Speaker 1: This is Bloomberg day Break Asia for this Monday, June
Speaker 1: nineteenth in Hong Kong, Sunday June eighteenth in New York
Speaker 1: and coming up today.
Speaker 2: The US feels the heat from China's push on electric vehicles.
Speaker 1: Intel will build a new manufacturing plant in Israel to
Speaker 1: diversify more production outside of Asia.
Speaker 2: Perelli will discuss the move by the Italian government to
Speaker 2: strip Sinochem's influence on Perelli's board.
Speaker 3: B Lincoln and Sheen meet Possible With Shichimpeg still up
Speaker 3: in the air, William Barr says the case against Trump
Speaker 3: is strong and that the former president is a fundamentally
Speaker 3: flawed person. Kishaa pulling down. I'm at Baxter with Global News.
Speaker 4: That's all straight ahead on Bloomberg Daybreak Asia, the business
Speaker 4: news you need to start your day in just one
Speaker 4: fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App,
Speaker 4: and everywhere you get your podcasts.
Speaker 1: Good morning, I'm Brian Curtiz.
Speaker 2: And I'm Doug Krisner. Here are the stories we're following today.
Speaker 1: Transportation Secretary Pete Boodaget says the US must take steps
Speaker 1: to cut into China's advantage in batteries that are used
Speaker 1: to power electric vehicles. Is Bridget. Speaking in Japan at
Speaker 1: the G seven Transport Ministers meeting, he said the US
Speaker 1: needs to do more.
Speaker 5: Refining capacity on many of the key raw materials needed
Speaker 5: for EV battery components. It's very concentrated in China, and
Speaker 5: that is something that's addressable. It's not a matter of geology,
Speaker 5: it's a matter of capacity, and we need to make
Speaker 5: sure both in terms of what we're building up domestically
Speaker 5: in the United States and our relationships with friends and
Speaker 5: trading partners that were positioning ourselves to have an economically sensible,
Speaker 5: environmentally sensible, and geopolitically stable approach to how we are
Speaker 5: going to get these vitally important elements in our economy
Speaker 5: that are only going to grow in importance.
Speaker 1: Meantime, Ford share Bill Ford Junior told CNNA and the
Speaker 1: US is not quite ready to compete with China in
Speaker 1: the production of electric vehicles, and he said his company
Speaker 1: is taking an all hands on deck approach to prepare.
Speaker 1: This includes Ford building a battery plant in Michigan. Bloomberg
Speaker 1: NEIF says Chinese firms now account for more than half
Speaker 1: of the EV battery market and it says that those
Speaker 1: firms satisfy as much as ninety percent of demand for
Speaker 1: some battery materials.
Speaker 2: Intel is building a new manufacturing plant in Israel, as
Speaker 2: the chip maker continues to diversify out of East Asia.
Speaker 2: We have more from Bloomberg's Thannis Pellegrini.
Speaker 6: Intel has agreed in principle to build a chip plant
Speaker 6: outside Tel Aviv that could be up and running within
Speaker 6: four years. Prime Minister Nuttnya, who calls a twenty five
Speaker 6: billion dollar deal the largest foreign investment in Israel, but
Speaker 6: we're also hearing that number may include a previously announced
Speaker 6: ten billion dollar investment. Intel may qualify for a big
Speaker 6: grant for the plant, and it's all part of Intel's
Speaker 6: push to diversify beyond Asia and restore technological leadership after
Speaker 6: gains by rivals in video in Taiwan Semi. Intel is
Speaker 6: also expanding in Poland and Ireland. Denise Pelgriny Bloomberg day Breakasia.
Speaker 1: Boeing says it's preparing to accelerate production of the seven
Speaker 1: thirty seven jets soon. That's according to Standal, who heads
Speaker 1: Boeing's commercial airplane business. It comes as the planmaker said
Speaker 1: it's making some progress and addressing a production defect in
Speaker 1: the tail of the seven eighty seven Dreamliner jet. Boeing
Speaker 1: said that this supplier defect has has slowed deliveries and
Speaker 1: will impact second quarter results, but the company hopes that
Speaker 1: hiking output of its seven thirty seven jet will ultimately
Speaker 1: boost revenue. Standeel declined to say whether the plan twenty
Speaker 1: three percent uptick would happen by the end of this
Speaker 1: month or in the third quarter.
Speaker 2: This is going to be the first opportunity for markets
Speaker 2: in Asia to react to some hawkish remarks last Friday
Speaker 2: from FED Governor Chris Waller, he said it's not clear
Speaker 2: the US banking strains will lead to significantly tighter lending
Speaker 2: conditions in the States, and he pushed back on the
Speaker 2: argument from some critics that the FED should consider recent
Speaker 2: bank troubles when deciding monetary policy.
