WEBVTT - US Debt Ceiling, Credit in Focus

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<v Speaker 1>This is Bloomberg Day Break Asia for this Monday, April

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<v Speaker 1>seventeenth in Hong Kong, Sunday April sixteenth in New York,

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<v Speaker 1>and coming up.

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<v Speaker 2>Today, Treasury Secretary Yellen says US banks may pull back

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<v Speaker 2>on issuing credit.

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<v Speaker 1>Chinese ev maker Xpun will shave cost dramatically by the

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<v Speaker 1>end of twenty twenty four.

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<v Speaker 2>And Mark is set to buy the biotech company Prometheus

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<v Speaker 2>Bioscience is for nearly eleven billion dollars.

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<v Speaker 3>China high on the G seven agenda in Japan, Russia's

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<v Speaker 3>president and China's Defense minister meet house. Hearings on the

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<v Speaker 3>intelligence leagues could come as early as this week. I'm

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<v Speaker 3>at Baxter with Global News.

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<v Speaker 4>That's all straight ahead on Bloomberg day Break Asia, the

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<v Speaker 4>business news you need to start your day in just

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<v Speaker 4>one fifteen minute podcast available on Apple, Spotify, the Bloomberg

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<v Speaker 4>Business App, and everywhere you get your podcasts.

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<v Speaker 1>Good morning, I'm Brian Curtiz.

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

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<v Speaker 1>Treasury Secretary Jenny Yellen says US banks may pull back

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<v Speaker 1>on credit after the recent stress in the banking system.

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<v Speaker 1>The comments coming in an interview on CNN.

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<v Speaker 5>Banks are likely to become somewhat more cautious in this environment,

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<v Speaker 5>and that does tend to lead to somewhat greater restriction

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<v Speaker 5>in credit. That could be a substitute for further pricing,

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<v Speaker 5>further interest rate hikes that the Fed needs to make.

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<v Speaker 1>So if that seems like a little bit of a

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<v Speaker 1>walk back for Miss Yellen, she did come out and

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<v Speaker 1>say that what she's seeing in the banking sector is

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<v Speaker 1>not enough to significantly change her economic forecast. She said

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<v Speaker 1>she's optimistic the US can avoid recession and a meaningful

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<v Speaker 1>jump in unemployment as the economy cools and inflation slows.

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<v Speaker 2>Well in the US. On Monday, House Speaker Kevin McCarthy

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<v Speaker 2>is expected to address the US debt limit. He's expected

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<v Speaker 2>to do so in a speech at the New York

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<v Speaker 2>Stock Exchange. We are told McCarthy will unveil a plan

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<v Speaker 2>to suspend the US debt ceiling for a year in

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<v Speaker 2>return for spending concessions. Now, the current standoff between the

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<v Speaker 2>GOP and Democrats is threatening a US payment's default this summer.

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<v Speaker 2>Needless to say, such an event would send shockwaves through

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<v Speaker 2>the global economy. Earlier today, ECB President Christine Leguard said

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<v Speaker 2>she's got confidence in the US and doesn't foresee default.

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<v Speaker 2>Here's Leguard speaking on CBS Face the Nation.

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<v Speaker 6>If it did happen, it would have very, very negative impact,

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<v Speaker 6>not just for this country where confidence would be challenged,

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<v Speaker 6>but around the world. Let's face it, this is the

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<v Speaker 6>largest economy, it's a major leader in economic growth around

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<v Speaker 6>the world. It cannot let that happen.

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<v Speaker 2>ECB President Christine Leguard speaking on CBS Face the Nation.

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<v Speaker 2>Earlier here on Bloomberg Radio.

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<v Speaker 1>In some corp st news, Mercan Company will buy the

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<v Speaker 1>biotech firm Prometheus Biosciences for about ten point eight billion dollars.

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<v Speaker 1>We get that story from Bloomberg Susanna Palmer.

