1
00:00:02,240 --> 00:00:05,240
Speaker 1: This is Bloomberg day Break Asia for this Wednesday, May

2
00:00:05,280 --> 00:00:08,480
Speaker 1: twenty fourth in Hong Kong, Tuesday May twenty third in

3
00:00:08,600 --> 00:00:10,320
Speaker 1: New York and coming up today.

4
00:00:10,520 --> 00:00:14,080
Speaker 2: US stocks fall as negotiations over raising the debt ceiling

5
00:00:14,200 --> 00:00:15,520
Speaker 2: remain at an impasse.

6
00:00:15,720 --> 00:00:19,040
Speaker 1: Apple signs a new multi billion dollar deal with Broadcom

7
00:00:19,079 --> 00:00:23,360
Speaker 1: to get five G radio frequency components for its devices.

8
00:00:22,840 --> 00:00:26,000
Speaker 2: And Ali Baba's cloud division will cut its workforce by

9
00:00:26,079 --> 00:00:28,680
Speaker 2: seven percent as it prepares for a spin off.

10
00:00:28,840 --> 00:00:32,199
Speaker 3: China's new ambassador to the US asks for open communication.

11
00:00:32,720 --> 00:00:36,280
Speaker 3: China opposes US trade agreement. Mixed messages coming from debt

12
00:00:36,320 --> 00:00:39,360
Speaker 3: ceiling talk same sticking point as where to play spending caps.

13
00:00:39,440 --> 00:00:41,000
Speaker 3: I'm at Baxter with Global News.

14
00:00:44,120 --> 00:00:47,239
Speaker 4: That's all straight ahead on Bloomberg day Break Asia, The

15
00:00:47,360 --> 00:00:50,000
Speaker 4: business news you need to start your day in just

16
00:00:50,120 --> 00:00:54,560
Speaker 4: one fifteen minute podcast available on Apple, Spotify, the Bloomberg

17
00:00:54,600 --> 00:00:57,320
Speaker 4: Business App, and everywhere you get your podcasts.

18
00:01:00,120 --> 00:01:02,880
Speaker 2: Good morning, I'm Doug Chrisner and I'm Brian Curtiz.

19
00:01:02,880 --> 00:01:06,360
Speaker 1: Here are the stories we're following today. Apple has signed

20
00:01:06,360 --> 00:01:09,400
Speaker 1: a new multi year, multi billion dollar deal with Broadcom

21
00:01:09,560 --> 00:01:12,600
Speaker 1: to get new components for its devices. These would be

22
00:01:12,600 --> 00:01:17,000
Speaker 1: five G radio frequency components. The deal extends the sometimes

23
00:01:17,080 --> 00:01:21,000
Speaker 1: contentious relationship between two of the world's biggest tech companies.

24
00:01:21,240 --> 00:01:23,919
Speaker 1: Let's get more on the story from Bloomberg's Denise Pellgreening.

25
00:01:24,200 --> 00:01:28,399
Speaker 5: Apple says the collaboration will include wireless connectivity components, and

26
00:01:28,440 --> 00:01:31,640
Speaker 5: those components will be designed and built in several US

27
00:01:31,680 --> 00:01:36,080
Speaker 5: manufacturing hubs, including Fort Collins, Colorado, where Broadcom has a

28
00:01:36,120 --> 00:01:39,200
Speaker 5: major facility. Apple says it already helps support more than

29
00:01:39,200 --> 00:01:42,280
Speaker 5: one thousand jobs in Fort Collumns and the partnership will

30
00:01:42,360 --> 00:01:46,679
Speaker 5: enable Broadcom to continue to invest in automation projects. The Iphonemaker,

31
00:01:46,720 --> 00:01:48,720
Speaker 5: as a matter of fact, is spending tens of billions

32
00:01:48,720 --> 00:01:51,480
Speaker 5: of dollars to develop five G technology in the US,

33
00:01:51,640 --> 00:01:54,000
Speaker 5: and these investments are all part of that commitment Apple

34
00:01:54,000 --> 00:01:56,760
Speaker 5: made back in twenty twenty one to invest four hundred

35
00:01:56,760 --> 00:01:59,080
Speaker 5: and thirty billion dollars in the US economy over the

36
00:01:59,120 --> 00:02:01,960
Speaker 5: next five years. Denise Pelgreney, Bloomberg Day Brakesia.

