WEBVTT - Treasuries, Apple, LIV Golf, and Bank Buybacks (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.080 --> 0:00:05.280 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day, we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.640 --> 0:00:24.000 June fourteenth, which for me is Flag Day, but for 0:00:24.079 --> 0:00:27.360 some other people it is FED Day. We're gonna hear 0:00:27.360 --> 0:00:30.080 from the Fed June fourteenth to get their latest thinking 0:00:30.120 --> 0:00:32.400 on interest rates. I want to bring in Ira Jersey 0:00:32.400 --> 0:00:34.400 because he actually does this stuff for a living. We 0:00:34.440 --> 0:00:37.160 actually pay him for this. Ira Jersey, chief US indust 0:00:37.200 --> 0:00:40.960 rate strategist for Bloomberg Intelligence. So, Ira, I guess you 0:00:40.960 --> 0:00:42.440 know kind of the new term that I heard here 0:00:42.520 --> 0:00:45.159 is is skip. Are they going to skip a rate 0:00:45.280 --> 0:00:47.280 increase here? Then maybe kind of re evaluate? 0:00:47.320 --> 0:00:47.680 Maybe? 0:00:47.760 --> 0:00:50.720 Yeah, Yeah, I think I think they will skip. I 0:00:50.840 --> 0:00:53.560 wouldn't be surprised if the skip turned into a proper pause. 0:00:54.080 --> 0:00:57.720 But there certainly are a number of people who are 0:00:57.720 --> 0:01:01.400 thinking that perhaps the Federal Reserve, if they do skip, 0:01:01.440 --> 0:01:04.759 could potentially hike again in July and that's not out 0:01:04.800 --> 0:01:07.039 of the question, but I think that the hurdle just 0:01:07.080 --> 0:01:09.959 gets a little bit higher and it gets more difficult 0:01:10.000 --> 0:01:13.320 to get over that hump, particularly if we wind up 0:01:13.319 --> 0:01:17.640 seeing economic data, right, real economic data start to slip 0:01:17.640 --> 0:01:19.240 as much as it is. And in fact, if you 0:01:19.280 --> 0:01:22.640 look at things like the ISM data that we've recently received, 0:01:22.880 --> 0:01:25.920 you know that's already in and near recessionary territories, if 0:01:26.000 --> 0:01:26.640 not actually in it. 0:01:27.040 --> 0:01:29.560 Iira, I have to get your thoughts on this debate 0:01:29.640 --> 0:01:33.480 over the Treasury's flood of bill issueings is basically being 0:01:33.520 --> 0:01:36.080 the latest test for banks kind of break it down 0:01:36.240 --> 0:01:38.200 for us as far as what the issues are there 0:01:38.440 --> 0:01:40.480 and what that could potentially mean for any sort of 0:01:40.560 --> 0:01:42.199 volatility that we could see in the bomb market. 0:01:43.319 --> 0:01:45.959 Yeah, so I don't think it's a debate. There will be, 0:01:46.319 --> 0:01:48.760 and we'll get an announcement actually just in about forty 0:01:48.800 --> 0:01:52.760 five minutes for what the Treasury Department is going to 0:01:52.760 --> 0:01:55.600 be issuing in terms of four to eight and four 0:01:55.640 --> 0:01:59.720 months bills that they're going to auction on Thursday. They 0:01:59.760 --> 0:02:02.520 have to increase the sizes to rebuild the cash balance 0:02:02.600 --> 0:02:05.840 in the Treasury General Account, which is the checking account 0:02:05.880 --> 0:02:09.160 that the Fed keeps for on behalf of the government. 0:02:09.840 --> 0:02:12.239 And what happens is when when the Treasury General account 0:02:12.280 --> 0:02:15.239 goes up, then other liabilities at the FED need to 0:02:15.280 --> 0:02:18.680 go down, and that's either bank reserves, so deposits come 0:02:18.720 --> 0:02:22.280 out of the system, and that means that bank reserves 0:02:22.320 --> 0:02:25.840 go down, or money market mutual funds, if they purchase 0:02:25.919 --> 0:02:31.120 the T bills, might instead not use the reverse repo 0:02:31.200 --> 0:02:34.000 facility that's been used quite frequently to the tune of 0:02:34.000 --> 0:02:36.760 two point two trillion dollars by money market mutual funds 0:02:37.480 --> 0:02:40.120 might move those So if money market mutual funds at 0:02:40.120 --> 0:02:42.040 