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<v Speaker 7>Buying Prometheus Biosciences will help MERK boost its research pipeline

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<v Speaker 7>and strengthen its portfolio of autoimmune drugs. This as Merk's

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<v Speaker 7>best selling cancer drug, key Trudea, loses patent protection. A

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<v Speaker 7>MERK unit will acquire all outstanding shares of Prometheus at

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<v Speaker 7>two hundred dollars each in cash, a seventy five percent

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<v Speaker 7>premium to Prometheus's closing price on Friday. The transaction is

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<v Speaker 7>one of the largest pharma deals in recent years. Susanna

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<v Speaker 7>Palmer Bloomberg day Break Asia.

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<v Speaker 2>The Chinese ev maker x Pong is planning to shave

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<v Speaker 2>its cost dramatically by the end of twenty twenty four.

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<v Speaker 2>That story from Bloomberg zvon Men x.

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<v Speaker 8>Onun plays to cut twenty five percent off the cost

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<v Speaker 8>of its power trade and say fifty percent on intelligent

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<v Speaker 8>driving features by the end of next year. The two

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<v Speaker 8>areas currently account for more than half of the cost

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<v Speaker 8>of building x punk EV's that's according to the company's

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<v Speaker 8>co president Brian Goo. Tesla cut prices earlier this year,

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<v Speaker 8>and that has put more pressure on carmakers in the

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<v Speaker 8>world's largest EV market. Xpun hopes these new cuts and

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<v Speaker 8>costs will propel the company towards profitability. Disappointing sales last

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<v Speaker 8>year forced the automaker to push back its timeline for

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<v Speaker 8>profitability to twenty twenty five. X pund will introduce a

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<v Speaker 8>new mid sized suv set to rival Tesla's Model Y

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<v Speaker 8>at the Shanghai Auto Show tomorrow in Hong Kong. I'm

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<v Speaker 8>von Mann Bloomberg day Break Asia.

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<v Speaker 1>PBOC governor E Gung says China has largely ended foreign

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<v Speaker 1>exchange intervention. Bloomberg's Joan Wong has that story from Hong Kong.

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<v Speaker 9>Ye says sooner or later markets defeat central banks. He

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<v Speaker 9>said the PBOC now operates what he calls a managed

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<v Speaker 9>floating regime, but the central bank governor said the PBOC

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<v Speaker 9>still reserves the right to intervene in the market, and

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<v Speaker 9>a speech at the Peterson Institute in Washington, y said

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<v Speaker 9>China does not have a date for letting the yuan

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<v Speaker 9>trade freely. He said, at the moment, the basic policy

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<v Speaker 9>is simply to make it easier for people to use

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<v Speaker 9>the currency. The US Treasury often criticizes China for a

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<v Speaker 9>lack of transparency and how the country manages its exchange rate.

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<v Speaker 9>The US Treasury often criticizes China for a lack of

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<v Speaker 9>transparency and how the country manages this exchange rate. Is

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<v Speaker 9>not clear if these latest comments from the PBOC governor

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<v Speaker 9>changed that calculation. In Hong Kong, Joan Wong, Bloomberg Day Brigasia.

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<v Speaker 1>I'm Brian Curtis along with Doug Christner, Doug Yields really

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<v Speaker 1>popped on Friday, particularly at the short end of the curve,

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<v Speaker 1>which kind of indicates what the market expects. The fed

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<v Speaker 1>will do. And it's funny because the retail sales data

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<v Speaker 1>was pretty weak. However, if you strip out cars in gasoline,

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<v Speaker 1>the number was better than expected and rates moved up

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<v Speaker 1>on that, but still it was pretty negative. Then the

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<v Speaker 1>consumer sentiment was pretty positive. So I don't know that

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<v Speaker 1>we learned all that much on Friday.

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<v Speaker 2>Yeah, but I would point out as part of that

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<v Speaker 2>University of Michigan data Brian uncertainty over short run inflation expectations,

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<v Speaker 2>they were notably elevated in the year ahead. The expectation

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<v Speaker 2>from the University of Michigan is that we could see

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<v Speaker 2>a rate maybe as high as four point six percent.

