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Speaker 1: Good morning. I'm Brian Curtis.

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Speaker 2: And I'm Doug Krisner. Here are the stories we're following today.

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Speaker 1: Some of the world's major central banks meeting this week

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Speaker 1: to set monetary policy. As you heard for a preview,

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Speaker 1: let's get to Bloomberg's Michael McKee.

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Speaker 3: It's a big week for central banks, with three of

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Speaker 3: the largest meeting and two of them expected to change policy.

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Speaker 3: The Fed has signaled it has at least one more

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Speaker 3: quarter point rate increased to go, and a still tight

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Speaker 3: labor market is expected to lead them to go ahead

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Speaker 3: on Wednesday. Futures are pricing in a ninety six percent

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Speaker 3: chance of a move. For investors, the real question is

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Speaker 3: what next. Fed officials said in June they anticipated two

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Speaker 3: more rate moves. What did they signal after their meeting?

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Speaker 3: And let's also think the ECB is close to ending

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Speaker 3: its tightening cycle, one more move and then on hold.

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Speaker 3: European markets are still pricing in cuts and President Christine

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Speaker 3: Legard will try to wave those off. In Japan's still

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Speaker 3: a long way to get to where they want to be.

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Speaker 3: Inflation is up but projected to fall, so investors see

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Speaker 3: less than a ten percent chance of a rate move.

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Speaker 3: They may talk about ending yield curve control, but have

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Speaker 3: no plans to do it yet. Michael McKee Bloomberg Daybreak Asia.

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Speaker 2: Two prominent economists who were early in warning the FED

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Speaker 2: about inflation are now offering different views over how the

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Speaker 2: central bank should proceed. On one hand, former US Treasury

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Speaker 2: Secretary Larry Summers says settling for a three percent plus

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Speaker 2: goal is now a bad idea and at risks setting

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Speaker 2: the stage for even stronger price growth in the next

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Speaker 2: economic cycle. On the other side, Allan's chief of Economic

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Speaker 2: advisor Mohammad Alarian says the fed's two percent near term

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Speaker 2: inflation target should be higher.

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Speaker 4: The question is, if you look forward for the next

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Speaker 4: five to ten years, where's the right inflation target? And

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Speaker 4: I suspect that the right inflation target is much nearer

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Speaker 4: to three percent than it is to two percent.

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Speaker 5: Now.

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Speaker 4: That may not sound like a big difference, but it

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Speaker 4: actually is a big difference over time.

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Speaker 2: Elarian went on to say a shift toward three percent

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Speaker 2: will allow the FED to declare victory earlier with less

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Speaker 2: risk of damage to the American economy. Also thinks, by

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Speaker 2: the way, the big risk is if the FED were

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Speaker 2: to focus on the two percent target in a relatively

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Speaker 2: rapid time frame, the economy could be tipped into recession right.

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Speaker 1: So central banks this week and a lot of big

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Speaker 1: decisions there and also earnings investors will have a ton

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Speaker 1: of earnings to digest. This week, we get a preview

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Speaker 1: from Bloomberg's Charlie Pillett.

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Speaker 6: According to Bloomberg data, so far, roughly eighty percent of

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Speaker 6: S and P five hundred companies have beaten estimates, compared

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Speaker 6: to seventy five percent for the whole season a year ago.

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Speaker 6: Brian Levitt is Global market staategist at Invesco.

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Speaker 7: This is still a reasonably strong economy, so I don't

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Speaker 7: expect it to be a typically bad earning season, but

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Speaker 7: certainly one where we see continued moderation in earnings growth.

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Speaker 6: Tech names including Alphabet, Microsoft, and Meta Platforms will be

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Speaker 6: front and center this week, also reporting GEGM, four, Boeing, Visa, MasterCard, Coke, Kacola,

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Speaker 6: and McDonald's, among many others. In New York Charlie Pellet

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Speaker 6: Bloomberg Daybreak Asia.

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Speaker 2: We go to Tesla next. The company has started to

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Speaker 2: offer consumers eighty four month auto loans. Previously, Tesla offered

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Speaker 2: loans as long as seventy two months, so now you

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Speaker 2: can get a seven year loan as an option for

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Speaker 2: US orders. This move, by the way, comes after CEO

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Speaker 2: Elon Musk said Tesla would have to do something about

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Speaker 2: rising interest rates. He said interest payments are increasing the

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Speaker 2: price of Tesla vehicles and this in turn is creating

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Speaker 2: greater risk of customers owing more than their vehicles of

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Speaker 2: are worth. Late last week, Tesla's shares plunged after Musk

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Speaker 2: said the company will have to keep lowering prices if

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Speaker 2: interest rates continue to rise.