the primary buyer of these tea bills, it's really not 0:02:42.080 --> 0:02:45.720 an issue. But I suspect that upwards of seventy percent 0:02:45.919 --> 0:02:48.280 of the T bills are going to be are going 0:02:48.320 --> 0:02:51.400 to be purchased for cash, and that means that bank 0:02:51.440 --> 0:02:53.840 reserves are going to go down. It means bank deposits 0:02:53.880 --> 0:02:56.560 go down, and it could see some depositively. Now the 0:02:56.639 --> 0:03:01.840 question is there's a distributional issue here where most of 0:03:01.880 --> 0:03:04.200 the depositive outflow is probably not going to be in 0:03:04.240 --> 0:03:07.239 the medium and smaller banks that were the problem back 0:03:07.280 --> 0:03:09.600 in March. I think it comes out of more of 0:03:09.600 --> 0:03:12.120 the bulge bracket firms that already have a lot of reserves, 0:03:12.160 --> 0:03:15.240 so probably won't be as systemically of a problem at 0:03:15.320 --> 0:03:19.360 least not initially. Now by year end that might change 0:03:19.440 --> 0:03:21.360 quite a lot. We're working on that now. We'll have 0:03:21.400 --> 0:03:24.720 a no doubt tomorrow morning looking at the reserve requirements 0:03:24.720 --> 0:03:26.840 and how low they can get in how quickly. But 0:03:26.919 --> 0:03:29.120 I don't think it's a June July issue. Could be 0:03:29.160 --> 0:03:31.600 something for later in the third quarter or before year 0:03:31.680 --> 0:03:32.200 end for sure. 0:03:32.919 --> 0:03:35.480 So all right, this is really get into the plumbing. 0:03:35.480 --> 0:03:39.360 But in terms of buying US security share, when they 0:03:39.400 --> 0:03:43.400 come to auction, international buyers, are they there, how big 0:03:43.440 --> 0:03:45.520 are they and who are they? 0:03:45.200 --> 0:03:48.480 So foreigners typically don't buy a whole lot of tea bills. 0:03:48.520 --> 0:03:52.280 Actually the central banks buy a few, but the primary 0:03:52.320 --> 0:03:56.000 buyer are domestic investment funds that means money market mutual funds. 0:03:56.000 --> 0:03:59.400 So you know it used to be when and where 0:03:59.440 --> 0:04:02.200 this comes from is I don't want to say it's old, 0:04:02.280 --> 0:04:06.480 but prior to the global financial crisis, when the US 0:04:06.480 --> 0:04:09.240 had twin deficits, there was a lot of buying of 0:04:09.480 --> 0:04:12.840 US treasury securities, both at auction and outside of auction 0:04:13.280 --> 0:04:17.039 by foreign central banks in particular, that's actually stopped. Most 0:04:17.080 --> 0:04:20.480 people still think that, you know, foreigners or massive buyers. 0:04:21.040 --> 0:04:24.960 Foreigners have not increased their holdings of US treasury securities 0:04:25.000 --> 0:04:29.320 significantly central banks over the last six seven years. Who 0:04:29.400 --> 0:04:32.680 has been buying there are private investors. And private investors 0:04:32.720 --> 0:04:36.400 typically don't buy tea bills. They buy longer term treasury securities, 0:04:36.440 --> 0:04:39.719 you know, thirty years for pension funds and investment and 0:04:40.040 --> 0:04:43.599 insurance companies, or they just buy for their portfolio because 0:04:44.040 --> 0:04:46.080 interest rates in the US are still higher than they 0:04:46.080 --> 0:04:47.560 are in a lot of other jurisdictions. 0:04:48.080 --> 0:04:48.520 And IIRA. 0:04:48.920 --> 0:04:51.680 We have a story on the terminal from Liz McCormick, 0:04:51.760 --> 0:04:54.359 Michael McKinsey, and Craig trur Is talking about how bond 0:04:54.360 --> 0:04:56.800 bulls are betting that the FED is right in anticipating 0:04:56.839 --> 0:04:59.760 low rates to return. In Fed official's long run neutral 0:05:00.200 --> 0:05:03.200 median forecast looking at that is around two and a 0:05:03.279 --> 0:05:05.279 half percent. Do you think that's accurate? 