Speaker 1: This is Bloomberg Daybreak Asia for this Thursday, January nineteenth
Speaker 1: in Hong Kong, Wednesday, January eighteen in New York and
Speaker 1: coming up this hour, U s dooks fall after week
Speaker 1: economic data and with prominent fedhawks repeating calls for more radikes.
Speaker 1: Microsoft and Amazon begin a round of job cuts to
Speaker 1: offset slowing sales, and the US and China pledge to
Speaker 1: talk more to avoid worsening tensions. She Jim Penn calls
Speaker 1: for more effort and COVID fight while saying the dawn
Speaker 1: is ahead. China's censors about a wipe away gloomy emotions
Speaker 1: fighting in Ukraine's Dome Boss described as ferocious. I'med Baxter
Speaker 1: with Lobal news and injured top seed raffiadell is ousted
Speaker 1: at the Australian Open on Dan Schwartz been I'll have
Speaker 1: that story more coming up in Bloomberg Sports. That's all
Speaker 1: straight ahead on Bloomberg Daybreak Asia on Bloomberg eleven and
Speaker 1: three on New York, Bloomberg on Washington, d C, bloom
Speaker 1: one of those SIGs one Boston Bloomberg nine sixties and
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Speaker 1: on Bloomberg Radio dot com and via the Bloomberg Business App.
Speaker 1: Good morning, I'm Dad Prisoner and I'm Brian Curtis. Here
Speaker 1: are the stories we're following today. So let's talk a
Speaker 1: little bit about what we had in market action today.
Speaker 1: We had a lot of weakness in the equity market today.
Speaker 1: Some weak economic news seemed to confirm this idea that
Speaker 1: things are slowing down, and it calls into question the
Speaker 1: outlook not only for growth, but for earnings as well.
Speaker 1: Retail sales below forecast. We also had a separate report
Speaker 1: indicating the production of business equipment slumped, and then if
Speaker 1: you look at the inflation story, producer prices down again.
Speaker 1: In the month of December, we were off about a
Speaker 1: half of one percent. And what I thought, curious, Brian,
Speaker 1: is the Fed's own survey I'm talking here about the
Speaker 1: Beige Book indicates moderating US price growth. So the conventional
Speaker 1: wisdom seems to be if you look at the data
Speaker 1: in and of itself, Hey, the Feds got room to
Speaker 1: down shift um policy and at least in terms of
Speaker 1: interest rate story that would normally be a positive for
Speaker 1: risk access today that's not what we saw. Yeah, I
Speaker 1: think it's very much a battle now between the Fed
Speaker 1: and the markets. They have very different views and and
Speaker 1: the FED has made it's it's point very clear, and
Speaker 1: I think the market is now realizing this that they're
Speaker 1: going to stay aggressive. Jim Bullard talking about getting up
Speaker 1: to five and a quarter to five and a half
Speaker 1: percent by the end of the year, and Cleveland Fed
Speaker 1: President Lurettemester also saying a good ways to go. And
Speaker 1: even if you look at the softer approach from Patrick
Speaker 1: Harker and also Lori Logan calling for twenty five basis
Speaker 1: point cuts, think about it. If they go a hundred
Speaker 1: basis points, that's four meetings, that's six months of raising
Speaker 1: interest rates into a weakening economy. Well, the other thing
Speaker 1: we have to remember is that in the background we
Speaker 1: have the unwind of the balance sheet happening. I think
Speaker 1: we were ust under nine trillion dollars back in April,
Speaker 1: So in that ninth month period, the FED has effectively
Speaker 1: retired about five hundred billion dollars worth of money that
Speaker 1: was put into the system during the pandemic. That's been
Speaker 1: essentially eradicated at this point. Look what happened to the
Speaker 1: yield curve today? We were down big across the curve.
Speaker 1: A tenure that was down seventeen basis points, massive move.
Speaker 1: We're trading right now in the tenure at four A
Speaker 1: check that three thirty six, a two year at four
Speaker 1: zero eight, So in that case a loss of about
Speaker 1: eight basis points alone, and then speaks to that go
Speaker 1: aheads to that that contention that the market and the
Speaker 1: Fed are in very different places. But I think that
Speaker 1: the Fed may suspect that things are slowing, and I
Speaker 1: think that maybe we can expect a little bit of moderation.
Speaker 1: But the one thing I think that we can agree
Speaker 1: on is the Fed does not want the market to
Speaker 1: take away that message and run with it. So that
Speaker 1: accounts for the weakness that they think we had today
Speaker 1: and risk assets with a down down about one eight percent.