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<v Speaker 2>That was the April reading, and if you look at

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<v Speaker 2>where things were in March three six so that's a

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<v Speaker 2>big move up. And I also want to point out

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<v Speaker 2>the fact that in terms of the data, there was

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<v Speaker 2>a bit of an upside surprise in the March industrial

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<v Speaker 2>production number that may not really be accurate in terms

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<v Speaker 2>of some of the contraction that we've seen overall in

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<v Speaker 2>US manufacturing, which makes this week's PMI data on Friday

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<v Speaker 2>all the more important.

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<v Speaker 1>Yeah, we keep moving forward to data and then really

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<v Speaker 1>not doing much off.

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<v Speaker 10>Of the data.

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<v Speaker 1>Although I guess you have to say that yields really

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<v Speaker 1>did pop on Friday, so that was a big move

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<v Speaker 1>the two you yield up thirteen basis points to four

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<v Speaker 1>points zero nine percent, and the dollar moved. But we

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<v Speaker 1>just didn't get a lot of expression, I suppose in

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<v Speaker 1>the stock market.

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<v Speaker 4>So that's what's let me.

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<v Speaker 1>We'll get a closer look on the Asian markets coming

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<v Speaker 1>up a little bit later this morning. Now it's time

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<v Speaker 1>for global news. Tensions with China are high on the

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<v Speaker 1>agenda at the G seven meetings in Japan, and Baxter

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<v Speaker 1>has global news from the nine to sixty newsroom in

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<v Speaker 1>San Francisco.

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<v Speaker 2>Yeah right, Brian.

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<v Speaker 3>Japan now holds a rotating presidency in Asia, sure to

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<v Speaker 3>come in a greater focus. Taiwan in particular holds special

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<v Speaker 3>interest in the wake of President Sayang Wen's meeting with

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<v Speaker 3>Housepeaker Kevin McCarthy and the ensuing Chinese military drills. Also

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<v Speaker 3>in the mixed France President Maliam mccron's meeting with President

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<v Speaker 3>Shi Jimping. Now Joseph Borel, the EU's foreign policy chief,

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<v Speaker 3>is sought to downplay any differences in the block going

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<v Speaker 3>into the meetings. Russian President Vladimir Putin has met with

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<v Speaker 3>China's new Defense Minister, General Lee Shangfu, who is visiting

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<v Speaker 3>Russia on his first official foreign trip. Lee on Russian

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<v Speaker 3>TV says a TIES surpassed some military political alliances of

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<v Speaker 3>the Cold War era, and Putin praised the TIES and

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<v Speaker 3>highlighted the exchange of intelligence as well as the joint

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<v Speaker 3>military maneuvers. Now, speaking of intelligence, the chair of the

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<v Speaker 3>US Intelligence Committee in the House, Mike Turner on CBS

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<v Speaker 3>has heard here on Bloomberg Today, said his committee expects

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<v Speaker 3>hearings as early as this week into the leak documents.

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<v Speaker 11>Through life patterns, there were clearly signals that he might

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<v Speaker 11>be a likely leaker of information in the future. And

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<v Speaker 11>then also the access that he was having to this

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<v Speaker 11>information should have been cut off. He should have never

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<v Speaker 11>been having access to this level of classified information that

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<v Speaker 11>could hurt the United.

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<v Speaker 3>State, and he says the system needs to be refined.

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<v Speaker 3>Senator Lindsey Graham agrees, I was.

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<v Speaker 12>The Captain and major. I would be surprised if I

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<v Speaker 12>had that kind of information. Yes, the system failed.

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<v Speaker 3>Graham on ABC's This Week is heard on Bloomberg.

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<v Speaker 1>And very damaging.

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<v Speaker 12>There's information about Masad supposedly helping the protesters. There's information

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<v Speaker 12>about the air defense capability of Ukraine, and everybody in

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<v Speaker 12>the regions really worried, because who wants to share information

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<v Speaker 12>with the United States If you're going to read about

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<v Speaker 12>it in the paper.

