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Speaker 1: Good morning. I'm Doug Chrisner and I'm Brian Curtiz. Here

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Speaker 1: are the stories we're following today. Nike reporting global sales

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Speaker 1: that rose five percent to twelve point eight billion dollars

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Speaker 1: in the fourth quarter. This beat analyst expectations of twelve

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Speaker 1: point six billion. We get reaction from Bloomberg's punam Goil.

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Speaker 2: It was driven by largely a beat an Asia pack,

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Speaker 2: with revenues up sixteen percent. I mean on a constant

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Speaker 2: currency basis. For revenues in China were up twenty five

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Speaker 2: percent versus a ten percent estimate, So a really nice

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Speaker 2: beat in China, with the outperformance coming in apparel and footwear.

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Speaker 1: Despite sales strength, quarterly profit fell just short of analyst expectations.

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Speaker 1: Nike said it was impacted by higher product input costs

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Speaker 1: and elevated freight and logistics costs. Higher discounts for merchandise

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Speaker 1: were also a factor as Nike tries to sell its

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Speaker 1: high stockpiles of inventory. And risch I mentioned the sheriffes

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Speaker 1: had been tumbling a little bit, now down three point

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Speaker 1: four percent in late trading.

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Speaker 3: We heard today from the head of the Atlanta Fedbank,

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Speaker 3: Raphael Bostik. He reiterated what he has said in the past.

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Speaker 3: He wants to keep borrowing cost on hold. However, mister

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Speaker 3: Bostick said FED shared J. Powell and other colleagues at

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Speaker 3: the FED don't agree with him.

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Speaker 4: I believe it makes sense to give restrictive monetary policy

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Speaker 4: more time to work. In my view, it is less

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Speaker 4: certain that we need to keep hiking the policy interest

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Speaker 4: rate in the immediate term. Less we risk tightening too

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Speaker 4: much and draining too much momentum from the economy.

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Speaker 3: That's the Atlanta Fedbank President rafaeled Bostik. He also sees

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Speaker 3: less urgency to hike rates because there are signs that

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Speaker 3: inflation is easing and the labor market is cooling. Earlier,

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Speaker 3: fedshaired J. Powell signaled the FED will probably need to

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Speaker 3: hike rates at least two more times this year as

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Speaker 3: a way of fighting inflation.

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Speaker 1: Right well, FED officials will have their eyes on more

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Speaker 1: economic data in the US Tomorrow eight thirty in the morning,

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Speaker 1: Wall Street Time will be getting US personal income and

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Speaker 1: spend along with May PCEE inflation numbers. Bloomberg's Michael McKee

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Speaker 1: has a.

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Speaker 5: Preview Americans likely continued to spend more in May, but

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Speaker 5: not a whole lot. Analysts are predicting a pullback as

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Speaker 5: people ran down their pandemic savings and tired of buying stuff.

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Speaker 5: The question is will spending on services continue to surprise

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Speaker 5: as it did in the first quarter, helping push GDP

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Speaker 5: growth through March to two percent from one point four percent.

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Speaker 5: The fad in particular, will also be focused on the

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Speaker 5: May PCE inflation numbers. While core inflation is forecast to

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Speaker 5: remain sticky, headline inflation should drop below four percent for

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Speaker 5: the first time since the pandemic. Michael McKee Bloomberg Daybreak Asia.

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Speaker 3: JP Morgan Chase is the new king of the hill,

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Speaker 3: so to speak. The firm is now beating Goldman Sachs

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Speaker 3: as the top deal maker. The story from Bloomberg's Denise Pellegrini.

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Speaker 6: JP Morgan Chase is taking credit for two hundred and

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Speaker 6: eighty four billion dollars in deals so far this year,

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Speaker 6: giving it a twenty two and a half percent market share,

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Speaker 6: compared to just two hundred and thirty seven billion, or

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Speaker 6: in eighty zene point eight percent share for Goldman. And

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Speaker 6: the last time Goldman was not to second place like

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Speaker 6: this was five years ago. It's tough time overall for

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Speaker 6: the industry. Deal volume has plunged forty two percent this

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Speaker 6: year compared to last year to just one point three

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Speaker 6: trillion dollars, and banks that ramped up hiring for deal

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Speaker 6: making beck in twenty twenty and twenty twenty one, well,

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Speaker 6: there are no cutting jobs in this weaker deal flow environment.