Speaker 1: So at the top of the news, and we'll get
Speaker 1: to this in a few moments. The meeting between US
Speaker 1: Treasury Secretary Janet Yellen and China's vice primarily or her
Speaker 1: that seems to have a good news angle to it,
Speaker 1: and also the China reopening that could also spur the
Speaker 1: global economy and change that that situation for the FED
Speaker 1: as well. I'm Brian Curtis along with Vonnie Quinn, and
Speaker 1: we will take a look at some of the top
Speaker 1: stories here. Let's start off with this one. Microsoft and
Speaker 1: Amazon cutting a total of twenty eight thousand jobs today,
Speaker 1: both companies saying that the painful measures are necessary to
Speaker 1: offset slowing sales and possible recession. Let's get more from
Speaker 1: Bloomberg's Ed Ludlow. I think there's kind of this unraveling
Speaker 1: of pandemic era demand. You know, there's not quite semis,
Speaker 1: but you know, Microsoft CEO such An Adela basically said
Speaker 1: that the technology industry is entering this period where there
Speaker 1: is a normalization demand, and so the industry needs to
Speaker 1: react to that and kind of be a bit leaner.
Speaker 1: You know. The similarity of Amazon is that they're kind
Speaker 1: of unwinding what was basically pandemic era bloating, right. They
Speaker 1: invested heavily in fulfillment centers and staffing to handle what
Speaker 1: was a shock to the system in terms of demand.
Speaker 1: At Ludlow, Microsoft says it's still plans to hire people
Speaker 1: in strategic competitive areas such as artificial intelligence. In the meantime,
Speaker 1: Amazon said that it would continue investing meaningfully in growth
Speaker 1: areas as well, They include groceries, Amazon's business to business
Speaker 1: sales program, services for third party sellers, and healthcare. Meanwhile, Bryan,
Speaker 1: there's been a flurry of diplomatic activity with US Treasury
Speaker 1: Secretary John at Yellen under Chinese counterparts planning to hold
Speaker 1: key meetings. Let's get more from Bloomberg's Denise Pelagreni. Planning
Speaker 1: is underway for a series of high level diplomatic meetings.
Speaker 1: It's all part of an effort to ramp up face
Speaker 1: to face engagement and improved ties. And Yellen will be
Speaker 1: meeting with her Chinese counterparts in Beijing and in Washington
Speaker 1: as part of this. The announcement coming after a meeting
Speaker 1: in Zurich today between Yellen and China's Vice Premier Lieu.
Speaker 1: And this would be Yellen's first trip to China's Jerry
Speaker 1: secretary and would likely come after a visit plan for
Speaker 1: early this year by Secretary of State Anthony B. Lincoln.
Speaker 1: The used team indicating concern about US trade and technology policies,
Speaker 1: and both sides are calling today's meeting constructive. Denise Pellegrini
Speaker 1: Bloomberg day Break Asia Time for Global News. China's President
Speaker 1: Shi Jinping is calling for more efforts in fighting COVID,
Speaker 1: while at the same time saying that the dawn is
Speaker 1: just ahead and batched it with Global News in the
Speaker 1: nine six news room. And I guess it's a fair
Speaker 1: question Brian to ask, can you have it both ways,
Speaker 1: because they seem divergent paths. In a rare video speech
Speaker 1: addressing citizens directly President, she says he's especially worried about
Speaker 1: epidemic control in rural areas, especially with a lunar New
Speaker 1: Year holidays approaching. Now. She says the fight against COVID
Speaker 1: is in a new stage and the dawn is just ahead.
Speaker 1: So some foreign institutions have opposite views. Their Affinity, for example,
Speaker 1: says there is one longer, more severe COVID wave ahead
Speaker 1: and China's sensors are vowing to wipe away gloomy emotions
Speaker 1: over the holiday. That is their statement, gloomy emotions. Cyberspace
Speaker 1: Administration says it will increase the rectification of epidemic related
Speaker 1: online rumors, focusing on rumor mongering behaviors in such areas
Speaker 1: as the economy and people's livelihoods. Maderna CEO Stefan Bazzell,
Speaker 1: by the way, says he is not overly concerned about
Speaker 1: a global impact from any variant that may come out
Speaker 1: of China. Even with the lack of current data, our
Speaker 1: team believe that the risk is not high that there
Speaker 1: is a CV and mutense coming out of China. It's
Speaker 1: possible because it's it's a large number of people, but
Speaker 1: we don't think there is is high because the very
Speaker 1: resistance to VOUS affecting people. Van Sella Davos on Bloomberg
Speaker 1: says that that day's, especially in the United States, level
Speaker 1: of vaccination any variants should not be severe. He says
Speaker 1: that is subject to change, though Van sell says the
Speaker 1: globe needs to plan ahead for future pandemics by bill
Speaker 1: manufacturing hubs in every continent. The U s Department of
Speaker 1: Justice says it has broken up cryptocurrency money laundering operation.
