Speaker 1: This is Bloomberg Daybreak Asia for this Wednesday February in
Speaker 1: Hong Kong, Tuesday February four in New York and coming
Speaker 1: up today, US consumer prices rise the most in three months,
Speaker 1: and FED officials warn of more rate hikes. President Biden
Speaker 1: names FED Vice chair Lele Brainerd as his top economic aide,
Speaker 1: and Air India will buy four hundred seventy aircraft from
Speaker 1: Boeing and Airbus in a record order. Henagon says the
Speaker 1: latest balloon shot down likely not for intelligence gathering. Senators
Speaker 1: asked the President to address the public regarding the balloons.
Speaker 1: President she pledges to deepen ties with Iran. Nikki Haley's
Speaker 1: in I'm at Baxter with Global News Byron Munich gets
Speaker 1: past ps GENA Champions League Round of sixteen, first match.
Speaker 1: I'm Dan Schwartzman. I'll have that story more coming up
Speaker 1: in Bloomberg Sports. That's all straight ahead on Bloomberg Daybreak Asia,
Speaker 1: the business news you need to start your day, and
Speaker 1: just one fifteen minute podcast available on Apple, Spotify, the
Speaker 1: Bloomberg Business App and everywhere you get your podcasts. Good morning,
Speaker 1: I'm Do Prisoner and I'm Brian Curtis. Here are the
Speaker 1: stories we're following today. CPI data shows investors are realizing
Speaker 1: that inflation is likely to remain higher for some time
Speaker 1: to come. Former I m F Chief economist Ken Rogoff
Speaker 1: told us that the feds two percent inflation target remains
Speaker 1: part of the problem. Back in the day, they should
Speaker 1: have set three percent instead of two percent, but they didn't.
Speaker 1: And you know, they've really made commitments. If you change it,
Speaker 1: it means you might change it again. So I think
Speaker 1: what in fact will happen. I don't think we're going
Speaker 1: to have a soft landing, by the way. I think
Speaker 1: we're gonna have soft but not the landing. I think
Speaker 1: inflations they're gonna allow to be alibated for longer, but
Speaker 1: they're gonna say it's going to get back to two percent.
Speaker 1: We're just taking longer. I think that's going to be
Speaker 1: the rhetoric. Rogof added that the Fed will have to
Speaker 1: figure out where to put the interest rate longer terms
Speaker 1: so that the US doesn't have inflation. So after that
Speaker 1: CPI report, the Fed officials began stressing the need for
Speaker 1: further rate increases. We heard from the head of the
Speaker 1: Dallas Fed, Lory Logan. She was saying much more it
Speaker 1: may be needed, and the FED should not lock in
Speaker 1: on a peak interest rate or a precise path of
Speaker 1: those rate increases. We also heard today from the head
Speaker 1: of the Richmond FED, Tom Barkin. Here's what he had
Speaker 1: to say earlier on Bloomberg. We may or may not
Speaker 1: choose to take rates up further if inflation continues to persist,
Speaker 1: but we'll have to see what happens. If inflation settles,
Speaker 1: maybe we don't go quite as far. But if inflation
Speaker 1: persists and levels well above our our target, maybe we'll
Speaker 1: have to do more. Richmond Fed President Tom Barkin. Then
Speaker 1: later in the day it was John Williams, who runs
Speaker 1: the New York FED, saying subdued economic growth and labor
Speaker 1: market weakness will likely be required to bring inflation back
Speaker 1: down to that two percent target. Not to be left
Speaker 1: out Pat Harker, the head of the Philly FED. He
Speaker 1: added his voice in believing the Fed will need to
Speaker 1: take rates somewhere above that five percent level. He also
Speaker 1: said data will dictate how high the Fed will need
Speaker 1: to go. Well life goes on, we have President Biden
Speaker 1: naming FED Vice Chair Lal Brainerd as his top economic aid.
Speaker 1: She will replace Brian Deese as head of White House
Speaker 1: National Economic Council. More from Bloomberg's Michael McKee Leal Brainerd
Speaker 1: has a lot of experience in Washington. She was Deputy
Speaker 1: Treasury Secretary. She was the deputy head of the National
Speaker 1: Economic Council before, so she has worked on the political
Speaker 1: side for many years as well as on the monetary
Speaker 1: policy side. So she knows everything about what's going on
Speaker 1: in Washington. And she is also considered to be a
Speaker 1: very capable kind of I don't want to use the
Speaker 1: word bureaucrat, but somebody who knows how to get things done.
