1 00:00:02,480 --> 00:00:10,480 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 2 00:00:10,520 --> 00:00:13,720 Speaker 1: Daybreak Asia podcast. I'm Doug Krisner. You can join Brian 3 00:00:13,800 --> 00:00:16,640 Speaker 1: Curtis and myself for the stories, making news and moving 4 00:00:16,680 --> 00:00:19,560 Speaker 1: markets in the APAC region. You can subscribe to the 5 00:00:19,600 --> 00:00:23,080 Speaker 1: show anywhere you get your podcast and always on Bloomberg Radio, 6 00:00:23,320 --> 00:00:26,360 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business app. 7 00:00:27,600 --> 00:00:27,720 Speaker 2: Well. 8 00:00:27,800 --> 00:00:30,920 Speaker 3: Joining us now on the program is Adam Turnquist, chief 9 00:00:30,960 --> 00:00:35,960 Speaker 3: technical strategist LPL Financial for a closer look at markets. 10 00:00:36,360 --> 00:00:39,400 Speaker 3: So it was seemed it seemed a little bit like 11 00:00:39,479 --> 00:00:43,120 Speaker 3: a douvish FED meeting compared to what we had expected. 12 00:00:44,040 --> 00:00:47,000 Speaker 3: And you get these comments from Powell, which you know 13 00:00:47,040 --> 00:00:50,000 Speaker 3: are sort of like, well, he's less confident than before, 14 00:00:50,600 --> 00:00:55,080 Speaker 3: but still confident of disinflation continuing. And how you take 15 00:00:55,160 --> 00:00:58,120 Speaker 3: that probably says more about you know, who you are 16 00:00:58,240 --> 00:01:00,000 Speaker 3: versus who he is. 17 00:01:00,120 --> 00:01:03,200 Speaker 4: You think it was an interesting FED meeting. 18 00:01:03,240 --> 00:01:06,560 Speaker 5: I think there was a lot there really no surprises 19 00:01:06,720 --> 00:01:09,560 Speaker 5: from the Fed when you look at the commentary was 20 00:01:09,600 --> 00:01:12,400 Speaker 5: really just a reverberation of the higher for longer narrative 21 00:01:12,440 --> 00:01:15,039 Speaker 5: that we've been hearing about from the Fed. Who's really 22 00:01:15,040 --> 00:01:17,600 Speaker 5: have been pushing back against the idea of rate cuts. 23 00:01:17,920 --> 00:01:21,399 Speaker 5: A lot of April was that repricing of that narrative. 24 00:01:21,720 --> 00:01:23,640 Speaker 5: I think if you were to classify it, it was maybe 25 00:01:23,720 --> 00:01:27,399 Speaker 5: less hawkish than feared, and really for the market, it 26 00:01:27,520 --> 00:01:29,360 Speaker 5: touched on a lot of things they were looking to hear. 27 00:01:29,560 --> 00:01:33,399 Speaker 5: I think most importantly, Chair Powell noted that a rate 28 00:01:33,480 --> 00:01:36,760 Speaker 5: hike is unlikely. As you mentioned, they're a little less 29 00:01:36,760 --> 00:01:40,400 Speaker 5: confident in the timing of reaching their two percent inflation target, 30 00:01:40,480 --> 00:01:41,920 Speaker 5: but he certainly sounded. 31 00:01:41,520 --> 00:01:45,080 Speaker 4: Confident they'll eventually get there, and he also sounded confident 32 00:01:45,080 --> 00:01:45,800 Speaker 4: in the economy. 33 00:01:45,840 --> 00:01:49,160 Speaker 5: He noted that he doesn't see the stag or the 34 00:01:49,800 --> 00:01:54,120 Speaker 5: flation risk as he coined it at the meeting, pushing 35 00:01:54,120 --> 00:01:58,640 Speaker 5: back against any of the stagflation headlines that it percolated recently, 36 00:01:58,960 --> 00:02:01,600 Speaker 5: citing really a strongly or market and growth moving along 37 00:02:01,640 --> 00:02:03,920 Speaker 5: at a solid pace. I was really more surprised by 38 00:02:04,000 --> 00:02:06,640 Speaker 5: the fade into the clothes, as you talked about earlier 39 00:02:07,040 --> 00:02:09,440 Speaker 5: sp given up at one point two percent gain and 40 00:02:09,480 --> 00:02:11,400 Speaker 5: closing at session lows today. 41 00:02:11,400 --> 00:02:13,560 Speaker 4: That was that was more of a surprise than the 42 00:02:13,600 --> 00:02:14,359 Speaker 4: initial reaction. 43 00:02:14,520 --> 00:02:16,120 Speaker 1: Yeah, there were a lot of cross currents, and I 44 00:02:16,120 --> 00:02:20,240 Speaker 1: think another one was this rally, this incredible rally that 45 00:02:20,280 --> 00:02:22,680 Speaker 1: we had in the Japanese yen against the dollar in 46 00:02:22,720 --> 00:02:24,720 Speaker 1: late New York trading. At one point we were up 47 00:02:24,760 --> 00:02:28,880 Speaker 1: three percent, and that obviously fostered a lot of speculation 48 00:02:28,960 --> 00:02:31,720 Speaker 1: that maybe it was an opportune moment for the Ministry 49 00:02:31,720 --> 00:02:34,640 Speaker 1: of Finance in Japan to intervene to support the currency. 