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Speaker 1: This is Bloomberg Daybreak Asia for this Thursday, April thirteenth

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Speaker 1: in Hong Kong, Wednesday April twelfth in New York and

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Speaker 1: coming up today. The FED is projecting a mild recession

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Speaker 1: beginning later this year. FED President of Thomas Barkin says

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Speaker 1: more work needs to be done to team prices, but

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Speaker 1: Mary Daley says more rate hikes may not be needed.

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Speaker 1: US shares in lvmh shit a record after the company

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Speaker 1: reported better than expected quarterly results. Mccron says he still

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Speaker 1: supports the China Taiwan status quo. Houghton personally ordered the

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Speaker 1: arrest of the Wall Street Journal reporter Brazil's Lula travels

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Speaker 1: to China. I'm d Baxter with Global News. That's all

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Speaker 1: straight ahead on Bloomberg Daybreak Asia, the business news you

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Speaker 1: need to start your day, and just one fifteen minute

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Speaker 1: podcast available on Apples, Spotify, the Bloomberg Business app and

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Speaker 1: everywhere you get your podcasts. Good Morning, I'm Dead Prisoner

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Speaker 1: and I'm Bryan Curtiz Hero the stories we're following today.

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Speaker 1: We start out with minutes of the last FED meeting.

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Speaker 1: All committee members agreed to a twenty five basis point

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Speaker 1: rate hike last month. For more, here's Bloomberg's Michael McKee.

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Speaker 1: Although the banking system remained quite strong and resilient, that's

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Speaker 1: a quote. Banks were likely to tighten credit conditions, and

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Speaker 1: that would weigh on growth, on hiring, and on inflation.

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Speaker 1: The problem where policymakers was quote the extent of these

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Speaker 1: effects was uncertain. Participants saw risks to the economy to

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Speaker 1: the downside, and they saw the risks of inflation waited

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Speaker 1: to the upside. Given that uncertainty and the stickiness of inflation,

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Speaker 1: all participates ultimately decided they should raise the target range

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Speaker 1: by a quarter percentage point. The minute show that the

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Speaker 1: FED is now projecting a mild recession starting later this year.

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Speaker 1: So we know the next meeting is in early May,

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Speaker 1: and not all members even now are sending the same

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Speaker 1: message regarding future rate hikes. Today we heard from the

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Speaker 1: head of the Richmond FED, Tom Barkin. He was policymakers

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Speaker 1: still have more work to do detain prices. His remarks

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Speaker 1: came even after that CPI print showed inflation did remain

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Speaker 1: well above the Fed's too pretent target. Here is Barkin

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Speaker 1: speaking earlier on CNBC. It was pretty much as expected.

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Speaker 1: You know, I put particular focus on the core, which

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Speaker 1: is still running a little over five percent year every year.

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Speaker 1: And you know, we had some good news on energy,

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Speaker 1: but there's still more to do, I think, to getting

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Speaker 1: core inflation back down to where we'd like it to be.

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Speaker 1: Tom Barkin there, the head of the Richmond FED. He

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Speaker 1: went on to say he does see signs of cooling demand.

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Speaker 1: Even so, he does remain wary of declaring victory on

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Speaker 1: inflation too soon. Meantime, San Francisco FED President Mary Daly

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Speaker 1: says more FED rate hikes may not be needed. There

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Speaker 1: are good reasons to think the policy may have to

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Speaker 1: tighten more to bring inflation down, but there are also

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Speaker 1: good reasons to think that the economy may continue to

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Speaker 1: slow even without additional policy adjustments. Daily highlighted the effects

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Speaker 1: of the FED having considerably ratchet it uprates over the

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Speaker 1: past year, and she said at this point, inflation still

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Speaker 1: has a way to come down to the feds two

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Speaker 1: percent goal. Well, Warren Buffett is expecting more US banks

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Speaker 1: will likely fail. Even so, he is saying depositors should

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Speaker 1: feel confident that they won't lose any of their funds.

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Speaker 1: Buffett went on to say, today troubled banks aren't. If

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Speaker 1: you look at the stocks, they aren't valuable investments, or

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Speaker 1: at least value investments, because shareholders are likely to be

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Speaker 1: wiped out even if the government does move to protect depositors.

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Speaker 1: Here's Buffett in an interview with CNBC. The owners of

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Speaker 1: banks may have lost a hell of a lot of money.

