 a very exciting area for some of the scientists you 0:19:07.280 --> 0:19:10.840 are talking about, is heavily government controlled, right, So if 0:19:10.880 --> 0:19:14.719 you are working for the largest state owned enterprises and 0:19:15.040 --> 0:19:19.399 under direct government supervision. You will be you will be 0:19:19.400 --> 0:19:22.439 benefiting from working on AI. But if you're working in 0:19:22.480 --> 0:19:24.960 the private sector, in some of the private sector companies 0:19:25.040 --> 0:19:27.680 or the ones that we're working with the venture industry 0:19:27.720 --> 0:19:32.080 in the US, that is something that is now think 0:19:32.160 --> 0:19:35.560 of the past, we've seen that a kind of cooperation 0:19:35.720 --> 0:19:38.679 between venture in the US and venture in China. 0:19:38.840 --> 0:19:39.199 Duendo. 0:19:39.280 --> 0:19:42.359 It's not gone, it's still there is still some going on, 0:19:42.560 --> 0:19:45.480 but at a very different level. So that will definitely 0:19:46.000 --> 0:19:50.040 impact the flow of the brain flow as it were 0:19:50.640 --> 0:19:52.160 into China. Asta. 0:19:52.200 --> 0:19:54.040 It's always so good to have your walls. Rybick, thank 0:19:54.080 --> 0:19:56.560 you so much. As ny Rshalist, she is the CEO 0:19:56.760 --> 0:19:59.520 of Rock Creek. 0:20:00.119 --> 0:20:00.560 Coming up. 0:20:00.760 --> 0:20:04.200 Media at a crossroads as leaders meet in Sun Valley 0:20:04.200 --> 0:20:06.800 in the middle of a strike with more uncertainty than 0:20:06.840 --> 0:20:09.840 they've seen for a long time. We go through it 0:20:09.960 --> 0:20:12.679 with Streaming and Cable executive Jonathan Klein. 0:20:13.560 --> 0:20:17.000 They know something is coming their way, they just don't. 0:20:16.800 --> 0:20:19.879 Know what that's next. On Wall Street Week on Bloomberg, 0:20:28.520 --> 0:20:30.840 this is Wall Street Week. I'm David Weston This week, 0:20:30.960 --> 0:20:34.040 media moguls had their annual Allen and Company meeting out 0:20:34.040 --> 0:20:37.320 in Sun Valley with the fundamentals of their business more uncertain, 0:20:37.320 --> 0:20:40.440 perhaps than ever before, as people rush to a streaming 0:20:40.480 --> 0:20:44.280 world with uncertain profits, the basic cable model is melting 0:20:44.359 --> 0:20:47.080 out from under them, and strikes are starting to shut 0:20:47.119 --> 0:20:50.200 down their businesses all together. To take us through where 0:20:50.240 --> 0:20:52.720 the business of media is heading, Welcome down, Jonathan Klin. 0:20:52.800 --> 0:20:56.320 He's a former PRESIDENCYNN now a media entrepreneur whose latest 0:20:56.359 --> 0:20:59.720 venture is Hanging Media, a sports streaming platform. John, Thank 0:20:59.720 --> 0:21:01.480 you so much for being with us. Thanks for having 0:21:01.520 --> 0:21:03.600 me so you know this business over a number of 0:21:03.680 --> 0:21:05.800