50 00:02:34,680 --> 00:02:36,079 Speaker 1: Now that you know you got the fed out of 51 00:02:36,120 --> 00:02:38,360 Speaker 1: the way, let's deal with the other big problem here, 52 00:02:38,400 --> 00:02:40,919 Speaker 1: which has been yen weakness. And I think that may 53 00:02:40,960 --> 00:02:44,080 Speaker 1: have correlated with a lot of the volatility that we 54 00:02:44,160 --> 00:02:46,600 Speaker 1: had in the equity market. When you look at Japan 55 00:02:46,760 --> 00:02:50,200 Speaker 1: right now, what is your feeling. Maybe it's about the 56 00:02:50,200 --> 00:02:52,880 Speaker 1: way that the currency has been behaving. Maybe it's about 57 00:02:53,240 --> 00:02:56,000 Speaker 1: whether there is still opportunity to put money to work 58 00:02:56,160 --> 00:02:58,880 Speaker 1: in the equity market. How are you seeing Japan these days? 59 00:03:00,080 --> 00:03:00,400 Speaker 4: Right now? 60 00:03:00,400 --> 00:03:04,440 Speaker 5: There's a rising risk of currency stability and you can 61 00:03:04,480 --> 00:03:07,840 Speaker 5: see that ever since the yen weakened against the dollar 62 00:03:07,919 --> 00:03:10,200 Speaker 5: through one fifty two. That was the spot where the 63 00:03:10,520 --> 00:03:13,240 Speaker 5: boj came in back in twenty twenty two, and I 64 00:03:13,240 --> 00:03:16,799 Speaker 5: think most people thought they would do the same, and 65 00:03:17,040 --> 00:03:21,080 Speaker 5: you can see now we briefly hit one sixty Sunday overnight, 66 00:03:21,480 --> 00:03:24,400 Speaker 5: the Bank of a Japan presumably came in with about 67 00:03:24,400 --> 00:03:27,240 Speaker 5: a thirty five billion dollar order to prop up the end, 68 00:03:27,720 --> 00:03:29,720 Speaker 5: and that was the same type of reaction that we 69 00:03:29,760 --> 00:03:31,360 Speaker 5: witnessed going into the close. 70 00:03:31,480 --> 00:03:33,160 Speaker 4: It was pretty interesting. 71 00:03:33,200 --> 00:03:36,160 Speaker 5: I looked down at my screen and I was shocked 72 00:03:36,200 --> 00:03:38,720 Speaker 5: when I thought when I saw the yen where it 73 00:03:38,800 --> 00:03:41,560 Speaker 5: was trading, it is bounced back a little bit or 74 00:03:41,600 --> 00:03:44,440 Speaker 5: weakened a little bit against the dollar. But I think 75 00:03:44,480 --> 00:03:46,600 Speaker 5: if they can maintain control and we're not going to 76 00:03:46,600 --> 00:03:50,720 Speaker 5: be pushing through one sixty, that should help stabilize the 77 00:03:52,000 --> 00:03:53,720 Speaker 5: Japanese equity market in the yen. 78 00:03:53,840 --> 00:03:56,120 Speaker 4: Of course, a lot of that's correlated. 79 00:03:55,720 --> 00:03:57,840 Speaker 5: To what's going on in the US, and you can't 80 00:03:57,840 --> 00:04:00,680 Speaker 5: really ignore that big rate differential when you're talking about 81 00:04:00,920 --> 00:04:04,920 Speaker 5: BED policy and BOJ policy. But from a longer term 82 00:04:05,080 --> 00:04:09,440 Speaker 5: investor standpoint, we continue to like Japan within international developed 83 00:04:09,640 --> 00:04:12,720 Speaker 5: I think there's a great earning story there. Shareholder friendly 84 00:04:12,800 --> 00:04:16,120 Speaker 5: practices are being implemented, and there's a lot of households 85 00:04:16,120 --> 00:04:19,159 Speaker 5: that are underinvested in equity markets, and you're seeing kapital 86 00:04:19,200 --> 00:04:22,360 Speaker 5: of move into equity markets at this time. So long term, 87 00:04:22,400 --> 00:04:24,880 Speaker 5: I think that theme has shelf life. Might be some 88 00:04:25,279 --> 00:04:28,240 Speaker 5: bumps along the road as we work through this Yen 89 00:04:28,360 --> 00:04:29,200 Speaker 5: weakness story. 90 00:04:29,760 --> 00:04:32,040 Speaker 3: Adam, you said you were quite surprised at the market 91 00:04:32,080 --> 00:04:36,200 Speaker 3: reaction because, as we know, when Pal finished speaking, both 92 00:04:36,240 --> 00:04:38,720 Speaker 3: the NASDAC and the S and P five hundred were 93 00:04:38,800 --> 00:04:40,520 Speaker 3: up more than one percent, and then just in the 94 00:04:40,600 --> 00:04:43,279 Speaker 3: last hour of training I ended up with the loss. 95 00:04:44,480 --> 00:04:49,320 Speaker 3: Doug talked about one possibility. I think also some of 96 00:04:49,360 --> 00:04:53,760 Speaker 3: the momentum plays did get slammed pretty hard, particularly some 97 00:04:53,839 --> 00:04:56,680 Speaker 3: of the chip makers. Now that might change with Coalcom 98 00:04:56,720 --> 00:04:59,800 Speaker 3: after the bill, but you did have Nvidia and Broadcom 99 00:05:00,040 --> 00:05:03,640 Speaker 3: and AMD down pretty sharply. I wonder whether or not 100 00:05:03,880 --> 00:05:07,400 Speaker 3: we're still in this process of sort of squeezing out 101 00:05:07,400 --> 00:05:09,520 Speaker 3: the giddiness in markets. 102 00:05:09,880 --> 00:05:12,440 Speaker 4: What do you think. I think that's a good point, Brian. 103 00:05:12,520 --> 00:05:13,359 Speaker 4: It was interesting. 