0:05:06.720 --> 0:05:11.320 So I actually think that ultimately the floor that when 0:05:11.320 --> 0:05:13.280 the Federal Reserve starts to cut will actually be below 0:05:13.320 --> 0:05:15.440 two and a half percent. I think that they'll wind 0:05:15.520 --> 0:05:18.720 up cutting probably closer to two. Of course, you're talking 0:05:18.720 --> 0:05:20.520 about twenty twenty five or twenty twenty six, it was 0:05:20.560 --> 0:05:23.680 still a long ways off from that. You know, where 0:05:23.680 --> 0:05:26.599 I think the market is probably a little bit a 0:05:26.600 --> 0:05:29.640 little bit wrong is that the market seems to think 0:05:29.680 --> 0:05:31.800 that the Federal Reserve, there's a good chance that the 0:05:31.839 --> 0:05:33.800 Federal Reserve is going to start cutting interest rates this 0:05:33.920 --> 0:05:36.680 year and January of next year. I suspect that the 0:05:36.720 --> 0:05:39.360 Federal Reserve will wind up raining on hold a bit longer, 0:05:39.400 --> 0:05:42.080 so regardless of what they do kind of this month 0:05:42.080 --> 0:05:44.680 and next month, that once they get to the peak, 0:05:44.760 --> 0:05:46.800 that they'll be on hold for the better part of 0:05:46.839 --> 0:05:49.720 the year, maybe more than a year. But once they 0:05:49.720 --> 0:05:51.600 start to cut, they're going to cut aggressively. They're not 0:05:51.640 --> 0:05:53.560 going to cut in twenty five base point increments once 0:05:53.600 --> 0:05:56.120 a quarter like some people are thinking. I think that 0:05:56.160 --> 0:05:58.480 they cut fifty basis points, you know, every meeting for 0:05:59.360 --> 0:06:01.560 four or five meterets, and then they wind up cutting 0:06:01.560 --> 0:06:03.760 interest rates down towards two percent. So two and a 0:06:03.800 --> 0:06:07.279 half is not outside the range of possibility. But I 0:06:07.320 --> 0:06:09.960 do think that there's a floor probably two is percent, 0:06:10.080 --> 0:06:12.400 and hopefully we don't go below that, because if we 0:06:12.440 --> 0:06:14.719 go below that, that means we have disinflation again, and 0:06:14.760 --> 0:06:19.040 it seems like that's not likely given the demographic and 0:06:19.640 --> 0:06:23.520 economic dynamics that have developed since the COVID pandemic. 0:06:24.000 --> 0:06:25.719 All right, Ira, thank you so much. We appreciate that. 0:06:25.760 --> 0:06:29.240 Ira Jersey, Chief US Interest rate Strategist for Bloomberg Intelligence. 0:06:30.640 --> 0:06:34.080 You're listening to the team. Can's are live program Bloomberg 0:06:34.120 --> 0:06:37.480 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:06:37.560 --> 0:06:40.720 the iHeartRadio app, and the Bloomberg Business App, or listen 0:06:40.760 --> 0:06:42.880 on demand wherever you get your podcasts. 0:06:45.240 --> 0:06:47.760 All swinging down here in Orlando, Florida the b and 0:06:47.920 --> 0:06:51.479 Y Insight Purshing Insight twenty twenty three conference where they 0:06:51.520 --> 0:06:55.200 got about two thousand and their financial clients down here. 0:06:55.240 --> 0:06:57.840 I'm talking about all things on financial services. So some 0:06:57.839 --> 0:07:00.760 good stuff down here, Jess. You can spend thirty five 0:07:00.800 --> 0:07:05.200 hundred bucks for I don't know vr Apple thing Mejig, I. 0:07:05.120 --> 0:07:07.239 Don't think so. I think I'm gonna have to pass 0:07:07.279 --> 0:07:11.120 on that one since it's a more than my rent. 0:07:11.360 --> 0:07:11.880 Exactly. 0:07:11.960 --> 0:07:14.080 I know, I don't know what they're doing, but let's 0:07:14.160 --> 0:07:16.559 let's roundtable this with a couple of smart people who 0:07:17.000 --> 0:07:20.240 know the text base. No Apple know this whole metaverse thing. 0:07:20.520 --> 0:07:23.960 Anurag Rana and Mandeep Sing their senior tech analysts for 0:07:24.120 --> 0:07:25.400 Bloomberg Intelligence. 0:07:27.240 --> 0:07:30.200 Let's go on. Let's start with you. You cover Apple. 0:07:29.960 --> 0:07:33.680 And as does Mandi. But what are they thinking with 0:07:33.760 --> 0:07:38.040 this thirty four and ninety nine dollars price point. 