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Speaker 1: This is Bloomberg day Break Asia for this Thursday, June

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Speaker 1: eighth in Hong Kong, Wednesday June seventh in New York

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Speaker 1: and coming up today.

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Speaker 2: The Bank of Canada defies market expectations with a surprise

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Speaker 2: intrast rate hike, while traders weigh the FEDS next move.

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Speaker 1: Game Stop terminates its CEO and reports quarterly sales that

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Speaker 1: missed analyst estimates.

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Speaker 2: And China's four big state banks are said to be

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Speaker 2: cutting dollar deposit rates.

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Speaker 3: Canadian smoke causing health concerns in the US Northeast, as

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Speaker 3: well as slowing air traffic. White House says China re

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Speaker 3: engagement in a very early phase. More hats in the

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Speaker 3: GOP presidential ring. I'm at Baxter with Global News.

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Speaker 4: That's all straight ahead on Bloomberg day Break Asia, the

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Speaker 4: business news you need to start your day in just

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Speaker 4: one fifteen minute podcast available on Apple, Spotify, the Bloomberg

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Speaker 4: Business App, and everywhere you get your podcasts.

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Speaker 2: Good morning, I'm Doug Chrisner and I'm Brian Curtiz.

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Speaker 1: Here are the stories we're following today. The Bank of

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Speaker 1: Canada defied expectations by restarting its interest rate tightening campaign.

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Speaker 1: Policymakers raised the overnight lending rate to four and three

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Speaker 1: quarters percent, the highest since two thousand and one. The

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Speaker 1: move was expected by only one in five economists in

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Speaker 1: a Bloomberg survey. More from Bloomberg's Amber Canoir.

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Speaker 5: They've had to acknowledge that underlying inflation remains stubbornly high.

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Speaker 5: They also noted Canada's economy was faster than expected, and

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Speaker 5: they reference that inflation ticked up in April. This seems

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Speaker 5: to be the game changer and why they decided to

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Speaker 5: move at this meeting.

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Speaker 1: The Bank of Canada increase follows a surprise twenty five

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Speaker 1: basis point boost on Tuesday by the Reserve Bank of Australia.

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Speaker 1: Now traders are wondering whether other central banks are going

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Speaker 1: to continue or are done with their own tightening policy.

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Speaker 1: Decisions to do from the FED and the European Central

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Speaker 1: Bank next week.

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Speaker 2: Now to Coinbase Company CEO Brian Armstrong, saying today the

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Speaker 2: Securities and Exchange Commission began to change its tone in

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Speaker 2: questioning the crypto exchange last year. Yesterday you may recall

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Speaker 2: the SEC file the lawsuit against Coinbase for violating securities rules. Today,

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Speaker 2: Armstrong discussed past SEC meetings here in New York at

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Speaker 2: the Bloomberg invest conference.

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Speaker 6: It started to come to us with more questions about

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Speaker 6: the business. So we were very forthcoming. We met with

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Speaker 6: them probably thirty times over the last year, and we

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Speaker 6: started to kind of ask them for feedback, and we said,

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Speaker 6: you know, we would like there to be a robust

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Speaker 6: market in the US to trade cryptosecurities. Of the thousand

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Speaker 6: plus assets we've reviewed today, we've rejected ninety percent of them.

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Speaker 6: The ones we've we believer commodities. What feedback do you

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Speaker 6: have for this for us? How can we come in

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Speaker 6: and register, how can we work together? And unfortunately we

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Speaker 6: were met with silence.

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Speaker 2: That is coinbased CEO Brian Armstrong. He went on to

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Speaker 2: say the company has not seen any risk of losing

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Speaker 2: its customers or banking partners since the SEC lawsuit, and

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Speaker 2: he said it will be business as usual at least

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Speaker 2: in the near term.

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Speaker 1: Brian GameStop has fired Matt Furlong, it's CEO of the

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Speaker 1: past two years, and the stock bolted to the upside.

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Speaker 1: We'll tell you more about that in a moment. The

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Speaker 1: company also says that chairman Ryan Cohen has taken on

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Speaker 1: a new executive rule. Let's get the story from Bloomberg's

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Speaker 1: Charlie Pellett.

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Speaker 7: The company says Cohen's responsibility as executive chairman of the

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Speaker 7: video game chain will include management oversight and capital allocation.