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Speaker 6: Denise Pelgrinny Bloomberg Day, Bricksia.

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Speaker 1: Well Doug as mentioned earlier, We'll be getting China's June

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Speaker 1: PMIS later this morning, likely showing the country's economic recovery

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Speaker 1: struggling to gain traction. Bloomberg's David and Glase has more

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Speaker 1: on what to expect in the data.

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Speaker 7: Recent signals on manufacturing have been mixed, but Bloomberg Economics

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Speaker 7: expects the PMIS to reflect contraction that's due to weak

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Speaker 7: demand for goods at home and abroad. Meantime, to gauge,

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Speaker 7: covering services is expected to drop to fifty three and

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Speaker 7: a half from fifty four and a half the month before.

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Speaker 7: That suggests a third month of slowing. Taken together, the

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Speaker 7: data will likely reinforce the case for stronger policy support

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Speaker 7: to try and recharge the economy. In Hong Kong. I'm

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Speaker 7: David Ingless Bloom Break, Day Break.

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Speaker 1: Asia and Doug We heard from the former IMF official

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Speaker 1: Jew Men saying that you're going to be disappointed if

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Speaker 1: you think China is going to roll out some kind

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Speaker 1: of massive stimulus to try to aid in the recovery.

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Speaker 1: They're sticking with targeted, it's likely to be piecemeal. The

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Speaker 1: yuan down about five percent against the dollar this year

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Speaker 1: and that makes it the third worst performer in Asia.

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Speaker 3: So maybe the next question is away from fiscal stimulus

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Speaker 3: policy as it relates to the currency. Could China, for example,

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Speaker 3: lower the reserve requirement or ratio foreign currency deposits at

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Speaker 3: banks that may unleash a little bit more dollars into

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Speaker 3: the system, maybe relieve some pressure on the yuan. Who knows.

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Speaker 1: And we have a story about the regulators seemingly cracking down,

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Speaker 1: although we say in this story that we're not quite

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Speaker 1: sure if they're aiding their research, but they've been asking

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Speaker 1: a lot of traders, from the banks to the brokers

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Speaker 1: about why people are moving money around and why they're

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Speaker 1: selling down the youan, they're trying to gather information about it.

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Speaker 1: So we may see some tighter controls on capital flows.

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Speaker 1: It's a seemingly different story over on the other side

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Speaker 1: of the Pacific. Investors in the US seem pretty encouraged

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Speaker 1: by the latest economic data. Consumer spending was good, growth,

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Speaker 1: overall growth numbers, jobs data, all sort of indicating that,

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Speaker 1: as you said earlier, nothing really looks like it's breaking

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Speaker 1: in the economy, and if you think about it, that's

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Speaker 1: a decent offset to the more hawkish commentary were getting

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Speaker 1: from the Fed.

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Speaker 3: You're absolutely right about that. And if you look at

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Speaker 3: the price action in yields, though, we were up to

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Speaker 3: day across the curve in a big way. And to

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Speaker 3: go back to the point that you were making about

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Speaker 3: what's happening in China with a currency, and you pointed

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Speaker 3: out this point on the pre show meeting that the

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Speaker 3: other side of the story is really a strong dollar story.

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Speaker 3: And then I think that's about the way in which

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Speaker 3: yields have been responding to a lot of the eco data.

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Speaker 3: We were up today in dollar terms when you look

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Speaker 3: at the Bloomberg Dollar Spot Index up about three tens

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Speaker 3: of one percent.

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Speaker 1: You know what we still need to see. I mean,

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Speaker 1: we've talked a lot on this show about how we've

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Speaker 1: had a trend of out of the few into the many.

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Speaker 1: But we haven't seen energy rally. If oil starts to

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Speaker 1: go up in any kind of significant fashion, that may

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Speaker 1: be the final indicator that people need, that demand is

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Speaker 1: coming back in the global economy. It's not that clear

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Speaker 1: at the moment. But we had today, at least we

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Speaker 1: had banks and energy both rallying over one percent. We

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Speaker 1: haven't seen that all that much of late.

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Speaker 3: Yeah, and WTI in New York's still below seventy dollars

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Speaker 3: a barrel. That's hard to believe, isn't it.