Speaker 1: Assistant Attorney General Lisa Monico says Hong Kong based Blazazzo
Speaker 1: was in operating iter nationally fits Lato facilitated the transmission
Speaker 1: of hundreds of millions of dollars in illicit funds, fueling
Speaker 1: darknet marketplaces and laundering the proceeds of ransomware attacks, yeah,
Speaker 1: Monico says. Blazzo says that Antonio Legamotiv is a Russian
Speaker 1: national living in China who was arrested in Miami. Monico
Speaker 1: says the arrest puts a major net in international crypto fraud.
Speaker 1: Fighting in Ukraine's Dombus region is ferocious today. Ukraine's President
Speaker 1: Vladimer Zelenski says there is desperate need for the promised
Speaker 1: tanks and air defense systems now to be delivered. It
Speaker 1: supplies a wisdom. Tanks must out peace. Another invasionble Russian
Speaker 1: tags there's a reason security and peace in Ukraine muscle
Speaker 1: out peace Russ's text on security and peace in all
Speaker 1: the converce. Zelinski says the security of other nations as
Speaker 1: at risk, as well as his own and Biden administration.
Speaker 1: It's considering Striker armored vehicles and it's next package of aid.
Speaker 1: The new package of schedule to be revealed Friday in
Speaker 1: San Francisco. I'm Ad Baxter. This is Bloomberg. I'm Brian Curtis,
Speaker 1: along with Vonnie Quinn, and our guest is Nancy Dowd,
Speaker 1: private wealth advisor at amery Prise Financial. Nancy, thanks very
Speaker 1: much for joining us. Doug and I were just discussing
Speaker 1: about the possibility we have this new mindset here that
Speaker 1: that bad news is is bad news now. And prior
Speaker 1: to this, we've we've had equity prices moving up because
Speaker 1: whatever bad news seemed like it would get the Fed
Speaker 1: to take a softer approach. But everyone knows now that
Speaker 1: that's not what the Fed has in mind for this year.
Speaker 1: So when we see bad news, it's an indicator to
Speaker 1: sell and maybe good news as an indicator to sell
Speaker 1: as well. Yeah, I mean the bad news has been
Speaker 1: there all along, and the Fed has been very consistent. Um.
Speaker 1: I think it was lovely that we had some optimism
Speaker 1: at the beginning of the year, uh, with the inflation
Speaker 1: number being down to six percent, but the reality is
Speaker 1: it is still higher year over year and we're still
Speaker 1: not there yet as far as looking inflation so to speak. Uh.
Speaker 1: And the said goal is to get to five percent,
Speaker 1: north of five percent as of today. Actually they were
Speaker 1: staying five percent before, but now it's north of five
Speaker 1: percent in the ten year treasury before they will pull
Speaker 1: back on raising rates. So I fully expect the Feds
Speaker 1: to raise rates again in January and in February, and
Speaker 1: I think the first part of the year is going
Speaker 1: to still be quite plumpy. Maybe not quite as volatile
Speaker 1: as it was all of last year, but I think
Speaker 1: that we're still we're still not quite there or not
Speaker 1: where we want to be yet. How much of your portfolio,
Speaker 1: what percentage of your portfolio should you this year having bonds? Well,
Speaker 1: I think that varies with every investor and their risks,
Speaker 1: tolerance and profile. Sure, but generally we talked about a
Speaker 1: sixty portfolio. Does that change this year because bonds are
Speaker 1: becoming more attractive, Well, bonds are certainly getting more attractive,
Speaker 1: and cash investments are getting more attractive, which is very,
Speaker 1: very good to us in this environment. So there's very
Speaker 1: nice opportunities in the fixed income market. Um, But if
Speaker 1: you're a moderate investor yet, it's still at about thirty five. Yeah,
Speaker 1: I'm interested in in this lag that we've been talking about.
Speaker 1: So I think the point I made at the beginning
Speaker 1: and your point that we can have six six rough
Speaker 1: months here actually are are pretty consistent. The point is
Speaker 1: that I wonder whether the market is coming to the
Speaker 1: grips here that we're not going to see the other
Speaker 1: side of this anytime soon, and therefore some of the
Speaker 1: buying we saw in the first two weeks of January
Speaker 1: may be misplaced. Well, absolutely, you know, like I said,
Speaker 1: there was misplaced optimism. Um. And and it's a good thing,
Speaker 1: you know, that's not such a bad thing, because when
Speaker 1: it's doom and gloom all the time, then it just
Speaker 1: virals downwards even further. Um. But I don't think we
Speaker 1: are finished with this yet. And uh, we can expect
Speaker 1: more interest rate hikes. The corporate earnings reports show the
Speaker 1: beginning of a decline in profit margins, which is certainly expected.