104 00:05:13,520 --> 00:05:15,520 Speaker 5: We look at things a lot technically, at least in 105 00:05:15,560 --> 00:05:18,920 Speaker 5: my role, and you've had this short relief rally off 106 00:05:18,960 --> 00:05:22,920 Speaker 5: some oversoul levels hit mid April that's stalled out right 107 00:05:22,920 --> 00:05:25,800 Speaker 5: around the fifty day moving average. That's often a spot 108 00:05:25,800 --> 00:05:28,640 Speaker 5: where you see these relief rallies die just not enough 109 00:05:28,680 --> 00:05:31,080 Speaker 5: the momentum. It does raise the risk we could go 110 00:05:31,120 --> 00:05:34,760 Speaker 5: back retest those April lows. We start breaking down there, 111 00:05:34,800 --> 00:05:37,240 Speaker 5: that could be another leg lower down more toward the 112 00:05:37,279 --> 00:05:40,440 Speaker 5: forty eight hundred level and potentially retesting those prior highs. 113 00:05:40,440 --> 00:05:42,920 Speaker 4: We were very frothy. 114 00:05:42,560 --> 00:05:45,359 Speaker 5: We'll call it if you look back, coming into the 115 00:05:45,600 --> 00:05:49,279 Speaker 5: second quarter after an impressive first quarter rally that had 116 00:05:49,440 --> 00:05:52,159 Speaker 5: I think a record high every three trading days. So 117 00:05:52,279 --> 00:05:54,320 Speaker 5: we're taking some of that froth out. It looks like 118 00:05:54,400 --> 00:05:58,599 Speaker 5: a pretty orderly pullback at this point. No major trend 119 00:05:58,680 --> 00:06:02,800 Speaker 5: line violations from technical standpoint, Breath still holding up well, 120 00:06:02,880 --> 00:06:04,960 Speaker 5: so looks like I could have a little bit more 121 00:06:04,960 --> 00:06:06,839 Speaker 5: of a shakeout though, as you mentioned in some of 122 00:06:06,839 --> 00:06:07,840 Speaker 5: those momentum. 123 00:06:07,440 --> 00:06:11,839 Speaker 1: Areas, Unfortunately Adam tech tech canalysis really doesn't work well 124 00:06:11,839 --> 00:06:13,200 Speaker 1: on the radio. But I'm going to go out on 125 00:06:13,200 --> 00:06:14,000 Speaker 1: a limb anyway. 126 00:06:14,800 --> 00:06:15,440 Speaker 4: I'm looking at the. 127 00:06:15,400 --> 00:06:17,600 Speaker 1: Bloomberg now on the S and P five hundred, it 128 00:06:17,640 --> 00:06:21,560 Speaker 1: looks like the one hundred day moving averages at forty 129 00:06:21,640 --> 00:06:24,640 Speaker 1: nine seventy four, and we seem to be using that 130 00:06:24,680 --> 00:06:27,280 Speaker 1: as support right now. Is that the key number for you? 131 00:06:27,360 --> 00:06:29,560 Speaker 1: I mean, we're trading today. We close the S and 132 00:06:29,600 --> 00:06:33,640 Speaker 1: P at fivey eighteen, so we're not far away from 133 00:06:33,680 --> 00:06:36,400 Speaker 1: the one hundred day moving average. If we violate that 134 00:06:36,480 --> 00:06:39,200 Speaker 1: level the number I just quoted forty nine seventy four, 135 00:06:39,279 --> 00:06:41,040 Speaker 1: is there a lot more in the way of downside, 136 00:06:42,120 --> 00:06:42,560 Speaker 1: I think so. 137 00:06:43,279 --> 00:06:46,560 Speaker 5: I'm really watching the April lows forty nine sixty seven 138 00:06:46,600 --> 00:06:49,480 Speaker 5: if we're going to get super technical tonight. But if 139 00:06:49,880 --> 00:06:52,600 Speaker 5: dip buyers aren't stepping in and there's no demand off 140 00:06:52,640 --> 00:06:55,719 Speaker 5: those lows, there's a pretty big pocket of air to 141 00:06:56,040 --> 00:06:58,720 Speaker 5: really that forty eight hundred level where those prior highs are. 142 00:06:58,760 --> 00:07:01,839 Speaker 5: And when you have how these type of parabolic moves, 143 00:07:02,000 --> 00:07:04,920 Speaker 5: you often revert back to towards the longer term trend 144 00:07:05,080 --> 00:07:08,440 Speaker 5: that tends to be around that forty eight hundred level. 145 00:07:08,760 --> 00:07:11,040 Speaker 5: So it could be a pretty quick trip down there 146 00:07:11,080 --> 00:07:13,400 Speaker 5: if we start breaking through those intra day lows. 147 00:07:13,400 --> 00:07:14,520 Speaker 4: In April, J. 148 00:07:14,720 --> 00:07:18,720 Speaker 3: Powell was asked if loose financial conditions were actually hurting 149 00:07:18,880 --> 00:07:22,000 Speaker 3: the FEDS fight against inflation, and he shrugged it off 150 00:07:22,000 --> 00:07:24,880 Speaker 3: to a certain degree, saying that growth in the early 151 00:07:24,960 --> 00:07:28,000 Speaker 3: part of this year was weaker than last year even 152 00:07:28,040 --> 00:07:30,840 Speaker 3: with the looser conditions, and he noted that inflation came 153 00:07:30,880 --> 00:07:36,480 Speaker 3: down fast last year despite overall GDP growth being really 154 00:07:36,520 --> 00:07:38,920 Speaker 3: high in the US up three point four percent in 155 00:07:38,960 --> 00:07:41,640 Speaker 3: the fourth quarter, stronger than this year. It's kind of 156 00:07:41,640 --> 00:07:45,239 Speaker 3: another way of saying that the relationships