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Speaker 1: Yeah, interesting though, that the energy companies did rally. I'm

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Speaker 1: looking at Exon here up one and a quarter percent.

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Speaker 1: Let's get an update now on Global News. Well, the

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Speaker 1: US Supreme Court has ruled on affirmative action. We get

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Speaker 1: more from Dan Schwartzman in the newsroom in New York.

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Speaker 8: Dan, Yeah, Brian's certainly a landmark decision, the court striking

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Speaker 8: down the use of race in the college admissions process.

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Speaker 8: As a court voted six to three against Harvard and

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Speaker 8: the University of North Carolina. Chief Justice John Roberts, writing

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Speaker 8: for the conservative majority, says the students individual experience in

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Speaker 8: getting past obstacles in their life could be used in

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Speaker 8: the admissions process, but a student's race could not be used.

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Speaker 8: The Court had twice over the past twenty years upheld

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Speaker 8: race being used in the process. President Biden, speaking at

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Speaker 8: the White House, says people have been misinformed as to

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Speaker 8: how fromive action works.

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Speaker 9: The Court has effectively entered affirmative action in college admissions,

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Speaker 9: and I strongly, strongly disagree with the course decision because

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Speaker 9: affirmative action is so misunderstood. I want to be clear,

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Speaker 9: make sure everybody's clear about what the law has been

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Speaker 9: and what it has not been. Until today, many people

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Speaker 9: wrongly believe that affirmative action allows unqualified students, unqualified students

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Speaker 9: to be admitted ahead of qualified students. This is not

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Speaker 9: This is not how college admissions work. Rather, college has

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Speaker 9: set out standards for admission and every student, every student,

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Speaker 9: has to meet those standards.

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Speaker 8: Biden was commenting from the White House. Russian General stagez

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Speaker 8: Sudovikin has been questioned by officials representing military prosecutors as

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Speaker 8: a government investigates who may have aided Wagner Mercenary Group

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Speaker 8: Leadery of Guinea Pregotionin in his attempt to mutiny over

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Speaker 8: the weekend. Sudovikan who is considered one of the country's

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Speaker 8: top generals, is being kept in one place, according to reports,

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Speaker 8: while the Moscow Times those says he's been arrested. According

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Speaker 8: to The Financial Times, European Union's Chief diplomat Jossep Burel

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Speaker 8: has told the Block Summit that some generals have in

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Speaker 8: fact been arrested. The fifty six year old has not

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Speaker 8: been seen publicly since Saturday's rebellion, but according to his

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Speaker 8: daughter Veronica, nothing has happened to Sdovikan and that he

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Speaker 8: was at work. Taiwan signing a deal to purchase anti

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Speaker 8: tank munition laying systems from the US for one hundred

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Speaker 8: and forty six million dollars. The delivery of the systems

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Speaker 8: is expected to be complet the end of twenty twenty nine.

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Speaker 8: Taipei has been dealing with increased saber rattling from China,

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Speaker 8: with the Chinese military becoming more active around the island nation.

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Speaker 8: Air quality in New York City was not as bad

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Speaker 8: today as originally forecast due to the Canadian wildfires, as

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Speaker 8: equality rebounding from unhealthy this morning to sensitive groups to

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Speaker 8: moderate levels during the afternoon. Other parts of the country, though,

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Speaker 8: are dealing with worse conditions as Aaron Pittsburgh and Madison,

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Speaker 8: Wisconsin was considered very unhealthy, while Chicago, Cincinnati, and Washington

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Speaker 8: were listed as just unhealthy. So far, over thirty thousand

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Speaker 8: square miles have been consumed by the five hundred or

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Speaker 8: so burning fires across Canada. Global News twenty four hours

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Speaker 8: a day, powered by more than twenty seven hundred journalists

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Speaker 8: and analysts in more than one hundred and twenty countries.

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Speaker 8: I'm Dan Schwartzman. This is Bloomberg.

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Speaker 1: I'm Brian Curtis along with Rashid SALAMTT. He'll be joining

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Speaker 1: us in a few moments. So let's say good morning

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Speaker 1: to our guest, Legion Hung. I was founder and CEO

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Speaker 1: at JL Warren Capital. So let's take a big broad

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Speaker 1: macro view. At the moment, the US seems to be

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Speaker 1: doing pretty well. China is stumbling a little, although the

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Speaker 1: growth levels are not that far apart. In the second

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Speaker 1: half of the year. Do you favorite China or the US?