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Speaker 7: The money losing retailer also reported fiscal first quarter sales

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Speaker 7: that fell short of analyst estimates. Game Stop has struggled

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Speaker 7: to adapt to the increasing share of game sales conducted

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Speaker 7: online underway from stores. Furlong delivered a profitable holiday quarter

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Speaker 7: for the company, in part due to job cuts and

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Speaker 7: store closings. He said at the time that game Stop

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Speaker 7: would become a much healthier business in New York. Charlie Pellett, Bloomberg,

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Speaker 7: Daybreak Asia.

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Speaker 2: And right Now game Stop shares in the late set

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Speaker 2: hire by five and three quarter percent. Well, we move

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Speaker 2: now to the new planned marriage between the PGA Tour

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Speaker 2: and Live Golf. It could soon run into some serious

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Speaker 2: anti trust issues. More from Bloomberg's Denise Pellegrini.

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Speaker 8: We're hearing officials view this tie up as a brazen

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Speaker 8: play loaded with red flags, and their plan to join

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Speaker 8: with the European golf circuit DP World Tour and combine

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Speaker 8: their golf related businesses and writes into a new commercial entity,

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Speaker 8: is already raising serious concerns from US and European anti

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Speaker 8: trust enforcers. The agreement will resolve the ongoing anti trust

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Speaker 8: litigation between PGA and Live, though final terms of the deal,

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Speaker 8: including finances, are apparently still in the works, and the

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Speaker 8: new for profit entity involves three of the biggest golf

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Speaker 8: tours in the world proposing to coordinate key aspects of

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Speaker 8: their business on which they currently compete, according to sources,

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Speaker 8: and that means competition. Enforcers are likely to want to

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Speaker 8: know how the proposed partnership will impact players, sponsorships, and

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Speaker 8: also broadcast right Denise Pelgridy Bloomberg day Break Asia well.

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Speaker 1: China's biggest banks are said to be cutting dollar deposit rates.

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Speaker 1: Bloomberg's Joan Wong has that story from Hong Kong.

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Speaker 9: Sources say some of the lenders provincial branches now offer

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Speaker 9: around five point seven percent on dollar deposits, that down

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Speaker 9: from six percent previously. The move comes at a time

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Speaker 9: when strong demand for the US currency has helped push

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Speaker 9: the yuan to US six months low. The deposit rate

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Speaker 9: cut indicates Chinese policymakers are seeking to manage the scale

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Speaker 9: of the rim and Bee's decline. However, economists say the

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Speaker 9: cut is probably not enough to deter carry traits. These

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Speaker 9: are traits that use cheaper yuon borrowings to fund dallar purchases.

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Speaker 9: China's Central Bank has vowed to curb currency speculation and

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Speaker 9: strengthen management of dollar deposits in Hong Kong. I'm Joann

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Speaker 9: Wang Bloomberg Day Brick Asia.

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Speaker 1: I'm Brian Curtis along with Doug Kristner. Doug, I I

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Speaker 1: love the threads that flow through all of this. People

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Speaker 1: borrowing in yuan because it's cheap, and buying dollars where

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Speaker 1: they can get higher rates. And now this notion of

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Speaker 1: higher ras. We just saw this on the Bank of

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Speaker 1: Canada that you just reported on that has hit technologies.

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Speaker 1: So you get this little pullback here and video for instance,

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Speaker 1: down now more than seven percent in a week. I mean,

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Speaker 1: it's nothing too dramatic given all the gains that we

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Speaker 1: had seen, but it does raise the question of the

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Speaker 1: trend that we've spoken about over the past couple of

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Speaker 1: weeks about into cyclical value like transports and banks. We'll

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Speaker 1: make up the slack and does it continue. Transports, by

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Speaker 1: the way, up ten percent in the past month.

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Speaker 2: So if you look at the yield curve now and

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Speaker 2: the move up with the we had in rates right

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Speaker 2: across the curve, particularly at the long end. One of

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Speaker 2: the things I'm wondering about, Brian, is whether or not

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Speaker 2: the market is becoming more convinced that a soft landing

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Speaker 2: is possible. Yes, there's been this debate around recession. Maybe

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Speaker 2: we move it out until twenty twenty four. I think

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Speaker 2: the other thing that's curious here is that for all

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Speaker 2: of the calls about recession is really yet to manifest,

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Speaker 2: although I guess there are some people that have been

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Speaker 2: saying under the surface, we've been seeing a recession in

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Speaker 2: certain pockets of the economy like housing for example.