37
00:02:02,120 --> 00:02:04,960
Speaker 2: As I mentioned earlier, WTI crude oil rose in New

38
00:02:05,040 --> 00:02:08,040
Speaker 2: York to just under seventy three dollars a barrel as

39
00:02:08,080 --> 00:02:12,000
Speaker 2: the market evaluated a warning from Saudi Arabia's top energy

40
00:02:12,000 --> 00:02:16,639
Speaker 2: official to short sellers. Here's Saudi Energy Minister Prince Abdulaziz

41
00:02:16,680 --> 00:02:22,320
Speaker 2: Ben Solomon speaking at the Cutter Economic Forum. Speculators like

42
00:02:22,919 --> 00:02:24,320
Speaker 2: any think in any market.

43
00:02:24,400 --> 00:02:25,840
Speaker 5: They are there to say.

44
00:02:26,960 --> 00:02:31,280
Speaker 2: I keep advising them that they will be ouching.

45
00:02:31,680 --> 00:02:32,960
Speaker 5: They did ouch in Avrid.

46
00:02:33,360 --> 00:02:36,000
Speaker 2: That warning, by the way, comes as the market considers,

47
00:02:36,200 --> 00:02:39,480
Speaker 2: or at least indicates that oil short sellers who initially

48
00:02:39,560 --> 00:02:43,119
Speaker 2: fled in April or making a comeback. Crewde traders were

49
00:02:43,160 --> 00:02:47,640
Speaker 2: surprised last month after OPEC Plus announced production cuts intended

50
00:02:47,680 --> 00:02:50,680
Speaker 2: to scare off those speculators. Traders now will have their

51
00:02:50,720 --> 00:02:54,200
Speaker 2: eyes on a meeting between opek Plus and its allies.

52
00:02:54,240 --> 00:02:57,400
Speaker 2: They will review their production policy for the second half

53
00:02:57,440 --> 00:03:00,359
Speaker 2: of the year June third and the fourth well.

54
00:03:00,400 --> 00:03:03,440
Speaker 1: By Dance's TikTok appears to be on track now to

55
00:03:03,520 --> 00:03:06,440
Speaker 1: have all of its US user data hosted and overseen

56
00:03:06,880 --> 00:03:10,919
Speaker 1: by the American company Oracle. TikTok CEO showed that Chew

57
00:03:11,120 --> 00:03:14,400
Speaker 1: said that Oracle has begun a review of his company's

58
00:03:14,400 --> 00:03:16,920
Speaker 1: source code, and he said that Oracle is now the

59
00:03:17,000 --> 00:03:22,200
Speaker 1: default destination for the app's user data US user data now.

60
00:03:22,200 --> 00:03:24,919
Speaker 1: This comes as by Dance struggles to win over critics

61
00:03:25,200 --> 00:03:28,880
Speaker 1: that critics are worried about national security implications of TikTok.

62
00:03:29,160 --> 00:03:31,040
Speaker 1: She said that the video app will continue to make

63
00:03:31,080 --> 00:03:33,200
Speaker 1: sure that its data is as safe as possible.

64
00:03:33,560 --> 00:03:36,240
Speaker 5: TikTok is not available in inland China today.

65
00:03:37,000 --> 00:03:39,680
Speaker 6: As we said many times, the Chinese government has actually

66
00:03:39,720 --> 00:03:42,240
Speaker 6: never asked us for US user data and we will

67
00:03:42,240 --> 00:03:43,520
Speaker 6: not provide even if asked.

68
00:03:43,760 --> 00:03:47,200
Speaker 1: Well, to address security concerns, TikTok said that it's US

69
00:03:47,240 --> 00:03:50,840
Speaker 1: and EU projects will have their user information stored locally

70
00:03:50,880 --> 00:03:53,720
Speaker 1: by a local company and it will be overseen by

71
00:03:53,800 --> 00:03:56,800
Speaker 1: local staff. TikTok also said that it will continue to

72
00:03:56,800 --> 00:03:59,840
Speaker 1: work with Oracle and the US government on data protection.

73
00:04:00,120 --> 00:04:02,760
Speaker 2: Ali Baba's Cloud division is said to be reducing its

74
00:04:02,800 --> 00:04:06,680
Speaker 2: staff by seven percent as the company prepares for a spinoff.

75
00:04:07,080 --> 00:04:09,480
Speaker 2: We have more from Bloomberg zvon Menn in Hong Kong.

76
00:04:09,880 --> 00:04:12,920
Speaker 7: The Cloud division is said to have begun offering severance

77
00:04:12,960 --> 00:04:16,680
Speaker 7: paid to employees. Sources say it's either that or workers

78
00:04:16,720 --> 00:04:19,719
Speaker 7: could be transferred to other parts of the Ali Baba group.