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Speaker 1: Brian and Doug, We're hearing that Chinese regulators addressed some

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Speaker 1: concerns of global investors in a recent meeting with global funds.

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Speaker 1: We get more on this from Bloomberg's Joan Wong, the vice.

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Speaker 8: Chair of the China Securities Regulatory Commission function HI met

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Speaker 8: with venture capital and private equity firms on Friday. Tamassak

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Speaker 8: and Warburg Pinkis were among the attendees. Topics included steps

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Speaker 8: that can be taken to ensure global funds can continue

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Speaker 8: to invest in China. We hear regulators were urged to

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Speaker 8: expect die procedures for overseas IPO registrations to accelerate listings

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Speaker 8: in mainland China and to relax m and A rules.

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Speaker 8: The meeting was another bid by Beijing to boost market

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Speaker 8: confidence as the country's economic recovery loses steam. It also

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Speaker 8: comes after the government voiced its strongest support in recent

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Speaker 8: years for the country's private sector. The support efforts, though,

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Speaker 8: have been met with skepticism. Investors are calling for more

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Speaker 8: concrete measures and stronger stimulus to revive growth in Hong Kong.

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Speaker 8: I'm joined Wong Bloomberg Day Brigasia.

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Speaker 1: I'm Brian Curtis along with Doug Christner and Doug Another

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Speaker 1: big story today is that Ali Bamba has said no

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Speaker 1: to a plan by ant Group to buy back shares.

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Speaker 1: It's kind of surprising because we think of the two,

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Speaker 1: as you know, pretty tightly connected. At shareholders voted yesterday

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Speaker 1: to repurchase the shares, but then Ali Baba came right

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Speaker 1: back and said that it did not want to sell.

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Speaker 1: And I find that quite interesting. It might be a

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Speaker 1: little bit about the price level because the repurchase scheme

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Speaker 1: values and at seventy nine billion dollars, that's some seventy

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Speaker 1: percent cheaper than.

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Speaker 6: The pre IPO value.

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Speaker 1: So that's kind of a big story today here in

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Speaker 1: Hong Kong.

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Speaker 2: Yeah, a very curious move. We were talking a moment

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Speaker 2: ago about how regulators in Beijing are trying to address

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Speaker 2: many international concerns about putting the money to work in China.

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Speaker 2: Interesting peace in the Wall Street Journal, Brian talking about

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Speaker 2: how Chinese investment is retreating from the West and increasingly

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Speaker 2: a number of Chinese firms are instead spending moneys on

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Speaker 2: factories in Southeast Asia. And one example, the biggest recipient

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Speaker 2: of Chinese investments so far this year is in Indonesia,

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Speaker 2: where you know, the economy has access to a lot

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Speaker 2: of nickel deposits and that's obviously a key component in

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Speaker 2: many batteries used to power electric vehicles.

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Speaker 1: Yeah, and it's part of this story. The reason that

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Speaker 1: the CEOs of those big chip companies were cautioning the

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Speaker 1: Biden administration about the export restriction, saying, look, they will

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Speaker 1: go elsewhere, and that's really something that has to be

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Speaker 1: taken into consideration. Something we can put to our guests.

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Speaker 1: Terry Spath coming up, an old friend of the program

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Speaker 1: founder in Cio at Zuma Wealth and that'll come right

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Speaker 1: after we get to Global News. US Secretary of State

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Speaker 1: Anthony Blinken says that the rest of the world is

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Speaker 1: eager to see US channel relations improve at Baxter has

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Speaker 1: Global News from the nine sixty News from at San Francisco.

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Speaker 9: Ed, Yeah right. Brian Blanket on CNN says he's hearing

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Speaker 9: from all over the globe concerned that it'll be managed

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Speaker 9: responsibly to.

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Speaker 10: Make sure that we sustain these lines of communication, that

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Speaker 10: we continue to talk.

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Speaker 9: And that we work on, As I said, both dealing.

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Speaker 8: With the differences and seeing if we can cooperate.

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Speaker 6: That's the way we're proaching it. I think it's the

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Speaker 6: responsible thing to do.

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Speaker 9: Blincoln says both will continue to say things the other

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Speaker 9: does not like, but that the relationship will be based

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Speaker 9: on how it is managed. China's top Dobamett Wang Yi

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Speaker 9: is approached Japan's foreign Minister Yoshi Masa Hayashi about holding

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Speaker 9: top level talks between the two of them and South Korea.

