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Speaker 1: This is Bloomberg Daybreak Asia for this Wednesday February in

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Speaker 1: Hong Kong, Tuesday February four in New York and coming

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Speaker 1: up today, US consumer prices rise the most in three months,

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Speaker 1: and FED officials warn of more rate hikes. President Biden

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Speaker 1: names FED Vice chair Lele Brainerd as his top economic aide,

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Speaker 1: and Air India will buy four hundred seventy aircraft from

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Speaker 1: Boeing and Airbus in a record order. Henagon says the

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Speaker 1: latest balloon shot down likely not for intelligence gathering. Senators

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Speaker 1: asked the President to address the public regarding the balloons.

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Speaker 1: President she pledges to deepen ties with Iran. Nikki Haley's

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Speaker 1: in I'm at Baxter with Global News Byron Munich gets

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Speaker 1: past ps GENA Champions League Round of sixteen, first match.

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Speaker 1: I'm Dan Schwartzman. I'll have that story more coming up

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Speaker 1: in Bloomberg Sports. That's all straight ahead on Bloomberg Daybreak Asia,

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Speaker 1: the business news you need to start your day, and

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Speaker 1: just one fifteen minute podcast available on Apple, Spotify, the

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Speaker 1: Bloomberg Business App and everywhere you get your podcasts. Good morning,

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Speaker 1: I'm Do Prisoner and I'm Brian Curtis. Here are the

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Speaker 1: stories we're following today. CPI data shows investors are realizing

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Speaker 1: that inflation is likely to remain higher for some time

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Speaker 1: to come. Former I m F Chief economist Ken Rogoff

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Speaker 1: told us that the feds two percent inflation target remains

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Speaker 1: part of the problem. Back in the day, they should

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Speaker 1: have set three percent instead of two percent, but they didn't.

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Speaker 1: And you know, they've really made commitments. If you change it,

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Speaker 1: it means you might change it again. So I think

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Speaker 1: what in fact will happen. I don't think we're going

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Speaker 1: to have a soft landing, by the way. I think

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Speaker 1: we're gonna have soft but not the landing. I think

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Speaker 1: inflations they're gonna allow to be alibated for longer, but

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Speaker 1: they're gonna say it's going to get back to two percent.

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Speaker 1: We're just taking longer. I think that's going to be

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Speaker 1: the rhetoric. Rogof added that the Fed will have to

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Speaker 1: figure out where to put the interest rate longer terms

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Speaker 1: so that the US doesn't have inflation. So after that

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Speaker 1: CPI report, the Fed officials began stressing the need for

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Speaker 1: further rate increases. We heard from the head of the

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Speaker 1: Dallas Fed, Lory Logan. She was saying much more it

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Speaker 1: may be needed, and the FED should not lock in

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Speaker 1: on a peak interest rate or a precise path of

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Speaker 1: those rate increases. We also heard today from the head

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Speaker 1: of the Richmond FED, Tom Barkin. Here's what he had

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Speaker 1: to say earlier on Bloomberg. We may or may not

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Speaker 1: choose to take rates up further if inflation continues to persist,

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Speaker 1: but we'll have to see what happens. If inflation settles,

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Speaker 1: maybe we don't go quite as far. But if inflation

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Speaker 1: persists and levels well above our our target, maybe we'll

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Speaker 1: have to do more. Richmond Fed President Tom Barkin. Then

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Speaker 1: later in the day it was John Williams, who runs

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Speaker 1: the New York FED, saying subdued economic growth and labor

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Speaker 1: market weakness will likely be required to bring inflation back

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Speaker 1: down to that two percent target. Not to be left

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Speaker 1: out Pat Harker, the head of the Philly FED. He

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Speaker 1: added his voice in believing the Fed will need to

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Speaker 1: take rates somewhere above that five percent level. He also

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Speaker 1: said data will dictate how high the Fed will need

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Speaker 1: to go. Well life goes on, we have President Biden

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Speaker 1: naming FED Vice Chair Lal Brainerd as his top economic aid.