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Speaker 1: The people who bought the deat of the holding company

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Speaker 1: may they may lose a lot of money. People they

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Speaker 1: can lose a lot of money, but the depositors aren't going.

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Speaker 1: So you don't need to turn a dumb decision by

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Speaker 1: managers into a panicking the whole citizenry of the United

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Speaker 1: States about something they don't need to be panicked about.

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Speaker 1: Berkshire Hathaway chairman and CEO Warren Buffett, Brian and something

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Speaker 1: you highlighted a day or two ago, we had confirmed

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Speaker 1: in that interview from Warren Buffett about his sales of TSMC,

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Speaker 1: and I'm swinging this around to Asia because that's the

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Speaker 1: focus of the program. Obviously, what he basically said was

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Speaker 1: he didn't reevaluate the business, the management, or anything of

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Speaker 1: that sort. It was specifically because of the geopolitical tensions

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Speaker 1: between China and Taiwan, and that may give comfort to

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Speaker 1: some holders of TSMC stock who thought maybe it was

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Speaker 1: more about direction or management, But no, it was more

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Speaker 1: about the geopolitical tensions. They haven't gone away. But if

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Speaker 1: you think that that simmers and doesn't cause a big problem,

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Speaker 1: then you're perhaps a little encouraged. Meantime, the US shares

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Speaker 1: of LVMH had a record high after the retailer reported

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Speaker 1: better first quarter results than expected. We get the story

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Speaker 1: from Bloomberg's David Englas. Sales jumped as Chinese shop resplurged

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Speaker 1: after emerging from a length he shut down. Revenue at

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Speaker 1: the group's biggest unit, which sells fashion and leather goods,

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Speaker 1: roast eighteen percent. That's almost twice the gain that analysts

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Speaker 1: were expecting. Let's CFO said that a company is extremely

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Speaker 1: optimistic for China. In twenty twenty three, sales jumped in

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Speaker 1: other countries as well. Japan saw a thirty four percent increase.

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Speaker 1: Shares of LVMH have rebounded by more than twenty percent

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Speaker 1: so far this year. After the slump in Chinese demand

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Speaker 1: began to recede. Lvmhs US shares closed up three point

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Speaker 1: four percent in Hong Kong I'm David Inglis bloom Brick

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Speaker 1: Day Break, Asia, Doug. Let's go back to the minutes

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Speaker 1: to the FED. It was interesting that, you know, they

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Speaker 1: mentioned that the banking crisis actually said that, you know,

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Speaker 1: the full effects of that, that that caused them to

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Speaker 1: lower their estimates on the terminal rate. And if we

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Speaker 1: can add to that, it's probably important to say that

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Speaker 1: the full effects of the cutback in bank lending probably

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Speaker 1: haven't been felt yet. I mean, the crisis may have

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Speaker 1: kind of stabilized, but the effects of the crisis haven't.

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Speaker 1: I think that's right, Brian. And if you remember what

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Speaker 1: FED cher J. Powell had to say after the last

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Speaker 1: decision that the effects of the banking crisis and what

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Speaker 1: is likely to be a contraction and credit could result

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Speaker 1: in the equivalent of a maybe twenty five or fifty

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Speaker 1: basis point rate hike, right, And I thought it was

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Speaker 1: very interesting the timing of the meeting coincided so closely

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Speaker 1: with the banking crisis, that before the banking crisis unfolded,

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Speaker 1: and we know this from the minutes, that some FED

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Speaker 1: officials were anticipating a fifty basis point rate hike in March,

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Speaker 1: but all of that changed given the stress in the

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Speaker 1: banking system. Yeah, and I don't know if this is right,

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Speaker 1: but we're hearing more from policymakers that the stock market

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Speaker 1: seems to be priced for a soft landing, not for

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Speaker 1: the mild recession that we got from the FED, whereas

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Speaker 1: maybe the bond market is not. So that's something. One

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Speaker 1: of our guests coming up is Anne Milletti, head of

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Speaker 1: active equity at all Spring Global Investments, and so we'll

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Speaker 1: be talking about that. This is Bloomberg and it's time

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Speaker 1: for global news. French President Emmanuel Macron is trying to

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Speaker 1: clarify his stance on Taiwan, China and the US because

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Speaker 1: they were quite interesting. Let's get to head backs to

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Speaker 1: He's got the details on that in the San Francisco newsroom.