Speaker 7: The Fed's job is to use monetary policy to achieve
Speaker 7: its dual mandate, and right now that means raising rates
Speaker 7: to fight inflation. It is the job of bank leaders
Speaker 7: to deal with interest rate risk. I do not support
Speaker 7: altering the stance of monetary policy over worries of ineffectual
Speaker 7: management at a few banks.
Speaker 2: That is FED Governor Chris Waller. He went on to
Speaker 2: say the FED has a separate range of targeted tools
Speaker 2: to address financial stability, and he said tighter credit conditions
Speaker 2: so far are a continuation of some prior trends. Meantime,
Speaker 2: Waller went on to say more policy tightening will likely
Speaker 2: be required by the FED. He said core inflation prices
Speaker 2: are not moving and that Brian, he said, is a
Speaker 2: concerning trend.
Speaker 8: Well.
Speaker 1: Italian tire maker Pirelli is moving ahead on a plan
Speaker 1: by the Italian government to limit Sinokem's influence on Pirelli.
Speaker 1: Let's get the story from Bloomberg's Joan Wong In Hong Kong.
Speaker 9: Parelli has called a board meeting to account for the
Speaker 9: government's new measures on Friday. Italy used as gold empower
Speaker 9: rights to strip Sinocamp's access to strategically important data. Sinocam
Speaker 9: owns more than a third of Pirelli and as a
Speaker 9: tire maker's biggest shareholder. The government has cited concern about
Speaker 9: data collected by sensors and the company's tires. It said
Speaker 9: that the data could feed into artificial intelligence models, making
Speaker 9: it critical to national security. In Hong Kong, Joan Wong
Speaker 9: Bloomberg Day Brigasia.
Speaker 1: I'm Brian Curtis along with Rashad Salama and Doug Christner. So, Doug,
Speaker 1: one of the things I'm interested in probing with guests
Speaker 1: on the program today is what's the big driver at
Speaker 1: the moment? Is it really still the FED, given that
Speaker 1: the FED is sort of close to the ending of
Speaker 1: its campaign. Is it more of the economy?
Speaker 4: Is it?
Speaker 1: Is it the impact on earnings or maybe even something else.
Speaker 4: I like China.
Speaker 1: So we've got David Kotok coming up in a few
Speaker 1: moments and we can chat with him over that.
Speaker 2: Yeah, when it comes to China, Brian Bloomberg Economics is
Speaker 2: saying that more stimulus is needed to put the recovery
Speaker 2: back on track. We were talking earlier about the high
Speaker 2: probability that China's big commercial banks will almost certainly cut
Speaker 2: their prime lending rates this week. And when it comes
Speaker 2: to EVS, I know we've been talking a lot about
Speaker 2: that today. Last week China did launch that green cars
Speaker 2: going Rural sales campaign. And now when you're looking at
Speaker 2: the issue of infrastructure spending in China, I think we
Speaker 2: have to address the issue of charging infrastructure.
Speaker 1: Yeah, it's interesting that the lead has been taken there
Speaker 1: by Tesla, and that seems to be holding sway even
Speaker 1: in China. Whether or not that stays is an interesting question.
Speaker 1: And in terms of this stimulus, so I think we're
Speaker 1: still waiting to see whether they lean more on broad
Speaker 1: stimulus or targeted to me. And we still don't have
Speaker 1: all the details of what may be coming, and it'll
Speaker 1: be interesting to see how important the economy is on
Speaker 1: whether or not China's behavior on.
Speaker 10: The global stage changes.
Speaker 1: I think, as Ed mentioned in our news, it'll be
Speaker 1: really important to see whether Anthony blink and visiting China
Speaker 1: actually gets a meeting with Shijinping, or whether or not
Speaker 1: that is somehow withheld because China still disapproves of US outlooks.
Speaker 2: Yeah, for the moment. I mean, if you look at
Speaker 2: the fact that the conversation between Blinkin and Chin Yung,
Speaker 2: his Chinese counterpart, those talks lasted seven and a half hours,
Speaker 2: much longer than planned. So maybe that's going to inject
Speaker 2: a little bit of positivity in markets today.
Speaker 1: Yeah, I think most investors would hope. So now it's
Speaker 1: time for global news. Both the US and China say
Speaker 1: the first meeting between the two foreign secretaries was candid
Speaker 1: at Baxter has Global News from the nine to sixty
Speaker 1: newsroom in San Francisco.
Speaker 3: Yeah, thank you, just following what you guys have set
Speaker 3: up for me. Secretary of State Blincoln meetings with Foreign
Speaker 3: Minister Chan Goong. The meeting lasted seven and a half hours.
Speaker 3: Bloomberg's Ian Marlow and Beijing says more meetings to come.
Speaker 11: We're looking to see how he's received by the Chinese side,
Speaker 11: whether there will be any fireworks their fiery rhetoric.
Speaker 12: In some of these meetings.