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Speaker 2: Oh?

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Speaker 10: I think China is going to have a really tough

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Speaker 10: Q three. I think if you so, China definitely benefits

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Speaker 10: from a low based Q two. So let's just not

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Speaker 10: Let's just get twenty twenty two, which is a distorted,

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Speaker 10: you know, comparison because the low base caused by law

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Speaker 10: bounce everywhere at different timing. Let's come to China gets

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Speaker 10: the first half to twenty twenty one. First half, you

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Speaker 10: will see actually growth declined, especially the India consumption area.

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Speaker 10: So that spells a story of the weaker that expected

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Speaker 10: macroeconomic performance and the sentiment. So and then on the

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Speaker 10: other hand, the US has been performing surprisingly well, even

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Speaker 10: though even though the FED policy is highly restrictive. But

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Speaker 10: you see the consumers are holding well, the housing starts

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Speaker 10: picking up again. And yeah, and so I mean, I

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Speaker 10: think there's divergence between the three economies, and those might

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Speaker 10: not be apps, those might not be completely reflected in

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Speaker 10: the absolute GDP growth number.

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Speaker 1: Yeah, have you seen enough broadening out in the stock

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Speaker 1: performance in the US to feel more comfortable about where

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Speaker 1: the economy is heading?

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Speaker 10: I mean, I think so on the big picture. From

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Speaker 10: a big picture, I think we are not yet seeing

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Speaker 10: a significant earning recession because we don't have a broad

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Speaker 10: economical recession. However, if you look at the stock stock

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Speaker 10: company specifics, some companies are doing better than the others

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Speaker 10: because you know they're taking shares right, So Nike just

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Speaker 10: reported and North America is growing five percent. That's at

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Speaker 10: the part of inflation. So maybe that's the reflection of

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Speaker 10: the sneaker category just not growing as much as used to,

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Speaker 10: or maybe the sneaker category and the consumption category is declining.

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Speaker 10: But Nike, you're still taking share. So we still have

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Speaker 10: to look into the company specific to draw any conclusion

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Speaker 10: for investments purpose.

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Speaker 11: Do you think Lee just looking at some of the

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Speaker 11: companies you like or don't and there's the liquidity risk,

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Speaker 11: a high liquidity risk in one of your biggest shorts.

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Speaker 10: Yes, so that goes to a chinel EV sector. CPCA,

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Speaker 10: which is Auto Association, predicts flatish all those sales earlier

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Speaker 10: in twenty twenty three. Yet if you collect, if you

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Speaker 10: add up all the guided number sales targets among the

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Speaker 10: pub twenty EV makers, you get ninety percent year over

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Speaker 10: year growth, which implies by the end of this year

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Speaker 10: the EV penetration will be around the forty percent compared

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Speaker 10: to right now we are already in June, going to

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Speaker 10: July it's still as thirty percent, So I think there's

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Speaker 10: oversupply in EB You know, GF three Tesla is making

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Speaker 10: about eighty five thousand cars in China and right now

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Speaker 10: it's exploring forty to fifty percent. But as the you know,

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Speaker 10: capacity gs, you know, it's the Tesla factories in Berlin

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Speaker 10: and anywhere else picking up the demand. The export demand

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Speaker 10: for Chinese factory will decline.

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Speaker 6: Right, So that's just Tesla.

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Speaker 10: And then in terms of the NEIL, which is one

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Speaker 10: of our top board recommendation, it has two factories. Each

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Speaker 10: factory produces about two hundred three hundred cars a day,

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Speaker 10: hiding in efficient and highly under capacity. So yeah, and

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Speaker 10: they're guiding you know, one hundred percent growth year over year.

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Speaker 1: So that's okay. So your short NEIL, your short NEIL,

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Speaker 1: would you also be short Li Auto and ex.

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Speaker 10: Pond Oh no, no, no, you know, we do have

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Speaker 10: concerns of the industry capacity over all, but each company

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Speaker 10: is different. Lee has its own story of you know,

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Speaker 10: being the top seller of hybrid EV and the x

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Speaker 10: puand has a restructuring story that's playing out for us.