of these things 157 00:07:45,240 --> 00:07:46,840 Speaker 3: are not hard and fast. 158 00:07:48,280 --> 00:07:50,840 Speaker 5: I think that's fair and it's been. Of course, we 159 00:07:50,920 --> 00:07:54,360 Speaker 5: have to factor in the lagged effects of monetary policy 160 00:07:54,640 --> 00:07:57,360 Speaker 5: and when that's really going to take fold. If you 161 00:07:57,400 --> 00:08:00,880 Speaker 5: look at some of the trends in consumer spending. Obviously 162 00:08:00,920 --> 00:08:04,120 Speaker 5: we witnessed that in the first quarter GDP with spending 163 00:08:04,160 --> 00:08:07,160 Speaker 5: slowing down, But other areas of the market that we've 164 00:08:07,200 --> 00:08:10,600 Speaker 5: watched in terms of some spending slowdowns have been just 165 00:08:10,760 --> 00:08:14,040 Speaker 5: in the delinquency rates, whether it's. 166 00:08:13,920 --> 00:08:17,520 Speaker 4: Auto loans or credit credit cards. 167 00:08:17,840 --> 00:08:21,560 Speaker 5: Ninety day delinquencies are up, and also just credit scores 168 00:08:21,640 --> 00:08:23,400 Speaker 5: have been moving lower as some of the bills come 169 00:08:23,480 --> 00:08:26,560 Speaker 5: doe and a lot of the excess savings have been 170 00:08:26,640 --> 00:08:28,520 Speaker 5: drawn down from the pandemic era. 171 00:08:28,640 --> 00:08:30,680 Speaker 1: So you seem a little cautious on the equity market 172 00:08:30,840 --> 00:08:33,760 Speaker 1: very quickly. If I'm short duration in the bond market, 173 00:08:33,800 --> 00:08:34,480 Speaker 1: is that a buy. 174 00:08:35,960 --> 00:08:37,880 Speaker 4: Yeah? I think so. We think you should be taking 175 00:08:37,920 --> 00:08:38,920 Speaker 4: advantage of yields. 176 00:08:39,480 --> 00:08:41,640 Speaker 5: You don't need to go out long duration right now, 177 00:08:41,960 --> 00:08:44,800 Speaker 5: or even in high yield. Credit spreads in the high 178 00:08:44,840 --> 00:08:48,520 Speaker 5: yield space are call it ninetieth percentile, So you're not 179 00:08:48,559 --> 00:08:49,400 Speaker 5: really getting. 180 00:08:49,120 --> 00:08:51,000 Speaker 4: Paid what you used to get paid to pick on 181 00:08:51,080 --> 00:08:51,640 Speaker 4: credit risk. 182 00:08:51,880 --> 00:08:56,400 Speaker 3: Thank you, Adam Turnquist, Chief technical strategist LPL Financially. 183 00:09:03,240 --> 00:09:06,200 Speaker 1: Let's get to what we heard after the belt from Qualcomm, 184 00:09:06,720 --> 00:09:09,640 Speaker 1: the company with an upbeat forecast for both sales and 185 00:09:09,720 --> 00:09:12,520 Speaker 1: profit in the current quarter. Qualcom, you may know, is 186 00:09:12,559 --> 00:09:16,480 Speaker 1: the world's largest seller of smartphone processors. We have now 187 00:09:16,520 --> 00:09:20,920 Speaker 1: on the line from San Francisco, Bloomberg Intelligence Senior semiconductor 188 00:09:20,920 --> 00:09:24,080 Speaker 1: analyst kun John Sabani. What did you make of what 189 00:09:24,120 --> 00:09:26,360 Speaker 1: you heard from the company or what you're kind of 190 00:09:26,440 --> 00:09:30,080 Speaker 1: reviewing now as you look at the statement from the company. 191 00:09:31,520 --> 00:09:34,480 Speaker 6: Yeah, I mean, you know, the main positive was that 192 00:09:34,600 --> 00:09:38,840 Speaker 6: while most of the smartphone guys, including its chips peers, 193 00:09:39,960 --> 00:09:44,040 Speaker 6: gave a really bleak June quarter outlook lower than seasonal, 194 00:09:44,440 --> 00:09:47,080 Speaker 6: Qualcoms sort of stood out from the pack as the 195 00:09:47,080 --> 00:09:49,600 Speaker 6: only one which not only came in line but with 196 00:09:49,679 --> 00:09:52,840 Speaker 6: a slight beaed, which was sort of a win in itself. 197 00:09:53,280 --> 00:09:56,600 Speaker 6: And we think there were two primary drivers of that. One, 198 00:09:57,000 --> 00:10:00,840 Speaker 6: Apple has seen a significant share loss in China and 199 00:10:01,040 --> 00:10:04,000 Speaker 6: the Android OEMs have picked up that loss, so that 200 00:10:04,080 --> 00:10:08,679 Speaker 6: really benefits a qual Comm and sort of the premium, 201 00:10:08,840 --> 00:10:14,000 Speaker 6: really high end segment is seeing less of this demand weakness, 202 00:10:14,040 --> 00:10:16,760 Speaker 6: which is again where Qualcom has a much higher exposure. 