0:07:39.440 --> 0:07:41.160 See Paul from our site. They're going to try to 0:07:41.200 --> 0:07:45.080 create an ecosystem of a new applications, new way of computing. 0:07:45.960 --> 0:07:49.840 This is a completely different ecosystem that they're currently the 0:07:49.840 --> 0:07:52.440 one that they have with the you know, the iPad, 0:07:52.560 --> 0:07:56.840 the iPhone, the air pods. So it is a first 0:07:56.840 --> 0:08:00.560 step in it. They really need develop us to build 0:08:00.600 --> 0:08:04.400 applications on it. We need new content and frankly speaking, 0:08:04.440 --> 0:08:06.640 that's really the game here. This is not It is 0:08:06.680 --> 0:08:09.240 going to take years to really build out, so we 0:08:09.280 --> 0:08:13.000 don't expect any near time action, but we are fairly 0:08:13.040 --> 0:08:14.400 optimistic in the long run. 0:08:14.720 --> 0:08:18.160 Man deep, how do we square this away with Meta's headset? 0:08:18.480 --> 0:08:22.400 So, actually, what Apple has done is really made it 0:08:22.520 --> 0:08:26.480 hard for Meta to go anywhere with their hardware ambitions. 0:08:26.520 --> 0:08:29.760 At least, I think what their demo showed was Apple 0:08:29.880 --> 0:08:33.200 can build this much better than what Meta has done, 0:08:33.240 --> 0:08:35.920 and just take aside the price point for a moment, 0:08:36.360 --> 0:08:39.200 but clearly what they showed was something that I think 0:08:39.480 --> 0:08:42.600 consumers may want, not at that price point. And for 0:08:42.760 --> 0:08:47.199 Meta having invested billions of dollars in developing their own headset, 0:08:47.600 --> 0:08:50.640 I mean it leaves them with very little room to 0:08:50.720 --> 0:08:53.040 be the scale player, even though they have that eighty 0:08:53.080 --> 0:08:56.160 percent share and they have a five hundred dollars headset. 0:08:56.240 --> 0:08:58.840 I would be surprised if they continue to pour more 0:08:58.880 --> 0:09:02.199 money because now that Apple has entered, they will lower 0:09:02.240 --> 0:09:04.920 the price over time. And I think when it comes 0:09:04.960 --> 0:09:07.760 to hardware, there's no other company that can build better 0:09:07.800 --> 0:09:08.800 hardware than Apple. 0:09:09.080 --> 0:09:13.040 So Mandy, what's you know, mister Zuckerberg to do here? 0:09:13.200 --> 0:09:15.800 Is he content not to be in a hardware business? Again, 0:09:15.920 --> 0:09:17.920 I don't think of hardware when I think of Meta. 0:09:18.600 --> 0:09:20.880 But how would they play here just by sybody with 0:09:20.920 --> 0:09:22.679 their applications with the metaverse? 0:09:23.000 --> 0:09:26.920 Yes, And what Meta has done in the background is 0:09:26.920 --> 0:09:31.000 they have invested heavily in AI and large language models, 0:09:31.040 --> 0:09:34.640 and they could still you know, build applications for the metaverse. 0:09:35.120 --> 0:09:38.079 I think they're better off trying to build it for 0:09:38.840 --> 0:09:41.440 you know, all the devices out there. And I think, 0:09:41.520 --> 0:09:45.640 going by what Apple has shown us they will be 0:09:45.960 --> 0:09:48.440 one of the kind of the leaders when it comes 0:09:48.480 --> 0:09:52.880 to the adoption for VR AR mixed reality headset. So 0:09:53.240 --> 0:09:56.320 what Meta probably will eventually end up doing is they 0:09:56.360 --> 0:09:59.640 will develop applications. They'll use whatever they have built on 0:09:59.679 --> 0:10:03.959 the A side to be compatible with Apple, and that 0:10:04.040 --> 0:10:07.200 may be a better approach than trying to develop their 0:10:07.240 --> 0:10:08.600 own ecosystem entirely. 0:10:08.840 --> 0:10:11.040 Hey on Rock, I wanted to jump in and get 0:10:11.040 --> 0:10:14.079 your take as far as what could be the potential 0:10:14.160 --> 0:10:18.000 next catalyst for Apple stock. It's interesting because Morgan Stanley 0:10:18.040 --> 0:10:20.240 is thinking they're actually looking to October for the next 0:10:20.280 --> 0:10:22.960 catalyst when they expect to learn more about the headset volumes. 