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Speaker 1: She will replace Brian Deese as head of White House

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Speaker 1: National Economic Council. More from Bloomberg's Michael McKee Leal Brainerd

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Speaker 1: has a lot of experience in Washington. She was Deputy

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Speaker 1: Treasury Secretary. She was the deputy head of the National

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Speaker 1: Economic Council before, so she has worked on the political

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Speaker 1: side for many years as well as on the monetary

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Speaker 1: policy side. So she knows everything about what's going on

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Speaker 1: in Washington. And she is also considered to be a

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Speaker 1: very capable kind of I don't want to use the

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Speaker 1: word bureaucrat, but somebody who knows how to get things done.

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Speaker 1: The FED said that brainer had submitted her resignation as

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Speaker 1: vice chair and it's effective on or around February. Her

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Speaker 1: departure means the FED will no longer have one of

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Speaker 1: its most devish voices. FED watchers wasted no time coming

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Speaker 1: up with potential replacements. Names circulating include Karen Dinon and

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Speaker 1: Janice Everley, who served as economist in the Obama Treasury Department,

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Speaker 1: and Brian Sack, the one time head of the New

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Speaker 1: York FEDS Market Group, was also floated as a possibility.

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Speaker 1: And I say life goes on. We often think that

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Speaker 1: it's all about the FED and is all about rates

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Speaker 1: that people do change jobs and go about their business.

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Speaker 1: Indeed they do. After the bell, Airbnb gave an outlook

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Speaker 1: for revenue in the current quarter that was above estimates.

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Speaker 1: More from Bloomberg's Charlie Pellett. It signals that travel demand

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Speaker 1: remains robust even after a record here for growth in

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Speaker 1: two Airbnb has been a major beneficiary of the work

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Speaker 1: and lifestyle changes brought on by the pandemic, and now

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Speaker 1: it's starting to see some of the trends that benefited

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Speaker 1: from such as people renting large rural homes for weeks

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Speaker 1: or months at a time reverse and travelers off for

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Speaker 1: shorter stays in big cities and more international destinations in

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Speaker 1: New York. Charlie Pellette, Bloomberg Daybreak Asia. Air India is

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Speaker 1: behind what stands to be the largest purchase ever made

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Speaker 1: in commercial aviation history. Bloomberg's and Kate's with the story.

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Speaker 1: Air India has announced a four hundred seventy plane order

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Speaker 1: with Airbus and Boeing, underscoring the industry's recovery from the

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Speaker 1: pandemic and the airline's ambition to become a global force.

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Speaker 1: The deal involves two hundred fifty Airbus jets and two

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Speaker 1: hundred twenty Boeing models. President Biden and Indian Prime Minister

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Speaker 1: Norndra Body held a phone conversation to discuss the transaction.

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Speaker 1: Body called on Boeing and other US companies to explore

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Speaker 1: opportunities arising from India's civil aviation sector in Washington and

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Speaker 1: Kate's Bloomberg Daybreak Asia. Well, Doug, I have to say this, Um,

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Speaker 1: it's bad that goods disinflation has slowed a little bit

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Speaker 1: for people hoping that inflation would come down sharply. But

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Speaker 1: it's it's good that services ex housing, which is kind

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Speaker 1: of tied to wages, only rose zero point three sent

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Speaker 1: month on month net net. I think from the equity

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Speaker 1: market standpoint, don't follow out of bed just yet. Yeah,

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Speaker 1: you're right about that. And I think if you look

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Speaker 1: at what the Cleveland Fed is saying, maybe some worrying

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Speaker 1: signs they're underlying inflation tracker is pointing to some price

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Speaker 1: pressure persisting both on a monthly and a twelve month basis,

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Speaker 1: so in selected pockets, I think you're right, Brian. You've

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Speaker 1: got to be very careful about saying that inflation the

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Speaker 1: problem is beginning to kind of wane a little bit.