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Speaker 9: Kyoto reports the advance was made at Asi on this month.

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Speaker 9: Japan's cabinet rating continues to slide. The last Manichi poll

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Speaker 9: shows another five percentage points to twenty eight percent. Disapproval

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Speaker 9: rating rows seven points to sixty five percent. The main

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Speaker 9: issue seems to be the number on the national ID card.

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Speaker 9: The docking of the US nuclear submarine in South Korea

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Speaker 9: should be a warning to both North Korea and China.

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Speaker 9: That's what the House Foreign Affairs Committee Chair Michael McCall says.

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Speaker 9: He says it's a show of superior nuclear force in

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Speaker 9: the region.

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Speaker 10: I think projecting strength right now is important for deterrence.

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Speaker 9: And McColl on ABC has heard here on Bloomberg says

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Speaker 9: he's hopeful the US soldier who ran across the DMZ

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Speaker 9: can be returned.

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Speaker 10: He was taken captive by North Koreans and I'm sure

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Speaker 10: that he's not being treated very well. I think it

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Speaker 10: was a serious mistake on his part and that I

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Speaker 10: hope we can get him back.

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Speaker 9: The soldier, Travis King, was being sent back to the

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Speaker 9: US for discharge. As the Israeli Parliament is close to

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Speaker 9: voting on the Benjamin net Yahoo judicial system reform, the

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Speaker 9: Prime Minister said today he's fine after having a cardiac

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Speaker 9: pacemaker put in yesterday. Says the plan is to go

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Speaker 9: ahead with the vote tomorrow. Spaniards of voting today stifling

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Speaker 9: summer heat, with conservative opposition to Prime Minister Pedro Sanchez

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Speaker 9: hoping to oust him. Now that has been turned back,

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Speaker 9: it looks very much as if the Socialist will remain

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Speaker 9: in power. The Conservatives did not gain enough strength to

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Speaker 9: overcome g Twenty ministers have failed to reach a consensus

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Speaker 9: on two major issues before them, fossil fuels and Russia.

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Speaker 9: While some countries agreed on the need to phase down

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Speaker 9: unabated US oil and gas, others argued that emissions should

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Speaker 9: be addressed by carbon removal technologies and a slow progress

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Speaker 9: on addressing climate change around the globe. Impacts of global

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Speaker 9: warming being felt all around the globe. Greece is being

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Speaker 9: particularly hard hit, raging wildfire forcing evacuation on the island

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Speaker 9: of Rhodes, temperatures as high as one hundred and thirteen

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Speaker 9: degrees fahrenheit and Brian harmon pretty much in unstoppable force

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Speaker 9: in the British Open and not to eat. Big name

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Speaker 9: golfers or bad weather could stand in his nor could

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Speaker 9: a rare bogie set him back with back to back

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Speaker 9: birdies then following leaving everyone else playing for second. He

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Speaker 9: finished with a one hundred seventy walked away with a

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Speaker 9: six stroke win. He's never played a Rider or President's Cup.

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Speaker 9: He now moves to number ten in the world Global

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Speaker 9: News powered by more than twenty seven hundred journalist and

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Speaker 9: analysts in over one hundred twenty countries. In San Francisco,

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Speaker 9: I'med Baxter and this is Bloomberg.

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Speaker 1: This is Bloomberg Debreak Asia. I'm Brian Curtis here in

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Speaker 1: Hong Kong, along with Vonni Quinn in New York, and

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Speaker 1: our guest is Terry Spath, founder and CIO at Zuomo Wealth.

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Speaker 1: So let's to talk about this week. We just highlighted

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Speaker 1: some of the big stories earnings obviously a big part

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Speaker 1: of the Central Banks, and also a lot of US

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Speaker 1: China and a lot of Chinese stories this morning to

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Speaker 1: feature what's chief of mine for you this morning?

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Speaker 5: Terry, Well, hello, Brian, It's always great to talk to

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Speaker 5: you in the I love our spirited discussion, so thanks

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Speaker 5: for having me back. You know, it's as you pointed

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Speaker 5: out in the messaging before I just jumped on, there's

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Speaker 5: so much coming on next week with Central banks around

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Speaker 5: the world meeting and with earnings coming out, and you

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Speaker 5: know what we're really focusing on is, you know the

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Speaker 5: number temperatures which aren't quite hot. As you pointed out,

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Speaker 5: I'm glad. I'm not in Greece, but inflation's really cooling

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Speaker 5: here in the US and there's a lot of evidence

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Speaker 5: in our view that this is going to continue, and

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Speaker 5: the money supply is contracting and inflation is coming down.