Speaker 1: The FED said that brainer had submitted her resignation as
Speaker 1: vice chair and it's effective on or around February. Her
Speaker 1: departure means the FED will no longer have one of
Speaker 1: its most devish voices. FED watchers wasted no time coming
Speaker 1: up with potential replacements. Names circulating include Karen Dinon and
Speaker 1: Janice Everley, who served as economist in the Obama Treasury Department,
Speaker 1: and Brian Sack, the one time head of the New
Speaker 1: York FEDS Market Group, was also floated as a possibility.
Speaker 1: And I say life goes on. We often think that
Speaker 1: it's all about the FED and is all about rates
Speaker 1: that people do change jobs and go about their business.
Speaker 1: Indeed they do. After the bell, Airbnb gave an outlook
Speaker 1: for revenue in the current quarter that was above estimates.
Speaker 1: More from Bloomberg's Charlie Pellett. It signals that travel demand
Speaker 1: remains robust even after a record here for growth in
Speaker 1: two Airbnb has been a major beneficiary of the work
Speaker 1: and lifestyle changes brought on by the pandemic, and now
Speaker 1: it's starting to see some of the trends that benefited
Speaker 1: from such as people renting large rural homes for weeks
Speaker 1: or months at a time reverse and travelers off for
Speaker 1: shorter stays in big cities and more international destinations in
Speaker 1: New York. Charlie Pellette, Bloomberg Daybreak Asia. Air India is
Speaker 1: behind what stands to be the largest purchase ever made
Speaker 1: in commercial aviation history. Bloomberg's and Kate's with the story.
Speaker 1: Air India has announced a four hundred seventy plane order
Speaker 1: with Airbus and Boeing, underscoring the industry's recovery from the
Speaker 1: pandemic and the airline's ambition to become a global force.
Speaker 1: The deal involves two hundred fifty Airbus jets and two
Speaker 1: hundred twenty Boeing models. President Biden and Indian Prime Minister
Speaker 1: Norndra Body held a phone conversation to discuss the transaction.
Speaker 1: Body called on Boeing and other US companies to explore
Speaker 1: opportunities arising from India's civil aviation sector in Washington and
Speaker 1: Kate's Bloomberg Daybreak Asia. Well, Doug, I have to say this, Um,
Speaker 1: it's bad that goods disinflation has slowed a little bit
Speaker 1: for people hoping that inflation would come down sharply. But
Speaker 1: it's it's good that services ex housing, which is kind
Speaker 1: of tied to wages, only rose zero point three sent
Speaker 1: month on month net net. I think from the equity
Speaker 1: market standpoint, don't follow out of bed just yet. Yeah,
Speaker 1: you're right about that. And I think if you look
Speaker 1: at what the Cleveland Fed is saying, maybe some worrying
Speaker 1: signs they're underlying inflation tracker is pointing to some price
Speaker 1: pressure persisting both on a monthly and a twelve month basis,
Speaker 1: so in selected pockets, I think you're right, Brian. You've
Speaker 1: got to be very careful about saying that inflation the
Speaker 1: problem is beginning to kind of wane a little bit.
Speaker 1: It may be sticky for some time. People seized on
Speaker 1: Patrick Harker's comment that we're not done yet, but we
Speaker 1: are likely close. Yeah, but that's also to say that
Speaker 1: when they get to wherever their destination point is, the
Speaker 1: so called terminal rate, things may end up being held
Speaker 1: higher for quite a bit longer. The other thing that
Speaker 1: I thought was interesting today we were talking about FED speakers.
Speaker 1: John Williams from the New York Fed was pushing out
Speaker 1: rate cuts maybe sometimes into or even Yeah. Absolutely. Now
Speaker 1: it's time for global news. The US says that three
Speaker 1: of as of yet not identified objects down since Friday.
Speaker 1: They don't appear to be government linked. That Baxter has
Speaker 1: Global News from the nine six newswom in San Francisco. Yeah, right, Brian.
Speaker 1: The Pentagon is saying likely for commercial use and not
Speaker 1: foreign intelligence gathering. And the White House says now that
Speaker 1: China has been launching balloons over the US for years,
Speaker 1: but has just recently ramped things up. National Security Council
Speaker 1: spokesman John Kirby, we have been studying the Chinese by
Speaker 1: balloon program since we came into office. This is a
Speaker 1: program that they have been working on for several years,
Speaker 1: so they have ramped up their abilities. They have ramped
Speaker 1: up their deployment of these balloons over just recent years. Yeah.
Speaker 1: Kirby says Congress was briefed about it and classified setting
Speaker 1: going back to last August, and the full Senate got
Speaker 1: a classified briefing about the status today and Bloomberg examily
Speaker 1: Wilkins says, the overall message coming up a call for transparency,
Speaker 1: and really what you're getting from senators is a call
Speaker 1: for transparency, a call for the Way House to take
Speaker 1: this issue seriously and even if we don't know every
Speaker 1: last detail about some of these objects, to make sure
Speaker 1: that they're just clearly communicating with the American people on
Speaker 1: this because of how sensitive this poticial potential issue could be.