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Speaker 1: It may be sticky for some time. People seized on

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Speaker 1: Patrick Harker's comment that we're not done yet, but we

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Speaker 1: are likely close. Yeah, but that's also to say that

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Speaker 1: when they get to wherever their destination point is, the

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Speaker 1: so called terminal rate, things may end up being held

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Speaker 1: higher for quite a bit longer. The other thing that

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Speaker 1: I thought was interesting today we were talking about FED speakers.

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Speaker 1: John Williams from the New York Fed was pushing out

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Speaker 1: rate cuts maybe sometimes into or even Yeah. Absolutely. Now

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Speaker 1: it's time for global news. The US says that three

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Speaker 1: of as of yet not identified objects down since Friday.

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Speaker 1: They don't appear to be government linked. That Baxter has

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Speaker 1: Global News from the nine six newswom in San Francisco. Yeah, right, Brian.

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Speaker 1: The Pentagon is saying likely for commercial use and not

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Speaker 1: foreign intelligence gathering. And the White House says now that

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Speaker 1: China has been launching balloons over the US for years,

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Speaker 1: but has just recently ramped things up. National Security Council

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Speaker 1: spokesman John Kirby, we have been studying the Chinese by

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Speaker 1: balloon program since we came into office. This is a

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Speaker 1: program that they have been working on for several years,

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Speaker 1: so they have ramped up their abilities. They have ramped

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Speaker 1: up their deployment of these balloons over just recent years. Yeah.

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Speaker 1: Kirby says Congress was briefed about it and classified setting

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Speaker 1: going back to last August, and the full Senate got

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Speaker 1: a classified briefing about the status today and Bloomberg examily

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Speaker 1: Wilkins says, the overall message coming up a call for transparency,

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Speaker 1: and really what you're getting from senators is a call

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Speaker 1: for transparency, a call for the Way House to take

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Speaker 1: this issue seriously and even if we don't know every

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Speaker 1: last detail about some of these objects, to make sure

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Speaker 1: that they're just clearly communicating with the American people on

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Speaker 1: this because of how sensitive this poticial potential issue could be.

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Speaker 1: Emily says, they call for a speech by the President

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Speaker 1: and Leon Panetta, former U S Secretary of Defense, c

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Speaker 1: i A Director Presidential Chief of Staff today on balance

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Speaker 1: of powers says, one explanation for the recent change in

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Speaker 1: balloon activity is carefully thought out by the Chinese. China

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Speaker 1: may very well be harassing us with these objects, UH

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Speaker 1: to try to create the kind of confusion that's taking

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Speaker 1: place in Washington right now is how we deal with it,

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Speaker 1: and says so far as succeeded. We've got to have

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Speaker 1: a strategy. I think if they are related to China,

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Speaker 1: all of them, then we've got to develop that strategy,

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Speaker 1: hopefully in conjunction with China. If not, we're going to

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Speaker 1: have to continue to shoot him down if they represent

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Speaker 1: a threat to the United States or to our airspace,

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Speaker 1: and he says Biden has done the right thing so far. Meanwhile,

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Speaker 1: the Pentagon scrambled fighter jets to counter for Russian aircraft

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Speaker 1: that approached but did not enter US or Canadian airspace.

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Speaker 1: Fishers describe it as a routine encounter, unrelated to the

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Speaker 1: series of unidentified objects shot down in recent days. Nikki

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Speaker 1: Hayley is officially a candidate for president of the United States.

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Speaker 1: In her presidential video to the here announcement, she immediately

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Speaker 1: pushed buttons on China and Russia. John and Russia are

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Speaker 1: on the march. They all think we can be bullied

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Speaker 1: kicked around. You should know this about me. I don't

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Speaker 1: put up with bullies, and when you kick back, it

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Speaker 1: hurts them more if you're wearing heels. She also says

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Speaker 1: it's a time for Republicans to win the popular vote again.