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<v Speaker 3>He says people should be fired. Graham's in the Middle

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<v Speaker 3>East and it's met with Saudi Crown Prince in a

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<v Speaker 3>reversal of his position after journalist Kamal Koshogi was killed

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<v Speaker 3>and when they said the US should never do business there.

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<v Speaker 12>Saudi Arabia purchased thirty six billion dollars worth of seven

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<v Speaker 12>eighty seven Boying jets made in Charleston, South Carolina. They

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<v Speaker 12>picked the Boeing seven eighty seven over the airbus. I

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<v Speaker 12>came over here to say thanks to Saudi Arabia. Well.

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<v Speaker 3>Today Graham is in Israel, where Prime Minister Benjamin Nett

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<v Speaker 3>Yahoo's defending his effort to weaken the judiciary system.

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<v Speaker 10>There is an issue. It's a real issue. It affects

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<v Speaker 10>many democracies. Sooner or later it's affected Israel because of

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<v Speaker 10>the imbalance of the three branches of government. We're trying

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<v Speaker 10>to bring it back in balance. But I think trying

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<v Speaker 10>to bring it back into balance requires, at least for me,

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<v Speaker 10>as prime minister of a democratic, fiercely a robustly democratic

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<v Speaker 10>country called Israel, to try to do it in his

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<v Speaker 10>blood an agreement as possible.

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<v Speaker 3>And who on NBC has heard on Bloomberg says he

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<v Speaker 3>paused a plan to take a closer look, and Japan's

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<v Speaker 3>Prime minister says he's getting back on the campaign trail,

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<v Speaker 3>calling the FUMIOCAC to calling off, the setting off and

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<v Speaker 3>an explosive at an event he attended on Saturday unforgivable.

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<v Speaker 3>He says it strikes the core of democracy. Global newspowered

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<v Speaker 3>by more than twenty seven hundred journalists and and listen

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<v Speaker 3>over one hundred and twenty countries in San Francisco, I'm

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<v Speaker 3>Ed Baxter, and this is Bloomberg.

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<v Speaker 1>I'm Brian Curtis along with Rashad Salamat, and this is

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<v Speaker 1>Bloomberg Daybreak Asia. We are here in Hong Kong welcoming

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<v Speaker 1>our guest Jason Schenker, president of Prestige Economics, to take

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<v Speaker 1>a closer look at markets well the culmination of the

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<v Speaker 1>data last week, Jason seems to be putting a little

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<v Speaker 1>bit more upward pressure now on yields and the dollar,

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<v Speaker 1>and that may be a little bit of a change

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<v Speaker 1>of thinking and that the FED was getting ever closer

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<v Speaker 1>to ending its interest rate hiking regime. Do you see

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<v Speaker 1>one more? Two more? How do you see the Fed

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<v Speaker 1>moving here?

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<v Speaker 10>In the shorter term?

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<v Speaker 13>I think the Fed is going to remain data dependent,

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<v Speaker 13>as they often have, and I think part of the

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<v Speaker 13>reason we saw the rising yields at the end of

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<v Speaker 13>the week was early in the week the imf S

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<v Speaker 13>World Economic Outlook Report, which came out and really told

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<v Speaker 13>a story of two kinds of inflation, where we're seeing

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<v Speaker 13>headline inflation going down but core CPI plateauing, and that's

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<v Speaker 13>the actual word they use within their report, looking across

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<v Speaker 13>especially advanced economies, that core inflation we saw not only

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<v Speaker 13>plateau in the US last week, but we saw that

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<v Speaker 13>core CPI accelerate year on year from five point five

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<v Speaker 13>to five point six percent. And I think that's the

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<v Speaker 13>Fed's biggest concern right now is can they push inflation

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<v Speaker 13>through the stick? Can they get it to really go

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<v Speaker 13>back down? Because PPI inflation's moving the right way, Core PPI,

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<v Speaker 13>goods PPI, total CPI, you could argue, is moving in

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<v Speaker 13>the right direction. But that core CPI number, that's the

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<v Speaker 13>sticky bit, and that's why they're probably going to raise

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<v Speaker 13>in May. June looks more likely, and then we'll have

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<v Speaker 13>to see do we actually see things moving in the

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<v Speaker 13>right direction, because if core CPI does begin to decelerate,

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<v Speaker 13>there's a chance we end up at the end of

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<v Speaker 13>the year between three and four percent for core CPI.