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Speaker 5: So it'll be really interesting to hear what the Federal

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Speaker 5: Reserve has to say after their meeting this week, as

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Speaker 5: well as the other central banks around the world, because

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Speaker 5: inflation has really switched direction, and that is it's coming down.

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Speaker 5: They've been raising increases, raising interest rates furiously, and in

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Speaker 5: our view, they've done their job. They can go on

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Speaker 5: vacation at this point and let this play through the

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Speaker 5: economy globally.

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Speaker 6: So, Terry, what does that.

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Speaker 11: Mean for the decision this week? Will we see a

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Speaker 11: twenty five bases point in Greece? And then when do

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Speaker 11: we start seeing cuts? The market says March of next year.

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Speaker 5: Yeah, yeah, Bonnie, Yeah, so nice to hear that. You're

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Speaker 5: on today too. I was like speaking with you, and

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Speaker 5: you know, we were strongly in the camp that the

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Speaker 5: Fed does not even need to raise this week, but

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Speaker 5: as you pointed out, most of the market is expecting

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Speaker 5: that the Fed has really guided us to that. Jaypowell

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Speaker 5: has been pretty transparent in suggesting that we should expect

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Speaker 5: an increase in interest rates. But we think they've done.

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Speaker 5: And I mean, when you look at inflation numbers, the

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Speaker 5: core inflation CPI, those numbers will come down significantly since

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Speaker 5: last year, but those are backwards looking numbers, and money

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Speaker 5: supply is contracting and that's what's driving inflation down and

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Speaker 5: those numbers down. So we think, you know there, they

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Speaker 5: are likely going to increase this this month. We don't

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Speaker 5: think they need to. And as a result, we think

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Speaker 5: there's a higher than sort of market expected probability that

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Speaker 5: we could even see a cut in interest rates sooner

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Speaker 5: than March, before the end of this year, within the

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Speaker 5: next six months, and I think that that would be

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Speaker 5: a good thing. It would keep the keep the economy

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Speaker 5: strong while still raining and inflation.

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Speaker 1: There is a camp that believes that the Fed will

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Speaker 1: talk very tough and they will mean it. There's another

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Speaker 1: camp that thinks that the Fed will talk tough, but

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Speaker 1: they have to and so they will continue to do so,

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Speaker 1: but they know that they're close to the end of

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Speaker 1: the line. Which of those two camps would you favor?

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Speaker 1: I mean, I know which will not favor, but which

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Speaker 1: do you think they will be pursuing.

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Speaker 5: Oh gosh, I wish I knew. I wish I knew,

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Speaker 5: because the Fed, you know, and Jape how they were

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Speaker 5: dead wrong about inflation a year ago or a year

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Speaker 5: and a half ago. They completely underestimated the relationship between

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Speaker 5: money supply and inflation. It should have been absolutely no

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Speaker 5: shock at all that we had the nosebleed inflation levels

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Speaker 5: that defined twenty twenty two. And you know, as a result,

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Speaker 5: they were caught flat footed and now they slammed on

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Speaker 5: the brakes as best they could by you know, these

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Speaker 5: fast and furious interest rate increases. And I hope that

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Speaker 5: what that does not do, and I don't think.

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Speaker 7: It will, is forced the FED to be like, well,

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Speaker 7: now we're.

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Speaker 5: Tough and we're going to keep on raising. I think,

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Speaker 5: you know, hopefully they've learned from that. They're seeing the

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Speaker 5: progress that they're making. They want the economy to you know,

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Speaker 5: continue to grow here in the US, and hopefully we'll

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Speaker 5: see that, you know, they've done a substantial job on

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Speaker 5: bringing in inflation and will not kind of torpedo economic

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Speaker 5: growth for twenty twenty four. We don't want, we don't

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Speaker 5: want to see that happen and I think there's a

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Speaker 5: good chance that they've learned from from what from what

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Speaker 5: has occurred and will be you know, a little bit

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Speaker 5: smarter going forward.

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Speaker 11: Tell you we also hear from the ECB and the

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Speaker 11: BOJ this week. Are you more focused on the ECB?