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Speaker 1: And banks.

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Speaker 2: Yeah, yeah, yeah, the extent to which maybe the market

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Speaker 2: is becoming more comfortable with this idea that a soft

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Speaker 2: landing as possible.

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Speaker 1: Yeah, It's interesting when you see consumer borrowing still strong,

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Speaker 1: and you see consumer spending still strong, and jobs are

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Speaker 1: relatively strong, That to me is the key. Once the

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Speaker 1: job's crack, if that happens, we haven't seen it yet,

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Speaker 1: just a few glimpses here and there. But once that happens,

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Speaker 1: and when you don't have a job, you don't spend,

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Speaker 1: and I think that's a fact.

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Speaker 2: I think that's right. You were referencing some of the

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Speaker 2: currency action a moment ago. I thought it was very

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Speaker 2: interesting that we had yields move up quite a bit today,

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Speaker 2: but the dollar did very little. And we have a

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Speaker 2: lot of yen weakness right now as we get set

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Speaker 2: for trading at Japan and weakness in the offshore. You

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Speaker 2: want as well, we are six or seven fourteen right now.

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Speaker 1: Absolutely, Yeah, that's part of that story that is developing

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Speaker 1: in China, the story that Juan reported on. And by

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Speaker 1: cutting the rates on dollar deposits, that sort of helps

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Speaker 1: strengthen the you on a little bit because you get

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Speaker 1: less on your dollar deposits, and so maybe you'll you'll

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Speaker 1: keep your money and you on. Now it's time for

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Speaker 1: Global News. Smoke from the Canadian wildfires is choking much

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Speaker 1: of the Northeast and it's causing health warnings and it's

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Speaker 1: affecting air travel ed. Baxter has Global News from nine

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Speaker 1: to sixty newsroom in San Francisco. Ed.

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Speaker 3: Yeah, it is really a mess, Brian. You're right. Meteorologists

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Speaker 3: are saying it will last several more days as well.

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Speaker 3: New York City Mayor Eric Adams says it is an

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Speaker 3: unprecedented event and residents must take measures to protect themselves.

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Speaker 10: We recommend vulnerable New Yorkers stay inside and non New

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Speaker 10: Yorkers should limit outdoor activity to the greatest extent possible.

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Speaker 3: Yeah, including wearing masks outside. It's making managing air traffic

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Speaker 3: flow very problematic. There have been ground stops from time

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Speaker 3: to time of both like and New York and at Newark,

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Speaker 3: New Jersey. Now Bloomberg Intelligence George Ferguson says equipment is

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Speaker 3: out of place. He expects it to go on for

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Speaker 3: a number of days.

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Speaker 11: Given the airlines are flying. You know, their schedules are

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Speaker 11: pretty packed. Their planes are pretty full, So anytime you

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Speaker 11: miss a flight, you have a lot of people to

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Speaker 11: reschedule and get onto other flights. It's hard. I bet

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Speaker 11: you have for a week things out of.

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Speaker 3: Sinc Now, having said that international flights may fare better,

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Speaker 3: he says probably for the.

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Speaker 11: Long haul flights to Europe, they're probably okay. Into Asia,

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Speaker 11: they're probably okay because they usually prioritize them.

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Speaker 3: Now, the meteorologists say there could be some rain showers

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Speaker 3: in the next couple of days, in the New York area,

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Speaker 3: which could help a bit, but it really depends on

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Speaker 3: the fires and smells themselves and how much smoke they

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Speaker 3: put out. The Senate majority of Leader Chuck Schumer of

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Speaker 3: New York says the message regarding climate now should come

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Speaker 3: out of this.

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Speaker 12: Climate change continues to make these disasters worse. Warmer temperature

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Speaker 12: and severe droughts mean forests burn faster, burn hotter, and

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Speaker 12: burned bigger.

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Speaker 3: Schumer says, a warning from nature. There's a lot to do.

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Speaker 3: The White House says us China re engagement is still

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Speaker 3: in a very early phase and that uncertain. Kurt Campbell,

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Speaker 3: White House Indo Pacific Coordinator, says the aim is for

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Speaker 3: constructive diplomacy with Beijing on issues like climate change, but

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Speaker 3: says completion is a key and competition is a key,

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Speaker 3: and that aim is to keep within reasonable bounds in competition.