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<v Speaker 13>But I mean, that's what the Fed's looking for, I think, really,

0:12:20.160 --> 0:12:22.120
<v Speaker 13>but that might take a couple more rate hikes.

0:12:22.920 --> 0:12:25.160
<v Speaker 14>Looking at this though, I mean, when we're in rates

0:12:25.200 --> 0:12:27.120
<v Speaker 14>to where they are right now, that's you know, you

0:12:27.160 --> 0:12:31.560
<v Speaker 14>look back thirty forty years, which is normalizing in essence,

0:12:31.600 --> 0:12:33.720
<v Speaker 14>aren't we here justin And you know, on top of that,

0:12:33.920 --> 0:12:35.640
<v Speaker 14>we've got other challenges ahead which are going to be

0:12:35.679 --> 0:12:40.320
<v Speaker 14>a bit more medium to long term decombonization, deglobalization. On

0:12:40.360 --> 0:12:42.520
<v Speaker 14>top of that, of course, aging populations, and this is

0:12:42.559 --> 0:12:46.720
<v Speaker 14>all adding to perhaps the structure of inflation becoming perhaps

0:12:46.880 --> 0:12:48.079
<v Speaker 14>a little bit more aggressive.

0:12:49.640 --> 0:12:52.680
<v Speaker 13>I don't think that's necessarily the case that we're there

0:12:52.840 --> 0:12:57.760
<v Speaker 13>seeing inflation remain permanently high, especially because there's the opportunity

0:12:57.760 --> 0:13:00.880
<v Speaker 13>with a base effect. Part of the reason that headline

0:13:00.920 --> 0:13:05.400
<v Speaker 13>CPI is down or PPI goods PPI right right now?

0:13:05.480 --> 0:13:08.400
<v Speaker 13>Year on year two percent back in June last year

0:13:08.480 --> 0:13:12.120
<v Speaker 13>was seventeen point nine percent, right, So we're seeing some

0:13:12.200 --> 0:13:15.800
<v Speaker 13>of these numbers really come down fast. That core number.

0:13:15.840 --> 0:13:17.880
<v Speaker 13>I think housing has a lot to do with why

0:13:17.920 --> 0:13:21.040
<v Speaker 13>that's sticky. But there is an opportunity for things to

0:13:21.080 --> 0:13:24.160
<v Speaker 13>move lower, partially because of that base effect. But this

0:13:24.240 --> 0:13:27.160
<v Speaker 13>is why the Fed wants to keep the interest rates

0:13:27.720 --> 0:13:30.600
<v Speaker 13>going up and remain in a tightening position, because they

0:13:30.640 --> 0:13:32.920
<v Speaker 13>want the opportunity for us to really get back down

0:13:33.280 --> 0:13:36.600
<v Speaker 13>towards that two percent target, which is critical given our

0:13:36.640 --> 0:13:39.120
<v Speaker 13>record level of government debt and consumer debt.

0:13:40.000 --> 0:13:41.880
<v Speaker 1>So I guess the other side of the equation is

0:13:42.160 --> 0:13:46.560
<v Speaker 1>how strong is growth? Does that help consumers and businesses

0:13:47.040 --> 0:13:50.400
<v Speaker 1>handle stickier levels of inflation. I mean, the worst thing

0:13:50.440 --> 0:13:52.880
<v Speaker 1>would be if growth falls off quickly and you have

0:13:52.960 --> 0:13:55.200
<v Speaker 1>inflation stay high. How do you see the next six

0:13:55.240 --> 0:13:56.920
<v Speaker 1>months from a growth perspective.