203 00:10:17,960 --> 00:10:21,600 Speaker 3: Yeah, as mentioned, Qualcomm seems to have made a comeback 204 00:10:21,640 --> 00:10:24,520 Speaker 3: in China, both on the sales front but also on 205 00:10:24,559 --> 00:10:29,959 Speaker 3: its relations with regulators. What's the latest there, I. 206 00:10:29,880 --> 00:10:34,280 Speaker 6: Mean for Qualcom revenues. Sort of these US China trade 207 00:10:34,320 --> 00:10:38,840 Speaker 6: sanctions never had any major impact because it goes most 208 00:10:38,840 --> 00:10:43,120 Speaker 6: of its devices goes in a consumer product and again 209 00:10:43,559 --> 00:10:46,720 Speaker 6: you know the Chinese OEMs who they're selling into. There's 210 00:10:46,760 --> 00:10:51,600 Speaker 6: sort of no other big alternative grown, homegrown alternative from China, 211 00:10:51,679 --> 00:10:55,600 Speaker 6: so it doesn't impact them. The tensions have impacted Apple, 212 00:10:55,679 --> 00:10:59,120 Speaker 6: which again is sort of a beneficial benefit. Qualcom is 213 00:10:59,120 --> 00:11:02,920 Speaker 6: a beneficiary from that because every Apple phone that is 214 00:11:02,960 --> 00:11:06,680 Speaker 6: not sold and is replaced by a Chinese Android OEM phone, 215 00:11:07,080 --> 00:11:09,680 Speaker 6: Qualcom gets sort of a three x to a five 216 00:11:09,920 --> 00:11:11,960 Speaker 6: x asp uplift from that. 217 00:11:12,240 --> 00:11:14,360 Speaker 1: Yeah, for the last two quarters, I think the number 218 00:11:14,559 --> 00:11:18,080 Speaker 1: in terms of sales to Chinese phonemakers was like a 219 00:11:18,160 --> 00:11:21,439 Speaker 1: gain of forty percent. I mean, that's just a stunning 220 00:11:21,520 --> 00:11:23,200 Speaker 1: number to look at, But when you look at the 221 00:11:23,240 --> 00:11:25,679 Speaker 1: guidance for the current quarter, I want to understand it. 222 00:11:25,720 --> 00:11:29,400 Speaker 1: Clearly we're calling it an upbeat forecast. Are we to 223 00:11:29,480 --> 00:11:32,520 Speaker 1: look at it in that way? I mean, is it 224 00:11:32,559 --> 00:11:36,319 Speaker 1: is it barely meeting expectations or is it more optimistic 225 00:11:36,880 --> 00:11:38,560 Speaker 1: than I'm kind of alluding to. 226 00:11:39,720 --> 00:11:43,160 Speaker 6: Well, it's not a significant beat in terms of magnitude, 227 00:11:43,559 --> 00:11:47,680 Speaker 6: but it's more of an optimistic sentimental beat, right, Like, 228 00:11:47,800 --> 00:11:51,800 Speaker 6: while rest of your peers are suffering and gave double 229 00:11:51,920 --> 00:11:56,440 Speaker 6: digit decline or beats, I should say non decline, you 230 00:11:56,559 --> 00:11:59,280 Speaker 6: came in in line or slightly up. That's sort of 231 00:11:59,280 --> 00:12:02,640 Speaker 6: an invitelf right. And what also is helping them is 232 00:12:02,960 --> 00:12:06,319 Speaker 6: the auto con which has been continued to grow sequentially 233 00:12:06,720 --> 00:12:12,080 Speaker 6: continues its tragedory, but IOD, which was declining significantly for 234 00:12:12,280 --> 00:12:15,160 Speaker 6: multiple quarters in a row, sort of has stopped that 235 00:12:15,240 --> 00:12:18,200 Speaker 6: bleeding and is now expected to turn around slowly. So 236 00:12:18,280 --> 00:12:20,960 Speaker 6: all that is sort of a win in a market 237 00:12:20,960 --> 00:12:23,679 Speaker 6: where again, like most of its peers are struggling. 238 00:12:24,760 --> 00:12:28,320 Speaker 3: Yeah, when I asked about actually about regulators earlier, I 239 00:12:28,360 --> 00:12:30,160 Speaker 3: was kind of referring back to the difficult period that 240 00:12:30,240 --> 00:12:33,720 Speaker 3: Qualcomm had in China. Over licensing and the billion dollar, 241 00:12:33,880 --> 00:12:36,920 Speaker 3: almost billion dollar fine that it had to pay. But 242 00:12:36,960 --> 00:12:40,240 Speaker 3: it seems like basically what you're saying is that things 243 00:12:40,320 --> 00:12:43,439 Speaker 3: are pretty hunky dory for Qualcom in China now, including 244 00:12:43,880 --> 00:12:47,440 Speaker 3: the relationship with Shaumi, Honor one plus Opo, Vivo, you 245 00:12:47,520 --> 00:12:47,880 Speaker 3: name it. 246 00:12:48,720 --> 00:12:51,640 Speaker 6: Yeah, exactly. I mean, China is one of their, if 247 00:12:51,679 --> 00:12:55,000 Speaker 6: not the biggest, most important market for them specifically, and 248 00:12:55,160 --> 00:12:59,240 Speaker 6: we don't see any sort of geopolitical or regulatory issues 249 00:12:59,280 --> 00:13:02,160 Speaker 6: for them in China, at least in the near future. 250 00:13:02,320 --> 00:13:04,240 Speaker 1: Huawei is a different story, right. 251 00:13:05,600 --> 00:13:10,360 Speaker 6: Yeah, I mean, Wawei is not a negative for them, right. 252 00:13:10,880 --> 00:13:14,160 Speaker 6: It seems the share gains in Wahwei had in five 253 00:13:14,240 --> 00:13:17,240 Speaker 6: G came again a lot at the expense of Apple, 254 00:13:18,000 --> 00:13:22,040 Speaker 6: and Wawei has actually indirectly helped them to drive up 255 00:13:22,160 --> 00:13:26,360 Speaker 6: the TAM for the Android space, so sort of indirectly 256 00:13:26,360 --> 00:13:28,120 Speaker 6: helping them. 257 00:13:28,000 --> 00:13:32,760 Speaker 3: Just briefly on AI and Internet of Things, I know 258 00:13:32,880 --> 00:13:36,040 Speaker 3: quakam as a group on that. How is the company 259 00:13:36,080 --> 00:13:41,960 Speaker 3: faring in those two areas. 