0:10:23.080 --> 0:10:24.280 Do you think we'll have to wait that long? 0:10:25.720 --> 0:10:27.640 I mean it could be even longer than that. If 0:10:27.960 --> 0:10:31.360 the consumer spending starts to slow down, then iPhone fifteen 0:10:31.440 --> 0:10:33.920 may not do exactly what all of us are hoping, 0:10:33.960 --> 0:10:36.640 which is jumpstart the top line growth rate. You know, 0:10:36.720 --> 0:10:39.920 and Paul and I have talked about this a lot, 0:10:40.000 --> 0:10:42.160 that this is a company that's not going to go 0:10:42.559 --> 0:10:46.120 top line above ten percent anytime soon. And that's because 0:10:46.160 --> 0:10:50.040 the scale, the size, the penetration rate of iPhones. So 0:10:50.160 --> 0:10:52.120 I think it's going to be a while before if 0:10:52.160 --> 0:10:54.959 people are thinking this is going to grow double digits again, 0:10:55.240 --> 0:10:56.880 you know, they may have to wait quite a bit 0:10:56.920 --> 0:10:57.280 of time. 0:10:58.520 --> 0:11:00.439 So, Man, Dave, what do we know now? 0:11:00.720 --> 0:11:04.200 It's been I don't know, maybe a year since you know, 0:11:04.360 --> 0:11:05.920 Meta kind of you know, more than a year when 0:11:05.920 --> 0:11:07.959 they changed their name and they said we're going all 0:11:07.960 --> 0:11:10.439 in on this metaverse and then they've kind of paired 0:11:10.440 --> 0:11:14.440 back their investment ambitions maybe in that business. What's the 0:11:14.520 --> 0:11:18.120 understanding on the street as to Meta's kind of next 0:11:18.200 --> 0:11:19.920 one to two to three years in terms of investment, 0:11:19.960 --> 0:11:21.120 in terms of how they'll evolve. 0:11:21.720 --> 0:11:24.480 I mean, clearly they have you know, made a one 0:11:24.520 --> 0:11:27.640 to ady degree turn this year compared to where they 0:11:27.640 --> 0:11:32.200 were last year, and that has increased, you know, at 0:11:32.240 --> 0:11:35.959 least expectations that they'll focus more on profitability. They will 0:11:36.080 --> 0:11:39.080 not lose as much money as they were doing before 0:11:39.280 --> 0:11:40.920 on reality labs. 0:11:41.320 --> 0:11:41.720 Still. 0:11:41.840 --> 0:11:46.800 I think they are investing on building data center capacity, 0:11:46.840 --> 0:11:51.760 adding more applications that are metaverse oriented, and I think 0:11:51.840 --> 0:11:54.680 the street is okay with that. It's just the hardware side, 0:11:55.000 --> 0:11:59.040 which I think where they're losing money on every headset 0:11:59.080 --> 0:12:01.720 that they're selling. That may not be a good strategy 0:12:01.760 --> 0:12:05.199 because the more you scale, you know, it's a bigger 0:12:05.240 --> 0:12:08.360 hole when it comes to your operating income. 0:12:09.080 --> 0:12:10.200 An a rog have to get. 0:12:10.040 --> 0:12:13.840 Your thoughts also when it comes to this fifteen inch 0:12:14.200 --> 0:12:17.760 MacBook Air that's starting around thirteen hundred dollars. 0:12:19.160 --> 0:12:22.280 Yeah, I'm actually looking forward to it. I'm a cheap guy, 0:12:22.320 --> 0:12:25.200 but I think I'm going to go by that. I 0:12:25.280 --> 0:12:28.280 love my MacBook Air. I've had it for I mean, 0:12:28.320 --> 0:12:31.520 I think fifteen years, two different models in that tankgame, 0:12:31.559 --> 0:12:35.440 and it's just a beautiful machine. I'm very optimistic in that. 0:12:35.559 --> 0:12:39.080 But having said that, once again, mathematically as as a 0:12:39.120 --> 0:12:42.480 company for Apple, it's not going to have a material 0:12:42.480 --> 0:12:45.080 impact over the next twelve months, and that has to 0:12:45.080 --> 0:12:48.440 do with very tough comparison the PC market in the slump. 0:12:48.840 --> 0:12:51.400 But personally I'm very keen on that machine. 