Speaker 11: Here there's meetings with Chin Kong, the Chinese foreign minister today,
Speaker 11: and there's the possibility of a meeting with Shi Jimping.
Speaker 10: Potentially.
Speaker 4: Yeah.
Speaker 3: Now, the US readout said quote, the Secretary emphasized the
Speaker 3: importance of diplomacy and maintaining open channels of communication across
Speaker 3: the full range of issues to reduce the risk of
Speaker 3: misperception and miscalculation. Secretary raised a number of issues of
Speaker 3: concern now. China has, of course emphasized the Taiwan issue.
Speaker 3: Blincoln has more meetings today, including one with Huangi, the
Speaker 3: Communist Party's top foreign affairs official. As Ian mentioned it
Speaker 3: is left to be seen now whether he'll meet with
Speaker 3: President Xi jimping political re action inside the US today
Speaker 3: as presidential Canada. Chris Christi on CBS has heard here
Speaker 3: on Bloomberg, said he thinks it's too late for this
Speaker 3: approach that is going on right now, and talking about
Speaker 3: President Biden, he.
Speaker 8: Has made mistakes in terms of not being tougher against
Speaker 8: China on the stealing of her intellectual property, letting spy
Speaker 8: balloons fly over our country unharrassed. Whatever he's doing today
Speaker 8: is a day late and a dollar short.
Speaker 3: Well, we'll see now. Christy is of course running against
Speaker 3: Donald Trump for president and doesn't mince any words on him.
Speaker 3: He says, as a former federal prosecutor, the case against
Speaker 3: Trump is very strong.
Speaker 8: We would not be here if Donald Trump had simply
Speaker 8: returned the documents the dozens of times the government asked
Speaker 8: him to return them, the times that the grand Jury
Speaker 8: served a subpoena for them.
Speaker 3: And also on CBS has heard here on Bloomberg, former
Speaker 3: Attorney General William Barr says the case looks very solid.
Speaker 3: Barr says this one is different.
Speaker 13: Yes, he's been the victim of unfair witch hunts in
Speaker 13: the pat asked, but that doesn't obviate the fact that
Speaker 13: he's also a fundamentally flawed person who engages in reckless conduct,
Speaker 13: and that leads to situations, calamitous situations like this.
Speaker 3: Yeah, and what Trump has said is inconsistent.
Speaker 4: Well, it's very.
Speaker 13: Strong because a lot of the evidence comes from his
Speaker 13: own lawyers, and furthermore, there's evidence of him saying things
Speaker 13: that are completely incompatible with any idea that this was
Speaker 13: an innocent document dispute.
Speaker 3: Barr says, so far, the Trump arguments just don't hold up.
Speaker 13: They're not even now arguing that it's purely private. What
Speaker 13: they're saying is the president just has sweeping discretion to
Speaker 13: say they are even though they squarely don't fall within
Speaker 13: the definition. It's an absurd argument.
Speaker 3: Yeah, But of course there are Trump defenders, one being
Speaker 3: Republican Congressman Jim Jordan, who says the documents were declassified.
Speaker 11: I go on the president's word, and he said he did,
Speaker 11: and the Supreme Court said, that's what count.
Speaker 3: Jordan says, if Trump said it, it is so. Support
Speaker 3: for Japanese Prime Minister Fumio Kishita's cabinet dropped twelve percentage
Speaker 3: points to thirty three percent of Paul take in Bamanat
Speaker 3: yesterday and the day before, disapproval rose twelve points to
Speaker 3: fifty eight percent. Global News powered by more than twenty
Speaker 3: seven hundred journalists and analysts and over one hundred twenty
Speaker 3: countries in San Francisco. I'm Ed Baxter, and this is Bloomberg.
Speaker 1: This is Bloomberg Daybreak Asia. I'm Brian Curtis with Rashad
Speaker 1: Salomat in Hong Kong, and our guests on the show
Speaker 1: this morning is David Kotok, cio and chairman of Cumberland Advisors.
Speaker 1: So I wanted to put the question to you about
Speaker 1: what the biggest market driver is and sort of do
Speaker 1: it in this way, David, is the FED slipping in
Speaker 1: its importance as a market driver given that it's somewhere
Speaker 1: close to or at its interest rate hiking campaign?
Speaker 4: Yeah?
Speaker 14: Well, Brian, thank you, and thank you Rashad. It's nice
Speaker 14: to be with you. The question is indeterminate today. With
Speaker 14: Waller's very strong comments which were quoted in your opening.
Speaker 14: Chris Waller essentially said we're not done yet until we're
Speaker 14: satisfied we're going to hit a two percent target, and
Speaker 14: he's very clear focused on the PCE index, that price index,
Speaker 14: and Waller is a powerful voice among the Board of Governors.