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Speaker 1: D Yeah, Brian boy, you're right at you talk about

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Speaker 1: a tight rope and he can't escape it either. Macron

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Speaker 1: is in the Netherlands today today, flanked by Dutch Prime

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Speaker 1: Minister Mark Ruta, overshadowed by his remarks last week, as

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Speaker 1: you say, regarding being dragged along by the US, and

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Speaker 1: has visited to China and with relations with Taiwan. Not

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Speaker 1: today he confirmed he's in favor of the status quo

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Speaker 1: regarding Taiwan and China, but also said that strategic autonomy

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Speaker 1: and quotes is not merely a concept, but it is

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Speaker 1: becoming a reality in a must. French cabinet officials are

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Speaker 1: working to clarify the statements as well. Bloomberg's Maria Todayo

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Speaker 1: has spoken with France Finance Minister Bruno Lemaire. Overall, what

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Speaker 1: the French President has said it is right and it

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Speaker 1: has been our position for years, this idea that the

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Speaker 1: European Union obviously has a close relationship with the United States.

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Speaker 1: He told me this is our best friend across the world.

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Speaker 1: We spoke with President Biden before the trip, but the

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Speaker 1: French president has always made it clear that the European

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Speaker 1: Union needs to have its own policy when it comes

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Speaker 1: to defense, with the economy and trade, and Maria says

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Speaker 1: more official statements on that are due soon. Bloomberg Is

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Speaker 1: exclusively reported today that Vladimir Putin personally ordered the arrest

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Speaker 1: of Wall Street Journal reporter Evan Gershkovitch. Bloomberg's national security

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Speaker 1: reporter Nick Waddum says this is a game changer. I mean,

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Speaker 1: this isn't something that's happened since the Cold War, and

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Speaker 1: it's essentially sent a messive chill through the journalist community there. Obviously,

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Speaker 1: there are very very few foreign reporters in Russia anymore.

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Speaker 1: Nick says most reporters have packed up and left. South

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Speaker 1: Korea's National Security Director Kem Taijo is saying that after

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Speaker 1: consultations with the US, he leaves a considerable number in

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Speaker 1: quotes of the leaked intelligence documents were fabricated. He says

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Speaker 1: there's no indication the US conducted eavesdropping with malicious intent.

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Speaker 1: Brazil's Lula in China today, arriving meanwhile to me with

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Speaker 1: President Jumping the end of the week. Lula has stated

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Speaker 1: that he wants to talk piece plans for Ukraine to

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Speaker 1: say he has reservations about China's peace plan and wants

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Speaker 1: to talk. US Environmental Protection Agency has announced the strictest

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Speaker 1: ever rules on pollution from cars and trucks. Director Michael

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Speaker 1: Reagan says the phase out of internal combustion engines will

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Speaker 1: mean two thirds of all small vehicle sales and almost

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Speaker 1: half will be electric by twenty thirty two. Reductions in

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Speaker 1: greenhouse gas emissions mean cleaner air and less pollution. It

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Speaker 1: means less sickness, and it means healthier Americans and will

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Speaker 1: ensure he says, the US as leader in this kind

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Speaker 1: of green energy globally. And the cigarette maker Jewel, has

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Speaker 1: been ordered to pay hundred and sixty two million dollars

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Speaker 1: to multiple states who claim the products were addictive and

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Speaker 1: harmful when it intentionally targeted teams and young adults. New

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Speaker 1: York Attorney General Latitia James. This is the largest multi

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Speaker 1: state settlement with Jewel and includes the most stringent restrictions

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Speaker 1: on the company's marketing and sales to protect and to

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Speaker 1: prevent minors from vaping. New York, California, Massachusetts, New Mexico, Colorado, Illinois, Washington,

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Speaker 1: DC parties in the suit. Global News powered by more

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Speaker 1: than twenty seven hundred journalists and analysts and over one

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Speaker 1: hundred and twenty countries. In San Francisco, I'm at Baxter

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Speaker 1: and this is bloomberg ed. Thanks very much, Sean Bryan Curtis,

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Speaker 1: along with Rishads Salamat, and our guest is Anne Milletti,

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Speaker 1: head of Active Equity at all Spring Global Investments. And

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Speaker 1: I wonder whether or not we're at a little bit

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Speaker 1: of an inflection point here for the FED and I

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Speaker 1: can kind of tell this story through the ECB. Francois Villroy,

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Speaker 1: a council member there, says the ECB's work is almost done.