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Speaker 1: Global News powered by more than undred journalists and analysts

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Speaker 1: and over one hundred twenty countries. In San Francisco, I'm

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Speaker 1: at Baxter and this is bloom This is Bloomberg, Gay

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Speaker 1: Break Asia and Brian Curtis along with Rashad salamat here

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Speaker 1: in Hong Kong. Our guest is Rebecca Walser, President of

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Speaker 1: Walzer Wealth. Rebecca we mentioned that the equity market seemed

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Speaker 1: to take this CPI report more or less in stride,

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Speaker 1: while the bond market reacted much more sharply. Why well,

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Speaker 1: because the bond market obviously has an inverse relationship with

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Speaker 1: rising interest rates. And even though we all believe don't

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Speaker 1: fight the Fed, what we've seen as the market really

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Speaker 1: pushing the Fed to change their position. Right. They all

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Speaker 1: priced in a QW three pivots, and we all the

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Speaker 1: Fed has been very consistent from the beginning that this

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Speaker 1: could be a long road and that they've constantly talked

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Speaker 1: about getting inflation to a specific level for a sustained

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Speaker 1: period of time. So when you have a CPI number

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Speaker 1: that shows, you know, Mrs consensus is showing that the

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Speaker 1: inflation is not happening in US fast, or disinflation is

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Speaker 1: not happening as fast as expected. The market has to

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Speaker 1: start saying, okay, hike in March and a hike in

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Speaker 1: May is not going to be sufficient. We're going to

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Speaker 1: have to hike more. And being a a you know,

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Speaker 1: a terminal rate of five two or five to five

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Speaker 1: is not going to be enough. And if you guys

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Speaker 1: can remember, if you look at the analysis that we

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Speaker 1: really saw in two, the analysis was broader. It always

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Speaker 1: said that the terminary should be somewhere between five and seven.

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Speaker 1: So it was really the market that was kind of

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Speaker 1: clued in onto the lower end of that range. And

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Speaker 1: you see Jamie Diamond coming out last week saying, you know,

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Speaker 1: the sign might have to go to six. And this

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Speaker 1: is just indicative of that. Uh I mean, what has

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Speaker 1: to look at the data a bit more? Uh I

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Speaker 1: suppose in a granny of fashion, because if you look

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Speaker 1: at it, it's shelter, which was the main reason why

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Speaker 1: we still such an increase there. Now what does that

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Speaker 1: tell you, Well, it tells me that we still have

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Speaker 1: a very mobile society that hasn't quite felt the pinch

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Speaker 1: of maybe we would have thought they would have felt

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Speaker 1: because that means that people are still mobile, they're still moving,

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Speaker 1: and they're still making the prices of you know, where

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Speaker 1: they're living continue to a fleet. Whereas if you have

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Speaker 1: a demand destruction like we've had in some of the

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Speaker 1: you know the the uh you know, just disposal income,

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Speaker 1: you know, goods. You see that kind of demand destroying,

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Speaker 1: but you can't, you know, you should be able to

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Speaker 1: pick a cheaper place to live. But like I'm based

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Speaker 1: in Florida and everyone is moving here. My city specifically

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Speaker 1: is like now the number one city a coordinate to

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Speaker 1: Forbes to move to in the United States. So people

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Speaker 1: are still very mobile. Go ahead. In any case, shelter

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Speaker 1: is is longer term. It takes longer to adjust because

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Speaker 1: if for nothing else, one year leases in such But many,

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Speaker 1: many economists are saying that's going to drop like a

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Speaker 1: stone in the second half of this year. You agree

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Speaker 1: with that, um, I I think that it should have

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Speaker 1: already dropped. I mean, it's it's been amazing how tack

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Speaker 1: you know, how sticky this has really been because we