260 00:13:40,200 --> 00:13:44,320 Speaker 6: You know, AI outside of smartphones sort of in let's say, 261 00:13:44,280 --> 00:13:47,199 Speaker 6: in automotive variety, it's too early. I don't think it's 262 00:13:47,240 --> 00:13:52,960 Speaker 6: having material revenue impact on the fundamentals, it's most of 263 00:13:53,040 --> 00:13:57,079 Speaker 6: its sort of other diversified products. The next big thing 264 00:13:57,160 --> 00:14:00,280 Speaker 6: to look out for the companies really bullish on in 265 00:14:00,320 --> 00:14:04,720 Speaker 6: that IoT segment is the AIPC, which I'd expected to 266 00:14:04,920 --> 00:14:07,520 Speaker 6: hit the market sort of in second half twenty four. 267 00:14:08,240 --> 00:14:11,600 Speaker 6: We don't think it is going to drive significant revenue 268 00:14:11,600 --> 00:14:14,840 Speaker 6: this year. If it goes all goes well, it could 269 00:14:14,920 --> 00:14:18,760 Speaker 6: be a driver in fiscal twenty five, but nothing this year. 270 00:14:18,880 --> 00:14:21,040 Speaker 1: All right, Kunjohn, it's always a pleasure. Thanks for making 271 00:14:21,080 --> 00:14:25,160 Speaker 1: time to chat with us, Bloomberg Intelligence Senior semiconductor analyst, 272 00:14:25,240 --> 00:14:27,800 Speaker 1: Kun John Subani. As we talk call Tom here. 273 00:14:34,880 --> 00:14:37,720 Speaker 3: Let's get to our guest, Nancy Davis, founder in CIOT 274 00:14:37,840 --> 00:14:40,760 Speaker 3: Quadratic Capital Management, to talk a little bit more about 275 00:14:40,760 --> 00:14:43,920 Speaker 3: markets and the FED. I always love watching the FED 276 00:14:44,040 --> 00:14:48,360 Speaker 3: news conference and how definitely Pal handles the questions. I 277 00:14:48,400 --> 00:14:51,760 Speaker 3: thought he was a little nervous at the open, really 278 00:14:51,800 --> 00:14:54,360 Speaker 3: referring to notes and scrambling and get the papers in there. 279 00:14:54,360 --> 00:14:57,160 Speaker 3: But then he started to kind of reach stride. He 280 00:14:57,760 --> 00:15:01,560 Speaker 3: blasted the notion of stagfla, He blasted the notion that 281 00:15:01,600 --> 00:15:04,760 Speaker 3: the FED would do anything different on policy because of 282 00:15:04,840 --> 00:15:08,320 Speaker 3: the election coming up. He said, look, I'm less confident 283 00:15:08,400 --> 00:15:13,760 Speaker 3: now about disinflation continuing, but I'm still confident. Your takeaway 284 00:15:13,800 --> 00:15:16,520 Speaker 3: from the way that this meeting rolled. 285 00:15:16,240 --> 00:15:20,760 Speaker 2: Out, well, I don't think he said anything really new, 286 00:15:21,680 --> 00:15:24,320 Speaker 2: but he was trying to thread the needle. I think 287 00:15:24,320 --> 00:15:27,480 Speaker 2: the markets definitely were worried a little bit that the 288 00:15:27,520 --> 00:15:30,080 Speaker 2: Fed was going to be more hawkish in their commentary, 289 00:15:30,120 --> 00:15:33,000 Speaker 2: and I think all the it was read more dubvish 290 00:15:33,200 --> 00:15:38,000 Speaker 2: just because of there's still they're using quantitative tightening. They're 291 00:15:38,040 --> 00:15:41,200 Speaker 2: still providing so much liquidity to the market that it 292 00:15:41,240 --> 00:15:45,680 Speaker 2: is still easing even though they haven't started cutting rates yet. 293 00:15:45,840 --> 00:15:48,760 Speaker 1: Yeah, they kind of dialed back on the amount of 294 00:15:49,680 --> 00:15:52,480 Speaker 1: quantitative tightening they're going to be doing. Is certainly where 295 00:15:52,600 --> 00:15:55,880 Speaker 1: US treasuries are concerned. I mean, the mortgage back portion 296 00:15:56,040 --> 00:15:59,120 Speaker 1: of unwanting the balance sheet remained in tech I think 297 00:15:59,680 --> 00:16:03,920 Speaker 1: months rated around thirty five billion. What is your sense 298 00:16:04,080 --> 00:16:07,440 Speaker 1: do you fear or suspect that the market is would 299 00:16:07,440 --> 00:16:10,040 Speaker 1: have a strong negative reaction if the Fed were to 300 00:16:10,080 --> 00:16:13,440 Speaker 1: remain on the same track that it's been with respect 301 00:16:13,480 --> 00:16:16,920 Speaker 1: to unwinding the balance sheet. Was there a risk that 302 00:16:16,960 --> 00:16:20,360 Speaker 1: Powell was trying to address today that may have to 303 00:16:20,400 --> 00:16:23,000 Speaker 1: do a little bit with some type of potential tantrum. 