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Speaker 5: Well, yeah, I mean I think what's really interesting about

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Speaker 5: Europe is that, you know, they'll probably increase rates too,

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Speaker 5: but they've been a little less i think strong in

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Speaker 5: their in their views on that and what that's going

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Speaker 5: to do. And we're seeing it is, you know, is

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Speaker 5: improvement or improvement in foreign currency relative to the dollar

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Speaker 5: or in other words, weakening of the dollar. So like hello,

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Speaker 5: you know, Barcelona, I'm on my way and I'm not

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Speaker 5: just talking about vacation plans going to Europe. We're bullish

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Speaker 5: on European stocks. They have never been cheaper relative to

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Speaker 5: the US based on twelve month pe ratios. Now that's

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Speaker 5: not a great timing metric valuation, it just isn't. But

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Speaker 5: the dollar is weakening and it will continue to do so,

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Speaker 5: particularly if the SAID cuts rates, which we think it

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Speaker 5: can this year. So the these is, you know, for Europe, undervalued, overlooked,

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Speaker 5: and ignored. Take a look at European stocks.

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Speaker 1: Let's take close to look at earnings in the US

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Speaker 1: as well, because you've had this kind of broadening of

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Speaker 1: the market to a certain degree, and people are trying

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Speaker 1: to make the decision do they stick with the tech

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Speaker 1: companies or go with some of these cyclicals. The broader

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Speaker 1: re SMP five hundred companies are expected to have a

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Speaker 1: nine percent earnings contraction. The problem with going with that

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Speaker 1: in liew of the big five tech companies is the

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Speaker 1: tech companies are likely to show a sixteen percent profit

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Speaker 1: expansion in the second quarter. So which side do you favor?

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Speaker 5: Well, stock prices follow earnings, that's for sure, and so

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Speaker 5: when you see, you know, certain sectors outperforming in terms

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Speaker 5: of earnings growth, you're going to see strengthen that. But

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Speaker 5: absolutely caution our own clients as well as anyone listening

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Speaker 5: to this show that owning just a few go go

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Speaker 5: go tech stocks is you know it can be I

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Speaker 5: saw the Barbie movie over the over the weekend and

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Speaker 5: there's a great line. You know, it can be fun

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Speaker 5: for a while, and it can be fun for tech stocks,

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Speaker 5: but you're really taking your chances. And that increased breadth

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Speaker 5: that we're seeing in the in the US market is

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Speaker 5: giving us a lot of optimism. We're seeing a widening

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Speaker 5: in participation of the stocks that are participating in the

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Speaker 5: broader gains of the S and P five hundred. That

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Speaker 5: definitely gives us optimism. So yeah, I mean, own a

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Speaker 5: couple of the go go tex stocks, but don't make

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Speaker 5: that your entire portfolio. We absolutely think it's time to

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Speaker 5: rebalance and broaden out that stock exposure in the US.

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Speaker 11: Now you like a lot of europe focused to adfs,

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Speaker 11: But you also have an interesting call here with India.

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Speaker 11: We've seen such gains in India. Why are you still

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Speaker 11: long term bullish?

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Speaker 5: Oh my gosh. Yeah, we really like India absolutely still

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Speaker 5: can include it in client portfolios. And there's a couple

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Speaker 5: of reasons for that. I mean, you know, obvious one,

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Speaker 5: population growth in India. It's going to be bigger than

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Speaker 5: China in short order, but that's really going to drive

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Speaker 5: GDP growth, and you know as well as their government

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Speaker 5: is doing these terrific infrastructure expansion plans over the next

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Speaker 5: few years, and so that increase in the economy from

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Speaker 5: population growth, from global supply chains moving to you know,

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Speaker 5: away from China and into India and other places that

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Speaker 5: are India focused as well as this infrastructure. I mean,

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Speaker 5: we're going to see a real strength and GDP continue

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Speaker 5: and we've seen projections that their economy can jump past Japan,

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Speaker 5: it can jump past Germany and can do so, you know,

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Speaker 5: by the end of this decade. So that's a long

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Speaker 5: term call that we include in our portfolios at this stage.

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Speaker 1: Final question, just looking at the bond market, it would

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Speaker 1: seem that you're saying, hang in there, pick your pick

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Speaker 1: your your your levels and just sort of stick with that.

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Speaker 5: Well, yeah, I mean, the the bonds have been frustrating.

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Speaker 5: Fortunately we were completely out last year, which you know,

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Speaker 5: it was an awful year for bonds. We only are

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Speaker 5: right now laddering in treasury bonds and really short because

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Speaker 5: you know, these high interest rates are in the rear

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Speaker 5: view mirror in short order, you know, as the Fed

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Speaker 5: has done enough. So yeah, I have a little bit

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Speaker 5: of exposure to bonds hyo, corporate bonds or even we

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Speaker 5: think you can be comfortable with those right now. But

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Speaker 5: that's sort of the ballast of the portfolio that's not

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Speaker 5: doing a whole lot.

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