Speaker 1: Emily says, they call for a speech by the President
Speaker 1: and Leon Panetta, former U S Secretary of Defense, c
Speaker 1: i A Director Presidential Chief of Staff today on balance
Speaker 1: of powers says, one explanation for the recent change in
Speaker 1: balloon activity is carefully thought out by the Chinese. China
Speaker 1: may very well be harassing us with these objects, UH
Speaker 1: to try to create the kind of confusion that's taking
Speaker 1: place in Washington right now is how we deal with it,
Speaker 1: and says so far as succeeded. We've got to have
Speaker 1: a strategy. I think if they are related to China,
Speaker 1: all of them, then we've got to develop that strategy,
Speaker 1: hopefully in conjunction with China. If not, we're going to
Speaker 1: have to continue to shoot him down if they represent
Speaker 1: a threat to the United States or to our airspace,
Speaker 1: and he says Biden has done the right thing so far. Meanwhile,
Speaker 1: the Pentagon scrambled fighter jets to counter for Russian aircraft
Speaker 1: that approached but did not enter US or Canadian airspace.
Speaker 1: Fishers describe it as a routine encounter, unrelated to the
Speaker 1: series of unidentified objects shot down in recent days. Nikki
Speaker 1: Hayley is officially a candidate for president of the United States.
Speaker 1: In her presidential video to the here announcement, she immediately
Speaker 1: pushed buttons on China and Russia. John and Russia are
Speaker 1: on the march. They all think we can be bullied
Speaker 1: kicked around. You should know this about me. I don't
Speaker 1: put up with bullies, and when you kick back, it
Speaker 1: hurts them more if you're wearing heels. She also says
Speaker 1: it's a time for Republicans to win the popular vote again.
Speaker 1: Global News powered by more than undred journalists and analysts
Speaker 1: and over one hundred twenty countries. In San Francisco, I'm
Speaker 1: at Baxter and this is bloom This is Bloomberg, Gay
Speaker 1: Break Asia and Brian Curtis along with Rashad salamat here
Speaker 1: in Hong Kong. Our guest is Rebecca Walser, President of
Speaker 1: Walzer Wealth. Rebecca we mentioned that the equity market seemed
Speaker 1: to take this CPI report more or less in stride,
Speaker 1: while the bond market reacted much more sharply. Why well,
Speaker 1: because the bond market obviously has an inverse relationship with
Speaker 1: rising interest rates. And even though we all believe don't
Speaker 1: fight the Fed, what we've seen as the market really
Speaker 1: pushing the Fed to change their position. Right. They all
Speaker 1: priced in a QW three pivots, and we all the
Speaker 1: Fed has been very consistent from the beginning that this
Speaker 1: could be a long road and that they've constantly talked
Speaker 1: about getting inflation to a specific level for a sustained
Speaker 1: period of time. So when you have a CPI number
Speaker 1: that shows, you know, Mrs consensus is showing that the
Speaker 1: inflation is not happening in US fast, or disinflation is
Speaker 1: not happening as fast as expected. The market has to
Speaker 1: start saying, okay, hike in March and a hike in
Speaker 1: May is not going to be sufficient. We're going to
Speaker 1: have to hike more. And being a a you know,
Speaker 1: a terminal rate of five two or five to five
Speaker 1: is not going to be enough. And if you guys
Speaker 1: can remember, if you look at the analysis that we
Speaker 1: really saw in two, the analysis was broader. It always
Speaker 1: said that the terminary should be somewhere between five and seven.