0:13:58.000 --> 0:14:00.480
<v Speaker 13>I think there's a few different things here. One is,

0:14:00.520 --> 0:14:02.880
<v Speaker 13>if we're looking at those line items at GDP, I'm

0:14:02.920 --> 0:14:06.040
<v Speaker 13>concerned about the investment line item. That's where we're looking

0:14:06.080 --> 0:14:10.120
<v Speaker 13>at businesses making investments. Think about equipment, think about structures.

0:14:10.160 --> 0:14:13.280
<v Speaker 13>Also residential investment. This week we're going to get US

0:14:13.320 --> 0:14:15.840
<v Speaker 13>housing data out likely to be a little bit weaker,

0:14:16.240 --> 0:14:18.920
<v Speaker 13>so that's also a line item of GDP that could

0:14:18.920 --> 0:14:21.400
<v Speaker 13>be way down, So we could see an investment recession,

0:14:21.720 --> 0:14:25.200
<v Speaker 13>something we've been expecting for this year. Earnings could also

0:14:25.320 --> 0:14:28.280
<v Speaker 13>come under pressure. Why cap X is up, we see

0:14:28.320 --> 0:14:31.120
<v Speaker 13>labor costs are up, we see op xes up, right,

0:14:31.200 --> 0:14:35.040
<v Speaker 13>so everything is higher, and so companies might really see

0:14:35.040 --> 0:14:38.240
<v Speaker 13>some of their earnings come into that position where they're

0:14:38.320 --> 0:14:40.800
<v Speaker 13>under pressure. At the same time, though, if you look

0:14:40.800 --> 0:14:43.640
<v Speaker 13>at the Jolts data out last week, or rather two

0:14:43.680 --> 0:14:46.080
<v Speaker 13>weeks ago, you would see that in the US there's

0:14:46.120 --> 0:14:49.400
<v Speaker 13>still about nine point nine million open jobs. Well, there

0:14:49.400 --> 0:14:52.080
<v Speaker 13>were seven million open before COVID, so we're still up

0:14:52.160 --> 0:14:54.720
<v Speaker 13>quite a lot. And if you look at where we

0:14:54.720 --> 0:14:57.440
<v Speaker 13>were before the two thousand and one recession or before

0:14:57.480 --> 0:14:59.440
<v Speaker 13>the Great Recession, it was a lot closer to five

0:14:59.520 --> 0:15:02.600
<v Speaker 13>million p jobs. We have nine point nine million open jobs,

0:15:02.600 --> 0:15:05.480
<v Speaker 13>and seventy percent of the US economy is people buying stuff,

0:15:05.680 --> 0:15:08.760
<v Speaker 13>So we might skirt an overall recession because there's so

0:15:08.760 --> 0:15:10.840
<v Speaker 13>many jobs and people are making good money. But the

0:15:10.880 --> 0:15:13.320
<v Speaker 13>investment side, the earning side, that's the question.

0:15:14.120 --> 0:15:16.000
<v Speaker 14>So what do you I mean is the earning season

0:15:16.000 --> 0:15:19.000
<v Speaker 14>is very much in its nascence, even the big banks

0:15:19.080 --> 0:15:21.680
<v Speaker 14>doing rather well. It's going to be really important what

0:15:21.680 --> 0:15:23.080
<v Speaker 14>they say about the outlook too, isn't it.

0:15:24.080 --> 0:15:24.320
<v Speaker 4>Yeah?

0:15:24.640 --> 0:15:27.040
<v Speaker 13>I think so. And actually I'm a bit more concerned,

0:15:27.040 --> 0:15:30.680
<v Speaker 13>i'd say, about Q two Q three earnings, especially because

0:15:30.680 --> 0:15:33.240
<v Speaker 13>we see again the interest rates. It's just the FED

0:15:33.320 --> 0:15:35.680
<v Speaker 13>is tightening up a little bit more, a little bit more.