0:12:52.520 --> 0:12:54.960 All right on rag Rana men deep seeing our senior 0:12:55.000 --> 0:12:58.120 technology analyst from Bloomberg Intelligence helping us break down. You know, 0:12:58.120 --> 0:12:59.800 it was a pretty big event yesterday for Apple with 0:12:59.840 --> 0:13:03.400 this new virtual reality augmented reality device. 0:13:03.760 --> 0:13:07.400 You're listening to the tape Kensur Live program Bloomberg Markets 0:13:07.440 --> 0:13:10.840 weekdays at ten am Eastern on Bloomberg Radio, the tune 0:13:10.880 --> 0:13:13.840 in app, Bloomberg dot Com, and the Bloomberg Business App. 0:13:13.880 --> 0:13:16.679 You can also listen live on Amazon Alexa from our 0:13:16.720 --> 0:13:21.120 flagship New York station, Just Say Alexa play Bloomberg eleven thirty. 0:13:23.080 --> 0:13:25.160 So the big, big news coming out of Marshton and DC. 0:13:25.320 --> 0:13:28.480 Secretary of State Anthony Blincoln plans to visit China in 0:13:28.520 --> 0:13:31.720 the coming weeks for talks with top officials, possibly including 0:13:32.080 --> 0:13:35.480 President Jijimping. People familiar with the matter said, as the 0:13:35.640 --> 0:13:39.720 US looks to resume high level communication despite continued at tensions, 0:13:39.720 --> 0:13:41.120 want to get the latest on that. We bring in 0:13:41.240 --> 0:13:44.920 Justin Sinky covers the White House and DC for Bloomberg News. 0:13:45.480 --> 0:13:49.000 Justin Big News. Give us your some sense of context here. 0:13:49.640 --> 0:13:52.640 Yeah, well, you know, the relationship between the US and 0:13:52.679 --> 0:13:55.600 China has been strained sort of multiple points over the 0:13:55.640 --> 0:13:59.800 last you know, well lots of years, last decade, however 0:14:00.080 --> 0:14:02.839 far back you want to go. But there had seemed 0:14:02.880 --> 0:14:05.680 to be a sort of warming between President Biden and 0:14:06.360 --> 0:14:09.600 President Juhn Ping of China at the sum in Bali 0:14:09.679 --> 0:14:12.680 last fall. All of that was sort of thrown off 0:14:12.800 --> 0:14:16.120 track when right ahead of the Secretary of Blncoln's planned 0:14:16.679 --> 0:14:21.280 trip earlier this year to Beijing, the Chinese Bible balloon 0:14:21.320 --> 0:14:23.880 flew over the US, so that led the State Department 0:14:23.920 --> 0:14:26.360 to scrap the plans, and since then there's been a 0:14:26.400 --> 0:14:31.560 real breakdown in sort of conversations between China and the US. 0:14:31.640 --> 0:14:34.760 There's been a number of military drills recently where US 0:14:34.960 --> 0:14:39.720 or Chinese aircraft and ships have buzzed in front of 0:14:40.160 --> 0:14:44.120 US aircraft or ships, and so it seems like there 0:14:44.200 --> 0:14:47.560 was a real tension and Secretary B. Lincoln headed back 0:14:47.600 --> 0:14:50.280 to Beijing a signal that things may be warming and 0:14:50.600 --> 0:14:51.640 getting back on track. 0:14:52.120 --> 0:14:54.440 Justin, do we have a sense of the exact timing 0:14:54.680 --> 0:14:57.040 of when his trip to Beijing could happen. 0:14:57.760 --> 0:15:01.320 We expect in the next few weeks. The specific dates, 0:15:02.000 --> 0:15:03.880 I'm not sure if they're locked in yet or they're 0:15:03.920 --> 0:15:05.920 just not being shared yet. The State Department has said 0:15:05.960 --> 0:15:08.400 that they don't have anything to announce officially yet. But 0:15:09.520 --> 0:15:12.920 my colleagues Jenny Leonard and Marie Horton, who reported this 0:15:12.960 --> 0:15:15.680 piece out, till fairly confidence this trip is not only happening, 0:15:15.680 --> 0:15:17.680 but happening in the relatively near future. 0:15:18.200 --> 0:15:21.320 And justin, I'm not sure how these things work here 0:15:21.360 --> 0:15:24.560 when it comes to the diplomacy is typically a high 0:15:24.640 --> 0:15:27.400 level visit by a Secretary of State, perhaps a precursor 0:15:27.440 --> 0:15:30.040 for getting Present Biden president G together at some point. 