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Speaker 10: So those are at a much lower risk than the NEO. Right.

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Speaker 11: Let's now turn to some of those companies that you

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Speaker 11: would be buying here as well, and what does well

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Speaker 11: in an economic downturn. That's the question I suppose you

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Speaker 11: ask yourself. But then you have to ask yourselves, well,

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Speaker 11: are we getting an economic downturn?

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Speaker 10: Well, I mean, if you look at the Chinel, we

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Speaker 10: are still substantially below twenty twenty one consumption levels, So

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Speaker 10: I would would I would conclude that it's an economic construction.

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Speaker 10: Like I said earlier, we need to skip twenty twenty

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Speaker 10: two as a base for comp because it was distorted

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Speaker 10: because of you know, lockdown here, and they're among you know,

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Speaker 10: among different locations in different months. So if we skip

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Speaker 10: twenty twenty two and comp against twenty twenty one or

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Speaker 10: even twenty nineteen, many many brands, I'm not setting nearly

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Speaker 10: as much today as they were two years ago alone

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Speaker 10: four years ago, so back to me is a contraction.

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Speaker 1: Okay, let's focus more on the US then, because you're clearly,

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Speaker 1: you know, much more positive about trading in the US

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Speaker 1: at the moment than China. One of the trends we've

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Speaker 1: seen of late, which might surprise some people, is that

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Speaker 1: we've seen techs underperform, and we've seen, for instance, the

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Speaker 1: Russell two thousand has has gained more in the past

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Speaker 1: month than the Nasdaq one hundred and transports have as well.

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Speaker 1: What are the pockets of non tech that you like.

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Speaker 10: At the moment, I think that the the the UH

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Speaker 10: sort of the line between tech and consumer is getting

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Speaker 10: so close. So I mean, many many consumer names use

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Speaker 10: tech as way to campaign and the sell to UH

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Speaker 10: their consumers digitally and you know, manage the CRN more efficiently.

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Speaker 10: So we are bolish consumer discretionaries are UH in the US,

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Speaker 10: So those will be the multinationals with diversify the geographic exposures.

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Speaker 10: So and also that's something that we feel like, you know,

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Speaker 10: the US investors and the global investors are so cautious

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Speaker 10: and the pessimistic about UH their exposure to China, and

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Speaker 10: it's very hard to convince them to change that sentiment

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Speaker 10: right now because there's no fundamental kind of UH action

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Speaker 10: point out of that part of the world. However, if

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Speaker 10: you feel like you cannot live without participating a China investment,

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Speaker 10: those multinationals, especially the beaten up multinationals such as Nike,

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Speaker 10: as the louder maybe and I'm just saying maybe, and

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Speaker 10: some European Urinians and you know, you know, Mount Clears

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Speaker 10: and the whatever, those might be a very good vehicle

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Speaker 10: for them to write the China recovery story eventually, or

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Speaker 10: the upside you know, uh brought up, brought up by

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Speaker 10: someone you know, bigger than expected stimulus.

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Speaker 1: Package very quickly.

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Speaker 11: Would that be enough to get people back into the

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Speaker 11: Chinese stock market or would there be something else needed

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Speaker 11: very quickly?

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Speaker 10: Well, I mean, I think it's a confidence crisis, so

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Speaker 10: that will take time. It's not a liquidity crisis. There's

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Speaker 10: plenty of liquidity in the system. It's the movement. It's

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Speaker 10: the velocity of the money that's the concern. No one

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Speaker 10: that demand from money and activitiece is so low.

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Speaker 1: Since you gave us a very short answer, let me

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Speaker 1: give you one more question as a nod to Matt Miller,

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Speaker 1: one of my colleagues, who said that it seems like

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Speaker 1: Chinese policy makers are going with a more sort of

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Speaker 1: longer term view at fixing the economy rather than reacting

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Speaker 1: very quickly like a lot of policymakers do. Do you

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Speaker 1: agree with that? Are they getting it right?

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Speaker 10: Yes, because they have a consolidated authoritative command based the economy,

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Speaker 10: so they don't have to respond to your market reactions

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Speaker 10: or economic reactions. I mean, they have the absolute contrue

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Speaker 10: of the people and economy.

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