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Speaker 1: That's our lead in our story on the comments, and

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Speaker 1: I think a lot of people would put the FED

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Speaker 1: in that picture as well. However, you have one of

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Speaker 1: the other ECB members, Robert Holtzmann, who told the press

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Speaker 1: that a fourth consecutive fifty basis point increase in May

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Speaker 1: is still warranted. Is that possible with the FED in

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Speaker 1: that inflation is proving stickier than some thought. I do

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Speaker 1: think it is possible that we see another twenty five

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Speaker 1: I prefer we didn't get it, but I do think

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Speaker 1: that the FED is so focused ultra focused on inflation,

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Speaker 1: and the data that we got probably wasn't enough information

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Speaker 1: to prove that the inflation there is behind them. You know,

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Speaker 1: I think the difference between the FED and the companies

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Speaker 1: that our investment teams speak to is that they are

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Speaker 1: all focused on data. But the FED tends to be

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Speaker 1: focused on the data that's in the past, where as

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Speaker 1: you know, company management teams are built on managing their

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Speaker 1: business looking into the future, and so you know we're

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Speaker 1: going to hear a lot more about that as companies

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Speaker 1: are reporting and what their expectations are coming forward. We

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Speaker 1: already saw some cracks in the system obviously, maybe maybe

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Speaker 1: you could call them bigger than cracks with you know,

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Speaker 1: SVB and some of the issues that we saw with

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Speaker 1: the regional banks here in the US. But I prefer

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Speaker 1: that we saw a pause and see where we get to.

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Speaker 1: I think there are signs that we are headed into

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Speaker 1: a pretty big flowdown as it is, but I'm not

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Speaker 1: sure that we're going to get that. Yeah. The thing

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Speaker 1: here also is that you mentioned that you know, looking

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Speaker 1: in the past, So in some ways are company statements

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Speaker 1: as important as the data way getting right now? And

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Speaker 1: you know, as you say, in the past, but you know,

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Speaker 1: when the next set of inflation numbers coming, we get

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Speaker 1: properly the these reflecting base effects. I do think what

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Speaker 1: is important, especially when you're listening to management teams and

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Speaker 1: these calls that we're having again, is not so much

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Speaker 1: what they're reporting on what happened, but what they're talking about,

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Speaker 1: what they're seeing currently and what they're planning for. And

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Speaker 1: so many companies are just talking about the plans for

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Speaker 1: the next quarter, and that's what our investment teams are

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Speaker 1: listening to what are the plans? What are the expectations

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Speaker 1: for spending? That tells you a lot about their expectations

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Speaker 1: for the economy. Are they pulling back on spending? Are

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Speaker 1: they pushing forward? Is it not changing? That tells you

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Speaker 1: a lot about their plan. It also tells you a

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Speaker 1: lot about like what's their cash you know, what's their

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Speaker 1: free cash flow? What's their ability to spend? It begs

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Speaker 1: the question and if you think that the earnings are

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Speaker 1: important for where the stocks are at the moment, whereas

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Speaker 1: the DA is important for the Fed and its job

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Speaker 1: on combating inflation, and that begs the question of whether

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Speaker 1: or not the stock market is slightly out of sync

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Speaker 1: that maybe, as I said earlier with Doug, that the

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Speaker 1: stock market is pricing in a soft dish landing and

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Speaker 1: not a mild recession. I do think there is. I

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Speaker 1: do think you're right about that. When I look at

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Speaker 1: the market. What's interesting about the market, And if you

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Speaker 1: just kind of look at first quarter performance and you

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Speaker 1: break it out between you know, growth and value, small

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Speaker 1: cap and large cap, you do see some differences. Right,

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Speaker 1: So it isn't that the tide lifted all ships and

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Speaker 1: you had big outperformance across the board. The performance has

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Speaker 1: been pretty narrow in what has outperformed and what hasn't.

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Speaker 1: You see large cap growth outperformed. You had about fourteen

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Speaker 1: fourteen and a half percent around that for the first quarter.

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Speaker 1: Small cap value down for the quarter, and so you

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Speaker 1: kind of looked at that and you say, what are

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Speaker 1: you know? What's driving that? Likelywood's drive in a lot

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Speaker 1: of that is the fact that you know, you had

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Speaker 1: interest rates, which we're going up, you know, at the

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Speaker 1: tail end of last year, compressing multiples for growth stocks,

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Speaker 1: doing a little bit of the reverse. As the projection

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Speaker 1: is now that interest rates will come down, the markets

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Speaker 1: pricing that in the growth stock. This is Bloomberg Daybreak Asia,

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