Speaker 14: So I would say the FED is still the key
Speaker 14: driver for US markets, and the outlook for interest rates
Speaker 14: and the yield curve is still a wide band of uncertainty.
Speaker 14: And we still have the US Treasury accessing markets for
Speaker 14: hundreds of billions in new issuance to make up for
Speaker 14: the debt ceiling political fight.
Speaker 10: So that's ahead of US. I put number one is
Speaker 10: the FED.
Speaker 14: I like what you've been reporting about seven hour meetings
Speaker 14: in China. It would be nice to see positive things
Speaker 14: break out in the US China relationships.
Speaker 10: Sorry, Chris Christy.
Speaker 14: It's better to have a good outcome later than not
Speaker 14: to have it at all.
Speaker 10: But I would say FED number one.
Speaker 12: Geopolitics number two a true I mean, it's amazing how
Speaker 12: geopojects has become the alpha, almost the alpha for markets
Speaker 12: right now.
Speaker 10: So how has that?
Speaker 12: You know, surely you know we got the dot plots,
Speaker 12: How did you interpret those? How close is the Federal
Speaker 12: Reserve for actually finishing up here? And when they start that,
Speaker 12: you know, really perhaps not doing anything about cutting but
Speaker 12: really using these interest rates of these sort of levels
Speaker 12: has been the old normal becoming the new normal.
Speaker 14: Well, Rich, you identified the dilemma for the investor in
Speaker 14: the United States. You look at the dot plots to
Speaker 14: send you a message. What is the real value of
Speaker 14: the dot plots? Well, to give you the sentiment. The
Speaker 14: sentiment said, nobody wanted to cut between now and the
Speaker 14: end of the year. And they were all over the place,
Speaker 14: and we had to speculate about which dot goes with
Speaker 14: which person. That's a shame, and there's not much we
Speaker 14: can do about it. But without knowing which dot is
Speaker 14: Bullered and which dot is Waller, we have to do
Speaker 14: this guesswork. So I don't put a lot of effort
Speaker 14: into the dot plots. I think it's important that key
Speaker 14: governors and their statements and their influence in that meeting
Speaker 14: is identified, and Chris Waller is certainly one of them.
Speaker 1: You know, given that the Fed has been hiking interest
Speaker 1: rates rather steadily and the market has still performed pretty
Speaker 1: well over the last six months, I would have thought
Speaker 1: that you might think that what's more important than whether
Speaker 1: or not we get one, two or three more spread
Speaker 1: out over some time here would be the impact of
Speaker 1: the previous hikes on the economy and on companies because
Speaker 1: it seems like companies are handling five percent interest rates
Speaker 1: reasonably well, and the economy too.
Speaker 14: It would we have never had this fast arise from
Speaker 14: zero to five percent, so we don't have guidance for
Speaker 14: the so called long and variable lags between monetary policy
Speaker 14: action today and what happens with real growth and to
Speaker 14: inflation tomorrow. This is a new place for the FED,
Speaker 14: and so I would say that they realize they need
Speaker 14: to allow time, which is why the pace of accelerating
Speaker 14: rate hikes has flattened out to some trajectory of between
Speaker 14: five and six percent for the rest of the year.
Speaker 10: Markets wanted to pivot.
Speaker 14: They wanted the FED to not only stop raising rates,
Speaker 14: but within a few months start to lower them, and
Speaker 14: markets have been disappointed and essentially pushing out the pivot.
Speaker 14: Push out the pivot, and I believe markets are going
Speaker 14: to find that this FED is very determined to get
Speaker 14: close to its target. The other side of that is
Speaker 14: there's still liquidity in the system, and the FED, with
Speaker 14: their the way in which they prevented a banking system
Speaker 14: contagion spirallling downward with signature and SVB First Republic, what
Speaker 14: they did was not permit contagion.
Speaker 10: In the US banking system.
Speaker 14: So we had three banks, big shock, hundreds of billions
Speaker 14: and no contagion. Depositors got scared, businesses got scared, investors
Speaker 14: got scared.
Speaker 10: But they didn't lose.
Speaker 14: The people who lost were the shareholders and the debt
Speaker 14: holders in those institutions. And so that's a very powerful
Speaker 14: positive and it is offsetting the fear that took place
Speaker 14: during that sequential bank failure period.
Speaker 12: Fifty anniversary for Comblan Advisors, the S and P fifty
Speaker 12: years ago was on one hundred and eight and the
Speaker 12: ten years yielding seven point four percent very quickly.
Speaker 10: Your thoughts, David, Oh well, thank you very much. Rich.
Speaker 14: The next fifty years are going to be very interesting.
Speaker 14: I intend to start on them tomorrow morning, and I
Speaker 14: hope we can discuss them in good health all of us.
Speaker 10: Thank you for the good wishes.
Speaker 1: This is Bloomberg Daybreak Asia, your morning brief on the
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