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Speaker 1: see all of the there's just a wide breath of

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Speaker 1: data that we see that we would expect you have

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Speaker 1: already dropped and it's just being really sticky. So I

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Speaker 1: I hate to make it pretty action as fast as

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Speaker 1: next uh, next quarter, but I honestly think that we

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Speaker 1: it has to drop. People can't afford these rates, and

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Speaker 1: we've seen mortgages and honestly housing US starts and all

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Speaker 1: of that completely affected by interest rates. And so it's

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Speaker 1: the rental market that has to come next. Okay, let's

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Speaker 1: have a look now at the overall markets and what

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Speaker 1: they're having to deal with. It's just you know, you've

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Speaker 1: got the FED, You've got the inflation I think is

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Speaker 1: of course very much dominant. But let's not forget we've

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Speaker 1: got Ukraine still, We've got balloons as well, all causing

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Speaker 1: confusion here. And on top of that, I think you

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Speaker 1: mentioned in your notes that the bird fluid new strain

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Speaker 1: of bird flu is also something that with one of

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Speaker 1: the geopolitical risks here as well. So it does seem

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Speaker 1: as they're being attacked on all sides. The confluence of

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Speaker 1: factors um geopolitically, macroeconomically, I have we've never I've never

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Speaker 1: experienced obviously before probably not since World War Two have

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Speaker 1: we had these kinds of massive factors. The difference now gentlemen,

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Speaker 1: is that we are an interglobally a pendant world. We have,

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Speaker 1: you know, globally outsourced most of our manufacturing, obviously to

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Speaker 1: Asia and America, and we rely on them a lot

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Speaker 1: to provide us our pharmaceuticals and and and everything that

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Speaker 1: we live off of. So when we have a globally, um,

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Speaker 1: if we have a geopolitical risk, if we have a

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Speaker 1: Ukraine Russia with NATO kind of coming in and no

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Speaker 1: longer being proxy, but now we're sending tanks between Germany

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Speaker 1: and the United States and we're moving. I mean, Joe

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Speaker 1: Biden said himself last year that if we send tanks

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Speaker 1: to the United sitstens tanks to Russia, are to Ukraine,

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Speaker 1: it's World War three. And now that's what we're doing.

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Speaker 1: So you could have any factor pop off and really

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Speaker 1: create additional economic distress. So lots to weigh up there, Rebecca.

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Speaker 1: But if we look at this most recent news, the

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Speaker 1: CPR report, would you be making changes major changes as

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Speaker 1: a result. You know, I I think that it was

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Speaker 1: exactly what I expected. I expected that it was going

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Speaker 1: to be more sticky than the market was stating. You know,

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Speaker 1: Larry Summers, I agree with his point on Friday on Bloomberg,

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Speaker 1: which was basically saying, we're just not taking it seriously enough.

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Speaker 1: The market has really been trying to push the FED

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Speaker 1: for a faster pivot, and we just don't have the

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Speaker 1: ability to do that right now. People have to remember that,

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Speaker 1: you know, we had a lot of stimulus release since

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Speaker 1: two thousand and eight, really low cost of capital, and

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Speaker 1: we have really had a lot of results from that,

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Speaker 1: and it's not going to be as much as we

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Speaker 1: all felt like, okay, here, let's gets back to a

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Speaker 1: normal year. We just aren't there with the fundamentals of

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Speaker 1: the economy at globally, and so until we get closer

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Speaker 1: to that, we're just going to have to bear through this.

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Speaker 1: And it's horrible. I'm the first to be like, can

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Speaker 1: this just be over? Can I pick my sectors and

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Speaker 1: can I trying to fully reopen? And can we get

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Speaker 1: GDP back up from the three percent of business number

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Speaker 1: they had last year? We need this for the global world,

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Speaker 1: but yet the conditions are not there yet. This is

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Speaker 1: Bloomberg Daybreak Asia, your morning brief on the story is

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