304 00:16:24,040 --> 00:16:28,280 Speaker 2: Well, he's easing by slowing the pace of quantitative tightening, 305 00:16:28,320 --> 00:16:31,800 Speaker 2: which really wasn't very large when you think about the 306 00:16:31,800 --> 00:16:35,320 Speaker 2: Fed's denominator, which is the balance sheet, is about seven 307 00:16:35,440 --> 00:16:38,400 Speaker 2: trillion dollars in the SOMA piece of the balance sheet, 308 00:16:38,480 --> 00:16:41,200 Speaker 2: So that's the piece of the Fed's balance sheet that 309 00:16:41,240 --> 00:16:43,880 Speaker 2: the New York Fed actually went into the open market 310 00:16:43,960 --> 00:16:50,520 Speaker 2: and bought during QE. So reducing the quantitative tightening is easing, 311 00:16:51,080 --> 00:16:54,600 Speaker 2: and they're easing in a very very hot economy in 312 00:16:54,600 --> 00:16:57,960 Speaker 2: the US, so it's all quite inflationary in the long term. 313 00:16:58,160 --> 00:17:00,840 Speaker 2: So it's sort of like talking out of both sides 314 00:17:00,840 --> 00:17:03,880 Speaker 2: of your mouth. You know, they're they're not cutting, but 315 00:17:04,000 --> 00:17:06,119 Speaker 2: they still are reducing QT. 316 00:17:07,840 --> 00:17:10,680 Speaker 3: We like to think of there being a lot of 317 00:17:10,760 --> 00:17:15,400 Speaker 3: volatility in the bond market, but as as we heard 318 00:17:15,480 --> 00:17:17,800 Speaker 3: from a number of practitioners, I mean, if you really 319 00:17:17,840 --> 00:17:20,920 Speaker 3: look at it, the ten year has been in a 320 00:17:21,040 --> 00:17:23,760 Speaker 3: range of around this this sort of area of four 321 00:17:23,760 --> 00:17:28,000 Speaker 3: point six percent going back on you know, back to November. 322 00:17:28,320 --> 00:17:31,240 Speaker 3: So yeah, we've fluctuated thirty forty basis points, but not 323 00:17:31,280 --> 00:17:34,280 Speaker 3: that much, are you do you like the short end 324 00:17:34,280 --> 00:17:36,639 Speaker 3: of the curve better here, or you would you go 325 00:17:36,720 --> 00:17:37,439 Speaker 3: out in duration. 326 00:17:39,040 --> 00:17:39,680 Speaker 4: I don't think you. 327 00:17:39,760 --> 00:17:42,320 Speaker 2: Really get paid to go out in duration, because the 328 00:17:42,440 --> 00:17:47,280 Speaker 2: US yield curve is still, you know, massively inverted. Especially 329 00:17:47,359 --> 00:17:50,240 Speaker 2: even if you look at the sofa curve, the not 330 00:17:50,359 --> 00:17:53,639 Speaker 2: the treasury curve, but the swaps curve, it's you know, 331 00:17:53,680 --> 00:17:57,720 Speaker 2: the choose tens as negative sixty four basis points, so 332 00:17:57,840 --> 00:18:01,399 Speaker 2: you literally get paid sixty four this points less to 333 00:18:02,440 --> 00:18:06,359 Speaker 2: lend the US money for ten years versus two years. 334 00:18:06,440 --> 00:18:10,600 Speaker 2: I mean, it's nonsensical. Even markets like Japan, their yield 335 00:18:10,680 --> 00:18:16,320 Speaker 2: curve is positive sixty basis points, so we're exactly opposite 336 00:18:16,359 --> 00:18:19,639 Speaker 2: being negative. So I just don't think investors in the 337 00:18:19,640 --> 00:18:22,320 Speaker 2: bond market really get paid to own duration. It's almost 338 00:18:22,359 --> 00:18:25,600 Speaker 2: like you're paying a tax, right, You're taking more risk 339 00:18:25,680 --> 00:18:28,800 Speaker 2: and getting paid less yield, And especially if the Fed's 340 00:18:28,880 --> 00:18:31,640 Speaker 2: gonna leave it higher for longer, I just don't see 341 00:18:31,640 --> 00:18:33,679 Speaker 2: any point to extend duration. 342 00:18:33,960 --> 00:18:36,080 Speaker 1: I'm glad you brought up Japan because we had a 343 00:18:36,119 --> 00:18:39,400 Speaker 1: lot of action in the foreign exchange in the last 344 00:18:39,480 --> 00:18:41,440 Speaker 1: hour of a New York trading in the equity market, 345 00:18:41,480 --> 00:18:45,000 Speaker 1: at one point, the end strengthened buy around three percent 346 00:18:45,000 --> 00:18:47,520 Speaker 1: against the greenback. The dollar had been a little week 347 00:18:48,280 --> 00:18:50,000 Speaker 1: after the you know, the FED meeting, we saw a 348 00:18:50,080 --> 00:18:52,400 Speaker 1: drop and yield. Some of that may have been due 349 00:18:52,440 --> 00:18:57,080 Speaker 1: to the quantitative tightening adjustment. But when when you trade 350 00:18:57,119 --> 00:18:59,359 Speaker 1: a market like the one that we find ourselves in 351 00:18:59,440 --> 00:19:03,360 Speaker 1: right now, if you're short yen, that may help explain 352 00:19:03,400 --> 00:19:05,480 Speaker 1: why we saw a pullback in US stocks. Would you 353 00:19:05,560 --> 00:19:08,080 Speaker 1: have to you know, sell the equity market to raise 354 00:19:08,160 --> 00:19:11,359 Speaker 1: cash to cover your short position in yen? Is Can 355 00:19:11,359 --> 00:19:13,280 Speaker 1: that help explain a little of what we saw in 356 00:19:13,320 --> 00:19:15,840 Speaker 1: the final moments of trading today. 