79
00:04:20,160 --> 00:04:23,279
Speaker 7: The moves are intended to streamline the business. Ali Baba

80
00:04:23,320 --> 00:04:25,960
Speaker 7: plans to carve out the cloud unit into a separate

81
00:04:25,960 --> 00:04:29,560
Speaker 7: company within a year. It would then prepare for an IPO.

82
00:04:29,760 --> 00:04:32,680
Speaker 7: Some analysts value the cloud business at upwards of thirty

83
00:04:32,720 --> 00:04:35,880
Speaker 7: billion dollars. Ali Baba Cloud is one of the biggest

84
00:04:35,880 --> 00:04:38,560
Speaker 7: companies that will be created in a six way split

85
00:04:38,800 --> 00:04:42,040
Speaker 7: of the parent in Hong Kong. I'm ivon Mann Bloomberg

86
00:04:42,120 --> 00:04:43,400
Speaker 7: day Break Asia and.

87
00:04:43,279 --> 00:04:46,080
Speaker 1: Ali Baba has really struggled here over the past month

88
00:04:46,160 --> 00:04:48,240
Speaker 1: or so, down around five percent or so, and in

89
00:04:48,279 --> 00:04:51,359
Speaker 1: this latest session, even with this news, Baba created lower

90
00:04:51,440 --> 00:04:55,880
Speaker 1: three point seven four percent with its usad rs. The

91
00:04:55,920 --> 00:04:58,560
Speaker 1: Reserve Bank of New Zealand is expected to raise interest

92
00:04:58,640 --> 00:05:01,280
Speaker 1: rates for the twelfth meeting in Row when it meets today.

93
00:05:01,400 --> 00:05:03,760
Speaker 1: Bloomberg's Paul Allen has more from Sydney.

94
00:05:03,880 --> 00:05:06,919
Speaker 8: Eighteen of twenty one economists surveyed by Bloomberg see the

95
00:05:07,080 --> 00:05:10,920
Speaker 8: Arbenz delivering another twenty five basis point rate increase at

96
00:05:10,920 --> 00:05:13,479
Speaker 8: today's meeting that would take the cash rate to five

97
00:05:13,520 --> 00:05:16,320
Speaker 8: and a half percent. The other three economists, well, they

98
00:05:16,360 --> 00:05:19,680
Speaker 8: see an even bigger fifty basis point move rebuilding from

99
00:05:19,720 --> 00:05:22,880
Speaker 8: a severe cyclone earlier this year, combined with the record

100
00:05:22,920 --> 00:05:26,960
Speaker 8: inflows of migrants as boosting economic activity even as inflation

101
00:05:27,160 --> 00:05:30,479
Speaker 8: shows signs of slowing. The RBNZ will also release a

102
00:05:30,480 --> 00:05:33,279
Speaker 8: new set of forecasts, and Governor Adrian Or will hold

103
00:05:33,279 --> 00:05:37,039
Speaker 8: a press conference following today's rate decision. Many economists believe

104
00:05:37,080 --> 00:05:41,279
Speaker 8: that even after today's anticipated twelfth consecutive rate increase, the

105
00:05:41,400 --> 00:05:45,000
Speaker 8: RBNZ may still not be done tightening yet. Paul Allen

106
00:05:45,120 --> 00:05:47,240
Speaker 8: Bloomberg day Break Asia and.

107
00:05:47,120 --> 00:05:50,120
Speaker 1: The Bank of Korea is set to hold its policy

108
00:05:50,200 --> 00:05:54,520
Speaker 1: rate for a third straight meeting when it meets this Thursday,

109
00:05:55,120 --> 00:05:58,640
Speaker 1: that's tomorrow here in Asia. I'm brand Curtis along with

110
00:05:58,680 --> 00:06:02,279
Speaker 1: Doug Christmas. Doug, a little bit of frustration maybe seeping

111
00:06:02,320 --> 00:06:05,880
Speaker 1: into market participants with these debt sealing negotiations.

112
00:06:06,400 --> 00:06:09,280
Speaker 2: Yes, even so, I think that where you're seeing most

113
00:06:09,320 --> 00:06:11,599
Speaker 2: of the stress is obviously at the shorter end of

114
00:06:11,600 --> 00:06:14,840
Speaker 2: the curve. Today we had the two year picking up

115
00:06:14,839 --> 00:06:18,320
Speaker 2: around two basis points. We heard from Neil Kashkari again today,

116
00:06:18,320 --> 00:06:20,080
Speaker 2: the head of the Minneapolis Fed. He was saying that

117
00:06:20,120 --> 00:06:24,479
Speaker 2: if inflation were to become more entrenched, the Fed could

118
00:06:24,600 --> 00:06:27,760
Speaker 2: keep rates elevated for a longer period of time. Now

119
00:06:27,760 --> 00:06:29,599
Speaker 2: tomorrow here in the US, we're going to be getting

120
00:06:29,720 --> 00:06:32,640
Speaker 2: minutes from the last FED meeting. Maybe maybe we'll get

121
00:06:32,640 --> 00:06:35,800
Speaker 2: some insight into whether or not the pause is going

122
00:06:35,880 --> 00:06:37,719
Speaker 2: to happen at the June meeting. That seems to be

123
00:06:37,760 --> 00:06:39,440
Speaker 2: what the market is counting on at this point.