0:15:30.760 --> 0:15:33.240 Yeah, or at the very least, even President Biden has 0:15:33.240 --> 0:15:35.240 said that he expects and hopes to talk to G 0:15:35.400 --> 0:15:39.240 on the phone sometime soon. So there are a number 0:15:39.240 --> 0:15:44.360 of you know, diplomatic forum again this fall or the 0:15:44.440 --> 0:15:47.240 G twenty, it could again be an opportunity for them 0:15:47.240 --> 0:15:50.400 to meet. But I would expect, you know, if this 0:15:50.440 --> 0:15:53.720 meeting goes well, to two possible things to accomplish setting 0:15:53.800 --> 0:15:57.280 up that phone call between Biden and G. And secondly, 0:15:57.320 --> 0:16:01.200 the US is really pushed for real opening military to 0:16:01.280 --> 0:16:06.280 military communication, which the Chinese cut off after former Speaker 0:16:06.280 --> 0:16:10.680 Pelosi went to Taiwan late last year, and so I 0:16:10.720 --> 0:16:12.920 think that was the goal of the original Blinking trip. 0:16:13.000 --> 0:16:15.360 Then the spy balloon happened, and so there's a hope 0:16:15.360 --> 0:16:18.440 that that can kind of kickstart if things go well. 0:16:18.480 --> 0:16:21.600 When Secretary Blanking Ghostavision. 0:16:21.600 --> 0:16:25.160 Justin talk to us about what this visit would essentially mean. 0:16:25.200 --> 0:16:28.240 When we're putting this in context to Presidents Biden's efforts 0:16:28.280 --> 0:16:31.280 to really try to restore some normalcy to the relationship here. 0:16:32.080 --> 0:16:37.000 Yeah, I mean there Not only did Speaker Pelosi's trip 0:16:37.080 --> 0:16:39.720 really kind of strain re license, but there have been 0:16:39.720 --> 0:16:41.880 a number of pressure points over the last few years. 0:16:42.800 --> 0:16:49.800 Obviously China's reaction to Russia's invasion of Ukraine, the Biden 0:16:49.840 --> 0:16:52.920 administration has been mostly happy with, but has wanted to 0:16:52.960 --> 0:16:58.320 push for kind of a stronger breaking of ties between 0:16:58.400 --> 0:17:02.640 Russia and China, the situation in Taiwan, the situation and 0:17:03.040 --> 0:17:07.760 sort of the South Pacific in general, where China has 0:17:07.760 --> 0:17:10.840 been increasingly assertive. And so you put all that into 0:17:10.840 --> 0:17:13.560 the context, especially of trade, when you think about the 0:17:13.560 --> 0:17:21.120 economy and efforts to sort of counter Chinese manufacturing influence 0:17:21.240 --> 0:17:24.040 and post COVID, I think all of these are sort 0:17:24.040 --> 0:17:26.399 of sore spots that there's a real hope than the 0:17:26.400 --> 0:17:29.840 Biden administration that improved dialogue can help get past. 0:17:30.960 --> 0:17:33.760 Hey justin you know, it's interesting we seem to sort 0:17:33.800 --> 0:17:36.800 of past several weeks a lot of high profile US 0:17:36.960 --> 0:17:39.960 executives heading over to China. Jamie Diamond was there for 0:17:40.000 --> 0:17:43.080 big a Jpmorton conference. Elon Musk was there, Tim Cook 0:17:43.119 --> 0:17:46.960 from Apple. It feels like maybe the government officials are 0:17:47.040 --> 0:17:49.520 kind of behind a little bit of the private sector. 0:17:49.840 --> 0:17:52.280 What's the feeling with in DC about what we should 0:17:52.280 --> 0:17:53.000 be doing in China? 0:17:53.720 --> 0:17:57.000 Yeah, I think that there is. There are sort of 0:17:57.440 --> 0:18:00.920 countervailing winds. Right on the one hand, I think there 0:18:00.920 --> 0:18:03.439 is a sense among many that they are trying to 0:18:03.480 --> 0:18:06.000 repair this relationship to at least make it more functional 0:18:06.080 --> 0:18:11.440 than it's been, particularly because you're seeing these military maneuvers 0:18:11.560 --> 0:18:15.439 or communication breakdowns, that there's a real concern that it 0:18:15.480 --> 0:18:19.920 could bleed inadvertently to something bad happening. At the same time, 0:18:20.000 --> 0:18:23.240 we're about to have a presidential election in twenty twenty 0:18:23.240 --> 0:18:26.199 four where the issue of China is certain to be central. 