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Speaker 3: More hats in the ring of the Republican nomination today,

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Speaker 3: Mike Pence making it official with being a Christian, he says,

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Speaker 3: and defeating Donald Trump as highly prioritized issues.

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Speaker 13: I believe that anyone who puts themselves over the Constitution

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Speaker 13: should never be president of the United States, and anyone

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Speaker 13: who asks someone else to put them over the constitution,

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Speaker 13: should never be president of the United States again.

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Speaker 3: Yeah, it's Christy at a town hall, making it clear

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Speaker 3: his target is as well, Donald Trump. The grift from

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Speaker 3: this family is breathtaking.

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Speaker 8: It's breathtaking.

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Speaker 3: Jared Kushner and Ivanka Kushner walk out of the White

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Speaker 3: House and months later get two billion dollars from the Saudis.

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Speaker 12: Two billion dollars from the Saudis.

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Speaker 14: You think it's because he's some kind of investing genius.

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Speaker 3: And North Dakota Governor Douglas Bergham also in the race today,

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Speaker 3: and a speculation continues over whether Japanese Prime Minister Fumiokashia

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Speaker 3: will call for early election. He's proposed a long list

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Speaker 3: of policy targets for this year. On top, he mentioned childcare.

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Speaker 3: Global News powered by more than twenty seven hundred journalists

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Speaker 3: in analyt and so over one hundred and twenty countries.

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Speaker 3: In San Francisco, I'm at Baxter and this is Bloomberg.

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Speaker 1: I'm Brian Curtis in Hong Kong along with Rushad Salamat

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Speaker 1: and our guest is George Ball, Chairman of Sanders Morris Harris.

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Speaker 1: George always really excited when you're on the program. I

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Speaker 1: like some of the points that you've given us, some

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Speaker 1: of your talking points, business can live with five percent rates,

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Speaker 1: and that we could go higher here, and by high

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Speaker 1: in terms of bitcoin, by it when it goes over

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Speaker 1: twenty nine thousands. So we have a lot of interesting

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Speaker 1: things to talk about. Doug Ray's the notion a few

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Speaker 1: moments ago about soft landing, no recession, higher rates. It

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Speaker 1: all kind of fits a little in with your theme

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Speaker 1: here walk us through why you like stocks here.

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Speaker 15: There's a great deal of division among the leading investment

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Speaker 15: firms in terms of where the stock market, where earnings

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Speaker 15: are going. You've got Morgan Stanley the Great Bears, on

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Speaker 15: the one hand, broadly saying that the SMP of five

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Speaker 15: hundred will learn one hundred and eighty one hundred and

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Speaker 15: ninety dollars this year. You've got Gold and Sacks interpretively

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Speaker 15: at least saying now it's going to be two hundred

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Speaker 15: and twenty dollars. That's a very broad difference, enough, unfortunately

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Speaker 15: or fortunately to remember the long eras when five percent

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Speaker 15: rates were the norm, and that's really for what we've

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Speaker 15: got right now. There's been a period of a decade

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Speaker 15: now when nominal and real rates around GERO, but that's abnormal.

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Speaker 15: American business has shown that it can accommodate what I

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Speaker 15: would call a more traditional and more normal level of

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Speaker 15: interest rates and profit maintain their profit margins. I think

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Speaker 15: that's very constructive for the US equity markets over the

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Speaker 15: balance of this year and in the next year as well.

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Speaker 15: So I think that the stock market's action, which is

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Speaker 15: at least moderately constructive, reflects the view that the business

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Speaker 15: leadership is going to be able to embrace five percent

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Speaker 15: interst rates and prosper well.

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Speaker 14: TU percent interest rates historically quite usual. And the thing is,

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Speaker 14: when you go around into your stock selection, how closely

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Speaker 14: do you look at debt and debt servicing costs and

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Speaker 14: making your decisions as to what you will be buying.

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Speaker 15: Very carefully. There are two things that are I guess

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Speaker 15: the alpha and omega of debt. A. There are companies

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Speaker 15: largely in finance dependent businesses, think ri i ts, think

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Speaker 15: debt heavy companies that will have bonds maturing over the

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Speaker 15: next year or two that have lower rates of interest

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Speaker 15: that could be under significant drest as they seek to

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Speaker 15: a need to refinance it. I stay away from those,

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Speaker 15: there are a number of companies, and I will say

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Speaker 15: quite a few of them are in the what I

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Speaker 15: would call mid tech businesses that are very, very cash

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Speaker 15: heavy and have minimal death or death that has maturity

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Speaker 15: well off into the future, and they're well positioned. They're

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Speaker 15: not threatened by a higher real or numeral industrate.