0:15:35.920 --> 0:15:37.800
<v Speaker 13>So I'm a little bit more concerned about the earnings

0:15:37.840 --> 0:15:39.640
<v Speaker 13>for the next two quarters, not so much about the

0:15:39.640 --> 0:15:43.120
<v Speaker 13>earnings for Q one. But I do think there's going

0:15:43.160 --> 0:15:45.320
<v Speaker 13>to be a lot of pressure op ex capex there

0:15:45.400 --> 0:15:47.920
<v Speaker 13>up companies are having trouble there. That's where we're seeing

0:15:47.960 --> 0:15:50.400
<v Speaker 13>some of these big layoffs, especially on the tech side.

0:15:50.440 --> 0:15:53.040
<v Speaker 13>But there's still a lot of open jobs in many industries,

0:15:53.240 --> 0:15:55.440
<v Speaker 13>and even in manufacturing where the pmis have been weak,

0:15:55.640 --> 0:15:57.960
<v Speaker 13>there's a backlog that's been there for a long time,

0:15:58.240 --> 0:16:00.680
<v Speaker 13>and that could keep some of those business is with

0:16:00.880 --> 0:16:05.000
<v Speaker 13>pretty good shipments and earnings, even though we see new

0:16:05.080 --> 0:16:05.880
<v Speaker 13>orders falling off.

0:16:07.200 --> 0:16:09.080
<v Speaker 1>So what do you do with your money here? Given

0:16:09.120 --> 0:16:11.640
<v Speaker 1>all that we've talked about.

0:16:13.320 --> 0:16:15.960
<v Speaker 13>You know, there's a few different ways you could play it,

0:16:16.320 --> 0:16:19.800
<v Speaker 13>and I think we're looking always at fundamentals. I think

0:16:19.840 --> 0:16:23.000
<v Speaker 13>the most important thing here if we're looking beyond the

0:16:23.040 --> 0:16:25.400
<v Speaker 13>next couple of years, is the fact that right now

0:16:26.160 --> 0:16:29.640
<v Speaker 13>we look at that rent inflation's really high, but we

0:16:29.680 --> 0:16:33.320
<v Speaker 13>know there's not much construction. We also know that rental

0:16:33.400 --> 0:16:36.120
<v Speaker 13>vacancies are the lowest since the early eighties. I'd be

0:16:36.200 --> 0:16:39.000
<v Speaker 13>looking still at housing as an opportunity, looking twenty four

0:16:39.000 --> 0:16:41.160
<v Speaker 13>to thirty six months out where we may be in

0:16:41.200 --> 0:16:42.640
<v Speaker 13>a severe shortage situation.

0:16:44.040 --> 0:16:46.640
<v Speaker 14>Jason, let me look at elsewhere in the Marcus give

0:16:46.680 --> 0:16:48.280
<v Speaker 14>us a sense of way. You see the dollar gave

0:16:48.320 --> 0:16:52.760
<v Speaker 14>from here because of recent weakness, and that recent weakness warranted.

0:16:54.320 --> 0:16:56.040
<v Speaker 13>I think we are going to see maybe a little

0:16:56.040 --> 0:16:58.720
<v Speaker 13>bit more weakness later in the year. I think it

0:16:58.720 --> 0:17:00.800
<v Speaker 13>could go up a little bit more here. In the

0:17:00.800 --> 0:17:03.080
<v Speaker 13>short terms, we see the FED, we begin pricing you

0:17:03.160 --> 0:17:05.520
<v Speaker 13>maybe a June rate hike. But when we get later

0:17:05.640 --> 0:17:07.520
<v Speaker 13>in the year, we see earnings under pressure, We see

0:17:07.560 --> 0:17:09.639
<v Speaker 13>the FED, the questions about when is the FED cut.