Speaker 1: So it was really the market that was kind of
Speaker 1: clued in onto the lower end of that range. And
Speaker 1: you see Jamie Diamond coming out last week saying, you know,
Speaker 1: the sign might have to go to six. And this
Speaker 1: is just indicative of that. Uh I mean, what has
Speaker 1: to look at the data a bit more? Uh I
Speaker 1: suppose in a granny of fashion, because if you look
Speaker 1: at it, it's shelter, which was the main reason why
Speaker 1: we still such an increase there. Now what does that
Speaker 1: tell you, Well, it tells me that we still have
Speaker 1: a very mobile society that hasn't quite felt the pinch
Speaker 1: of maybe we would have thought they would have felt
Speaker 1: because that means that people are still mobile, they're still moving,
Speaker 1: and they're still making the prices of you know, where
Speaker 1: they're living continue to a fleet. Whereas if you have
Speaker 1: a demand destruction like we've had in some of the
Speaker 1: you know the the uh you know, just disposal income,
Speaker 1: you know, goods. You see that kind of demand destroying,
Speaker 1: but you can't, you know, you should be able to
Speaker 1: pick a cheaper place to live. But like I'm based
Speaker 1: in Florida and everyone is moving here. My city specifically
Speaker 1: is like now the number one city a coordinate to
Speaker 1: Forbes to move to in the United States. So people
Speaker 1: are still very mobile. Go ahead. In any case, shelter
Speaker 1: is is longer term. It takes longer to adjust because
Speaker 1: if for nothing else, one year leases in such But many,
Speaker 1: many economists are saying that's going to drop like a
Speaker 1: stone in the second half of this year. You agree
Speaker 1: with that, um, I I think that it should have
Speaker 1: already dropped. I mean, it's it's been amazing how tack
Speaker 1: you know, how sticky this has really been because we
Speaker 1: see all of the there's just a wide breath of
Speaker 1: data that we see that we would expect you have
Speaker 1: already dropped and it's just being really sticky. So I
Speaker 1: I hate to make it pretty action as fast as
Speaker 1: next uh, next quarter, but I honestly think that we
Speaker 1: it has to drop. People can't afford these rates, and
Speaker 1: we've seen mortgages and honestly housing US starts and all
Speaker 1: of that completely affected by interest rates. And so it's
Speaker 1: the rental market that has to come next. Okay, let's
Speaker 1: have a look now at the overall markets and what
Speaker 1: they're having to deal with. It's just you know, you've
Speaker 1: got the FED, You've got the inflation I think is
Speaker 1: of course very much dominant. But let's not forget we've
Speaker 1: got Ukraine still, We've got balloons as well, all causing
Speaker 1: confusion here. And on top of that, I think you
Speaker 1: mentioned in your notes that the bird fluid new strain
Speaker 1: of bird flu is also something that with one of
Speaker 1: the geopolitical risks here as well. So it does seem
Speaker 1: as they're being attacked on all sides. The confluence of
Speaker 1: factors um geopolitically, macroeconomically, I have we've never I've never
Speaker 1: experienced obviously before probably not since World War Two have
Speaker 1: we had these kinds of massive factors. The difference now gentlemen,
Speaker 1: is that we are an interglobally a pendant world. We have,
Speaker 1: you know, globally outsourced most of our manufacturing, obviously to
Speaker 1: Asia and America, and we rely on them a lot
Speaker 1: to provide us our pharmaceuticals and and and everything that
Speaker 1: we live off of. So when we have a globally, um,
Speaker 1: if we have a geopolitical risk, if we have a
Speaker 1: Ukraine Russia with NATO kind of coming in and no
Speaker 1: longer being proxy, but now we're sending tanks between Germany
Speaker 1: and the United States and we're moving. I mean, Joe
Speaker 1: Biden said himself last year that if we send tanks
Speaker 1: to the United sitstens tanks to Russia, are to Ukraine,
Speaker 1: it's World War three. And now that's what we're doing.
Speaker 1: So you could have any factor pop off and really
Speaker 1: create additional economic distress. So lots to weigh up there, Rebecca.
Speaker 1: But if we look at this most recent news, the
Speaker 1: CPR report, would you be making changes major changes as
Speaker 1: a result. You know, I I think that it was
Speaker 1: exactly what I expected. I expected that it was going
Speaker 1: to be more sticky than the market was stating. You know,
Speaker 1: Larry Summers, I agree with his point on Friday on Bloomberg,
Speaker 1: which was basically saying, we're just not taking it seriously enough.
Speaker 1: The market has really been trying to push the FED
Speaker 1: for a faster pivot, and we just don't have the
Speaker 1: ability to do that right now. People have to remember that,
Speaker 1: you know, we had a lot of stimulus release since
Speaker 1: two thousand and eight, really low cost of capital, and
Speaker 1: we have really had a lot of results from that,
Speaker 1: and it's not going to be as much as we
Speaker 1: all felt like, okay, here, let's gets back to a
Speaker 1: normal year. We just aren't there with the fundamentals of
Speaker 1: the economy at globally, and so until we get closer
Speaker 1: to that, we're just going to have to bear through this.
Speaker 1: And it's horrible. I'm the first to be like, can
Speaker 1: this just be over? Can I pick my sectors and
Speaker 1: can I trying to fully reopen? And can we get
Speaker 1: GDP back up from the three percent of business number
Speaker 1: they had last year? We need this for the global world,
Speaker 1: but yet the conditions are not there yet. This is
Speaker 1: Bloomberg Daybreak Asia, your morning brief on the story is
Speaker 1: making news from Hong Kong to Singapore and Wall Street.
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