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Speaker 1: That's an interesting position. Maybe you can give us a

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Speaker 1: little bit more on that. You would sell Fang here

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Speaker 1: and you would buy some mid tech and explain why.

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Speaker 15: The fang stocks that I would thrown the video into

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Speaker 15: that have done wonderfully this year after a absolutely dismal

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Speaker 15: nineteen twenty two. They're up, but they're off a horribly

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Speaker 15: low base. They can't continue to grow the way that

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Speaker 15: they used to. They're simply too big, got economies of scale.

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Speaker 15: They're great companies, they have a huge amount of cash,

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Speaker 15: but they're single digit growers now with already fairly healthy

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Speaker 15: profit margins. They've they've had a nice bounce off a

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Speaker 15: low base, but it's very unlikely that they've got the

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Speaker 15: oomph to continue to appreciate the way they have in

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Speaker 15: the in the first uh quarter of this year. On

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Speaker 15: the other hand, there are a lot of flight with

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Speaker 15: term as mid mid tech companies. They're pretty good size,

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Speaker 15: they're well established, They've got hundreds of millions of dollars

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Speaker 15: of revenues. Many of them were not profitable, but.

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Speaker 7: They have.

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Speaker 15: Substantial amounts of cash. Others of them had uh significant

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Speaker 15: pre cash flow, and they're now looking to improve their

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Speaker 15: profit margins to throw off big earnings per share. And

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Speaker 15: that's where I think the big opportunities are in the

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Speaker 15: remainder of this year.

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Speaker 14: Jeege. I'm just taking a couple of what to the

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Speaker 14: stuff you like here as well in the mid tech space,

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Speaker 14: a Trade Desk, open Door Technologies, which is into the

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Speaker 14: ad digital platform for residential real estates. Now trade Desk

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Speaker 14: is you say, you know, the fans a hat a

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Speaker 14: good run up, but Trade Desk is up sixty four

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Speaker 14: percent year to date and open Door Technology is one

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Speaker 14: hundred percent.

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Speaker 15: And without looking at a chart right now, they were

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Speaker 15: both down ed to ninety plus percent last year. So yes,

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Speaker 15: they're up this year, but only off from a very

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Speaker 15: very low base. They were totally traumatized last year. And

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Speaker 15: if you look their free cash floward their opportunities, the

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Speaker 15: stealing for them is still way off in the future.

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Speaker 1: So, George, a little bit of that is mean reversion,

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Speaker 1: as you suggest, I'm starting to hear more about people

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Speaker 1: talking about China as a way of getting out of

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Speaker 1: big tech in the US. Yeah. Maybe they're looking at,

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Speaker 1: you know, cyclical value, but then they're also talking about

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Speaker 1: China because it is it's a lot cheaper than it

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Speaker 1: used to be. Can you can you stomach that?

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Speaker 15: No? I can't. When you've got you a political risk

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Speaker 15: and you're playing in somebody else's backyard, you're very app

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Speaker 15: to be to be blindsided. One of the things I

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Speaker 15: heard from very successful investors many many years ago is

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Speaker 15: if you're playing by someone else's rules and you aren't

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Speaker 15: indigenous to those rules, you're going to get tricked much

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Speaker 15: more often than not. China does well hate that's great,

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Speaker 15: but I can't tell you. Yeah, I don't know. Well,

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Speaker 15: I know.

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Speaker 1: Final tough question here thirty seconds has to be why

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Speaker 1: do you like the five year note rather than say,

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Speaker 1: the three month bill? When the three month is yielding

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Speaker 1: of almost two hundred bases.

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Speaker 15: Points more, the reinvestment risk on the three month bill

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Speaker 15: is too high. If you buy the five year bill,

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Speaker 15: you're getting the best blend of not a lot of duration,

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Speaker 15: risk of not having to reinvest the money when maybe

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Speaker 15: the rates are a whole lot the lower the volatility

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Speaker 15: isn't high. The five year is the best of all worlds.

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Speaker 15: It's the mama there of the on maturity curve.

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Speaker 1: This is Bloomberg Daybreak Asia, your morning brief on this

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