0:18:26.640 --> 0:18:29.439 Former President Donald Trump obviously made that a sort of 0:18:29.440 --> 0:18:33.320 signature campaign issue and has talked a lot about being 0:18:33.359 --> 0:18:35.920 tough on China as part of his push back into 0:18:35.920 --> 0:18:40.560 the Republican primary. It's something that the Biden administration has 0:18:40.560 --> 0:18:44.879 tried to counter by big government programs to return manufacturing 0:18:44.880 --> 0:18:47.560 back to the United States. And so it's one of 0:18:47.600 --> 0:18:49.919 those tricky things where I think if you talk to 0:18:50.280 --> 0:18:53.760 people about is it good for business to improve those ties, 0:18:53.800 --> 0:18:56.320 they'll say yes, Is it good for politics to improve 0:18:56.359 --> 0:18:57.159 those ties? Maybe no. 0:18:58.480 --> 0:19:00.720 I just think thank thank you so much for joining us. 0:19:00.800 --> 0:19:04.000 Really appreciated getting the latest air Secretary of State Blincoln 0:19:04.240 --> 0:19:06.600 announcing that he intends to travel to China in the 0:19:06.640 --> 0:19:09.800 near future, so presumably that is good news. 0:19:11.080 --> 0:19:14.520 You're listening to the team Ken's are Live program Bloomberg 0:19:14.560 --> 0:19:17.919 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:19:18.000 --> 0:19:21.160 the iHeartRadio app, and the Bloomberg Business App, or listen 0:19:21.240 --> 0:19:23.320 on demand wherever you get your podcasts. 0:19:25.520 --> 0:19:27.640 Let's get a breakdown what's happening with the markets. Billy 0:19:27.680 --> 0:19:30.720 Lipschaltzy covers the Markets force. He joins us in a 0:19:30.760 --> 0:19:34.199 Bloomberg Inactive broker studio, as does Scarlet Food TV anchor 0:19:34.240 --> 0:19:39.359 for Bloomberg Television business sports host as well. So Bailly 0:19:39.440 --> 0:19:41.639 gave us kind of the movements in the golf stocks. 0:19:41.720 --> 0:19:44.280 Let's go to Scarlett right away here. I mean, this 0:19:44.320 --> 0:19:45.000 news shocked me. 0:19:45.200 --> 0:19:48.160 Scarlett. I'm a golfer, I follow the business, I follow 0:19:48.200 --> 0:19:50.480 the sport of it. I was shocked at this happened. 0:19:50.680 --> 0:19:53.960 Totally shocked. Given that the two had really dug in 0:19:54.000 --> 0:19:56.760 the two sides live golf and the PGA Tour, there 0:19:56.840 --> 0:20:00.400 was a lot of charges flung against each other, suits 0:20:00.440 --> 0:20:03.000 between the two. The DOJ got involved because it was 0:20:03.040 --> 0:20:07.080 also looking into the PGA for monopolistic antitrust type of behavior. 0:20:07.320 --> 0:20:09.080 And then all of a sudden, you have them declaring 0:20:09.080 --> 0:20:12.719 a truce in what really was a civil war in golf. 0:20:13.600 --> 0:20:17.520 So who caved It's not clear, but I guess if 0:20:18.480 --> 0:20:23.320 the PGA Tour has admitted, basically conceded that live has 0:20:23.720 --> 0:20:26.240 a role to play, my guess is PGA Tour did. 0:20:27.080 --> 0:20:27.920 Yeah, that's exactically. 0:20:28.000 --> 0:20:28.359 Well. 0:20:28.440 --> 0:20:30.320 You know, it's interesting if you look at the Bloomberg 0:20:30.440 --> 0:20:35.359 news story, the headline is PGA bows and so I 0:20:35.359 --> 0:20:38.159 immediately emailed the editor, which you can do because all 0:20:38.200 --> 0:20:40.760 the contact information to the bottom of every Bloomberg story helpful. 0:20:40.880 --> 0:20:43.000 And I said, I said, really, because I didn't. I 0:20:43.040 --> 0:20:46.000 don't think that, not knowing anything about this deal, but 0:20:46.080 --> 0:20:48.800 I thought pg had by far the upper hand here. 0:20:49.160 --> 0:20:52.080 Nobody cared about Live Golf, nobody watched it, nobody went 0:20:52.160 --> 0:20:54.760 to the events relative to a PGA event. Yes, they 0:20:54.800 --> 0:20:57.080 had the money, and that's I guess the big issue. 0:20:57.200 --> 0:20:59.920 Yes, they had an investor with bottomless pockets, which was 0:21:00.040 --> 0:21:03.119 basically the Sovereign Wealth Fund of Saudi Arabia, and my 0:21:03.240 --> 0:21:06.240