Speaker 1: I mean, at some point inflation and higher costs and
Speaker 1: and uh and higher interest rates are going to take
Speaker 1: a toll on corporate profits and we're just beginning to
Speaker 1: see it. The job market is still pretty tight, um,
Speaker 1: although we're seeing some layoffs. The reports and the data
Speaker 1: is landing and until those reports come out, we will
Speaker 1: not see the subsiding of um action on the pit part.
Speaker 1: So now saying what parts of the market are you
Speaker 1: looking specifically as in terms of opportunity right now? Well,
Speaker 1: as I said, um, the good news of all of
Speaker 1: this is that there are nice opportunities in the fixed
Speaker 1: income market where there was virtually none uh. And cash
Speaker 1: was certainly worthless. Uh, you know, as far as an
Speaker 1: earn interest rates. But now there's a nice opportunity with
Speaker 1: cash and fixed income investments. UM, as long as you're
Speaker 1: very careful, as long as you're very careful about credit quality,
Speaker 1: which is going to become more and more important. UM.
Speaker 1: But and also watch the duration, but much more small
Speaker 1: focused on credit quality and the other opportunity. I'm sorry, no,
Speaker 1: you go ahead. But the other opportunity in the equity
Speaker 1: markets will certainly be in the energy and industrial sector
Speaker 1: because out of anything, of all, corporate profits are starting
Speaker 1: to show a decline, but those are the two sectors
Speaker 1: that are still showing us increasing. Do you think, though, Nancy,
Speaker 1: that another option would be Asia? And I say this
Speaker 1: because if we do have the FED raising interest rates
Speaker 1: for the next six months, as the economy is, you know,
Speaker 1: grinding down, some money will find its way to China,
Speaker 1: where they're in a hurry to try to restoke growth,
Speaker 1: and equity markets have been running pretty positive here. Do
Speaker 1: you see that shift happening? Well, I think if you're
Speaker 1: very speculative, that may happen. But I'm in the business
Speaker 1: of meeting clients long term goals, so that would be
Speaker 1: a little too speculative on our part to do. UM.
Speaker 1: I think that would fixed income being very attractive here
Speaker 1: in the US. Why would wait, wait, sorry, China is
Speaker 1: the second biggest China's the second biggest economy in the world,
Speaker 1: so obviously there are opportunities there. Are you saying that
Speaker 1: any investments in China is purely speculative? Not long, that's
Speaker 1: not what saying. I'm just saying that it is more
Speaker 1: speculative than in pounds than not to mention the strength
Speaker 1: of the dollars still that's still a factor, although it's
Speaker 1: showing some signs of weakening. Um. I think the dollar,
Speaker 1: the strength of the dollar is there is a big
Speaker 1: factor in any outside the US investing. Nancy, it's been
Speaker 1: a tough couple of years. What kinds of returns are
Speaker 1: you targeting now? What has become the normal? There's nothing
Speaker 1: that was ever normal? Well, eight percent was considered sort
Speaker 1: of reasonable, right, eight percent a year? Um? Well, I
Speaker 1: think it depends on a eight percent used to be
Speaker 1: an acceptable return. Um. However, with inflation being at six percent,
Speaker 1: that's not really a very good return. So it really
Speaker 1: all have to do with cost of living and purchasing power. Um.
Speaker 1: So we had a great year in one, but not
Speaker 1: such a great year in twenty two, and that's very,
Speaker 1: very normal in stock markets or in the markets in general.
Speaker 1: We're always going to see up or down and it's
Speaker 1: never the same, and these are things that have to
Speaker 1: be built into every portfolio. So time frame is certainly
Speaker 1: always the biggest consideration, how long do we in it for?
Speaker 1: And then the not so solid consideration that it's harder
Speaker 1: to predict, and that's how much appetite for risk do
Speaker 1: we have, and that varies by each individual. With that
Speaker 1: in mind, let's talk a little bit about Japan. Uh,
Speaker 1: And I fully understand your comments on China. You could
Speaker 1: have pushed back at me and say, look, with the
Speaker 1: inconsistency of policy there, I do consider it speculative. But anyway,
Speaker 1: that was an interesting exchange. But on Japan, so we
Speaker 1: had the b O J in a sense surprise traders
Speaker 1: but not economists, and the end is almost back to
Speaker 1: where it was before. So it's hard to get a
Speaker 1: read on this. Your take, Yeah, I mean there's certainly
Speaker 1: a lot of tensions. Just going back to your previous comments,
Speaker 1: in addition to UH, you know, try them being expeculative.
Speaker 1: There's there's a whole lot of tensions between the events
Speaker 1: in China right now, and there's there's a lot of
Speaker 1: geopolitical risk in my opinion, so um, but it's it's
Speaker 1: really the whole Asia market in my opinion. Uh, we're
Speaker 1: just going back right now. This is Bloomberg Daybreak Asia,
Speaker 1: your morning brief on the stories making news from Hong
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