357 00:19:16,960 --> 00:19:19,719 Speaker 2: Well, I do think that the yen, the currency is 358 00:19:19,720 --> 00:19:22,920 Speaker 2: more closely tied to the treasury market. More too, because 359 00:19:22,960 --> 00:19:26,480 Speaker 2: Japan such a large owner of our debt and the 360 00:19:26,520 --> 00:19:30,120 Speaker 2: treasury does have to refinance a ton of the debt. Yeah, 361 00:19:30,440 --> 00:19:32,600 Speaker 2: And at the same time, the Fed is still doing 362 00:19:32,640 --> 00:19:38,280 Speaker 2: They reduced quantitative tightening starting in June, but they're still 363 00:19:38,320 --> 00:19:40,880 Speaker 2: doing it, and so I think, you know, I would 364 00:19:40,920 --> 00:19:44,280 Speaker 2: say the foreign currency moves are more tied to the 365 00:19:44,359 --> 00:19:46,720 Speaker 2: rate differential. In carry trade. 366 00:19:46,880 --> 00:19:49,720 Speaker 1: We were like six basis points down in the case 367 00:19:49,760 --> 00:19:51,600 Speaker 1: of both the two and the ten, but that was 368 00:19:51,640 --> 00:19:54,520 Speaker 1: a three percent move in yen. That felt to me 369 00:19:54,680 --> 00:19:57,399 Speaker 1: like a massive short squeeze that was tied to fear 370 00:19:58,119 --> 00:20:01,439 Speaker 1: that or maybe the Ministry of Finance was already in 371 00:20:01,480 --> 00:20:04,159 Speaker 1: there kind of trying to prompt a bit of short covering. 372 00:20:05,480 --> 00:20:08,080 Speaker 2: Yeah, I mean there's definitely a lot of chatter about 373 00:20:08,840 --> 00:20:11,800 Speaker 2: intervention because again, as we can you know, if you 374 00:20:11,880 --> 00:20:13,719 Speaker 2: just take a big step back, you know, the end 375 00:20:13,880 --> 00:20:17,359 Speaker 2: was ninety and then got to one sixty in a 376 00:20:17,480 --> 00:20:22,320 Speaker 2: very short period of time. So it's had massive depreciation recently, 377 00:20:22,320 --> 00:20:24,919 Speaker 2: and the dollar has been very strong, so you know, 378 00:20:25,080 --> 00:20:28,400 Speaker 2: three percent pullback before even Asia is really open. I'm 379 00:20:28,440 --> 00:20:32,040 Speaker 2: sort of you know, like the bond market's moving like 380 00:20:32,119 --> 00:20:34,639 Speaker 2: crazy too. It's kind of just noise at this point, 381 00:20:34,720 --> 00:20:35,760 Speaker 2: and we'll really have to. 382 00:20:35,720 --> 00:20:37,680 Speaker 6: See what actually. 383 00:20:38,920 --> 00:20:40,800 Speaker 3: Where then do you see the best value in the 384 00:20:40,800 --> 00:20:45,960 Speaker 3: bond market, including credit? Would you look at investment grade 385 00:20:46,040 --> 00:20:48,560 Speaker 3: but the better you know, sort of maybe triple b's 386 00:20:48,640 --> 00:20:50,360 Speaker 3: instead of higher than that. 387 00:20:51,320 --> 00:20:53,800 Speaker 2: No, I wouldn't touch that stuff with a ten foot pull. 388 00:20:54,280 --> 00:20:57,240 Speaker 2: I mean, if you have equities in your portfolio already 389 00:20:57,240 --> 00:21:01,119 Speaker 2: have that corporate beta, you know, with investment grade, you know, 390 00:21:01,160 --> 00:21:03,679 Speaker 2: you pull up your Bloomberg terminal and look at the 391 00:21:03,760 --> 00:21:07,760 Speaker 2: CDX index for the two year investment grade bond. It's 392 00:21:07,800 --> 00:21:10,320 Speaker 2: twenty two basis points. I mean that you can only 393 00:21:10,400 --> 00:21:13,160 Speaker 2: go to zero, right. It's a spread trade. You want 394 00:21:13,200 --> 00:21:16,639 Speaker 2: credit spreads Titan to Titan to go lower. If you 395 00:21:16,720 --> 00:21:20,000 Speaker 2: own the bonds, you're not getting paid with credit. Frankly, 396 00:21:20,040 --> 00:21:21,800 Speaker 2: I think if you're going to take corporate resk, you 397 00:21:21,840 --> 00:21:25,840 Speaker 2: might as well have equities, and I think values of 398 00:21:25,920 --> 00:21:28,240 Speaker 2: value our inflation protection bonds. 399 00:21:28,240 --> 00:21:30,720 Speaker 3: No time to go into it, but that was Jeff 400 00:21:30,760 --> 00:21:34,239 Speaker 3: Gundlock speaking on CNBC earlier saying that he thought that 401 00:21:34,320 --> 00:21:36,359 Speaker 3: was the best value shot. I thought I'd throw it 402 00:21:36,400 --> 00:21:39,600 Speaker 3: at you're saying no way, Nancy. Thank you for joining us, 403 00:21:39,680 --> 00:21:41,440 Speaker 3: Nancy Davis from Quadratic. 404 00:21:43,600 --> 00:21:46,520 Speaker 1: This has been the Bloomberg Daybreak Asia podcast, bringing you 405 00:21:46,600 --> 00:21:49,720 Speaker 1: the stories making news and moving markets in the Asia Pacific. 406 00:21:50,240 --> 00:21:53,360 Speaker 1: Visit the Bloomberg Podcast channel on YouTube to get more 407 00:21:53,359 --> 00:21:57,000 Speaker 1: episodes of this and other shows from Bloomberg. Subscribe to 408 00:21:57,000 --> 00:22:00,800 Speaker 1: the podcast on Apple, Spotify, or anywhere else you listen 409 00:22:00,880 --> 00:22:04,000 Speaker 1: and always on Bloomberg Radio, the Bloomberg Terminal, and the 410 00:22:04,000 --> 00:22:05,080 Speaker 1: Bloomberg Business app.