0:17:10.040 --> 0:17:12.480
<v Speaker 13>We're pretty close to the end for FED tightening, so

0:17:12.480 --> 0:17:15.080
<v Speaker 13>it's tough to make a really big upside case for

0:17:15.160 --> 0:17:17.320
<v Speaker 13>the greenback here, but it's a lot easier to make

0:17:17.320 --> 0:17:19.720
<v Speaker 13>a downside case later in the year. Obviously, we've seen

0:17:19.720 --> 0:17:22.560
<v Speaker 13>precious metals, especially gold, prices have been on a real

0:17:22.600 --> 0:17:26.880
<v Speaker 13>tear as there's high uncertainty geopolitical uncertainty as well as

0:17:26.960 --> 0:17:31.600
<v Speaker 13>economic as well as banking. So I do think there

0:17:31.640 --> 0:17:35.200
<v Speaker 13>are a few areas people are looking for a flight

0:17:35.280 --> 0:17:38.040
<v Speaker 13>to quality, and we're going to probably continue to see

0:17:38.080 --> 0:17:39.280
<v Speaker 13>some of that in the short term.

0:17:39.359 --> 0:17:42.800
<v Speaker 1>So it's very complicated. It's not like very easy to

0:17:42.920 --> 0:17:46.199
<v Speaker 1>really figure out what to do with money. There was

0:17:46.200 --> 0:17:49.040
<v Speaker 1>a piece on the Terminal late last week about how

0:17:49.160 --> 0:17:53.080
<v Speaker 1>maybe shorting retail was a good hedge against a buoyant

0:17:53.119 --> 0:17:56.280
<v Speaker 1>equity market, at least one that hasn't fallen much. But

0:17:56.280 --> 0:17:59.040
<v Speaker 1>if you look at XRT, I have to say it

0:17:59.080 --> 0:18:02.199
<v Speaker 1>really started falling when the FED started hiking. So you

0:18:02.240 --> 0:18:05.840
<v Speaker 1>almost wonder whether the reverse might be true and that

0:18:05.920 --> 0:18:08.600
<v Speaker 1>you could maybe get some gains here once the Fed

0:18:08.720 --> 0:18:11.760
<v Speaker 1>actually starts cutting. Admittedly not right around the corner, but

0:18:12.000 --> 0:18:12.840
<v Speaker 1>you should be coming.

0:18:13.680 --> 0:18:16.800
<v Speaker 13>I'm a little bit less concerned maybe about retail. I

0:18:16.840 --> 0:18:19.600
<v Speaker 13>am concerned, like Manny about what is in store for

0:18:19.640 --> 0:18:23.200
<v Speaker 13>commercial real estate, especially office space. I am concerned we're

0:18:23.240 --> 0:18:26.239
<v Speaker 13>going to see probably further downward pressure there over the

0:18:26.240 --> 0:18:29.119
<v Speaker 13>next couple of years. But on the res side, there's

0:18:29.240 --> 0:18:31.119
<v Speaker 13>just not enough supply, and I'm always looking for a

0:18:31.160 --> 0:18:34.040
<v Speaker 13>supply demand imbalance. Speaking of which, if you look at

0:18:34.040 --> 0:18:37.320
<v Speaker 13>oil prices right you've seen OPEC making this additional cut

0:18:37.520 --> 0:18:40.359
<v Speaker 13>begins May one. We're going into the summer driving season.

0:18:40.760 --> 0:18:43.280
<v Speaker 13>There's nine point nine million open jobs. We still have

0:18:43.400 --> 0:18:47.280
<v Speaker 13>record right now, record labor force participation, sorry, record labor

0:18:47.320 --> 0:18:51.000
<v Speaker 13>force numbers. The participation rate is up. We've got record

0:18:51.040 --> 0:18:53.600
<v Speaker 13>non farm payrolls in the US, So people have jobs,

0:18:53.600 --> 0:18:55.360
<v Speaker 13>people are making money, they're making more money than they've

0:18:55.400 --> 0:18:57.120
<v Speaker 13>ever made before, and there's still nine point nine million

0:18:57.119 --> 0:18:59.240
<v Speaker 13>open jobs and they're going to be driving this summer.

0:18:59.280 --> 0:19:01.399
<v Speaker 13>So I think there might some upside oil prices in

0:19:01.480 --> 0:19:02.120
<v Speaker 13>summer as well.

0:19:04.800 --> 0:19:07.639
<v Speaker 1>This is Bloomberg Daybreak Asia, your morning brief on the

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