124
00:06:39,960 --> 00:06:43,479
Speaker 1: Yeah, a little interesting that long term yields were lower

125
00:06:43,520 --> 00:06:45,360
Speaker 1: while the short term was up. And I think you've

126
00:06:45,400 --> 00:06:48,000
Speaker 1: got the one month, the three month, the six month,

127
00:06:48,080 --> 00:06:52,440
Speaker 1: the one year, all over five percent. Yet the equity

128
00:06:52,480 --> 00:06:56,120
Speaker 1: markets have hung in there today not so much. But

129
00:06:56,560 --> 00:06:59,560
Speaker 1: we've talked a little bit about if and when the

130
00:06:59,600 --> 00:07:02,520
Speaker 1: bear might change their stripes, and I was interested to

131
00:07:02,520 --> 00:07:06,599
Speaker 1: hear Bank of America's Cevita Supermanian turned a little bit bullish.

132
00:07:06,640 --> 00:07:09,159
Speaker 1: Years she's talking forty three hundred now for the S

133
00:07:09,200 --> 00:07:12,360
Speaker 1: and P five hundred. That's not a huge game. She

134
00:07:12,480 --> 00:07:15,720
Speaker 1: made a couple of interesting points on surveillance, which is

135
00:07:15,800 --> 00:07:18,480
Speaker 1: right before bedtime for me, but I thought it was

136
00:07:18,600 --> 00:07:21,160
Speaker 1: kind of interesting. And one point is that big tech

137
00:07:21,680 --> 00:07:25,040
Speaker 1: doesn't really have to crack from here if their duration

138
00:07:25,240 --> 00:07:28,080
Speaker 1: risk is shortened. Now that needs a little unpacking. Perhaps

139
00:07:28,080 --> 00:07:30,560
Speaker 1: you can get to that. And the second point is

140
00:07:30,600 --> 00:07:33,400
Speaker 1: that the S and P five hundred equal weight can

141
00:07:33,440 --> 00:07:37,320
Speaker 1: take up the slack going forward and can outperform through

142
00:07:37,320 --> 00:07:39,280
Speaker 1: the next many months. I found that quite.

143
00:07:39,040 --> 00:07:41,960
Speaker 2: Interesting, and I'm wondering when it comes to what's happening

144
00:07:41,960 --> 00:07:44,480
Speaker 2: in the foreign exchange, when you begin to consider the

145
00:07:44,560 --> 00:07:47,320
Speaker 2: revenue outlook for American companies, how much of that is

146
00:07:47,400 --> 00:07:51,400
Speaker 2: predicated on the dollar kind of weakening just a bit

147
00:07:51,440 --> 00:07:56,520
Speaker 2: and improving the fortunes the potential fortunes of US multinationals.

148
00:07:56,560 --> 00:07:59,200
Speaker 2: I thought it interesting today that Goldman Sachs was saying

149
00:08:00,320 --> 00:08:02,920
Speaker 2: enough that the dollar has more room to strengthen from here,

150
00:08:02,960 --> 00:08:05,320
Speaker 2: more so than the market is currently estimating, which kind

151
00:08:05,320 --> 00:08:06,000
Speaker 2: of surprised me.

152
00:08:06,600 --> 00:08:08,840
Speaker 1: It is surprising. I think the market is a bit

153
00:08:08,920 --> 00:08:11,840
Speaker 1: split on this whether or not if the FED really

154
00:08:11,840 --> 00:08:14,600
Speaker 1: sticks to higher for longer and inflation stays up there,

155
00:08:14,840 --> 00:08:17,720
Speaker 1: that probably means, you know, a firm dollar. But a

156
00:08:17,720 --> 00:08:20,360
Speaker 1: lot of people think the reverse will happen, and they

157
00:08:20,720 --> 00:08:24,960
Speaker 1: are betting that, especially if recession comes in, maybe yields

158
00:08:25,040 --> 00:08:27,160
Speaker 1: moved down a little bit and the dollar would ease

159
00:08:27,680 --> 00:08:30,320
Speaker 1: a little as well. It's all there, it's all there

160
00:08:30,360 --> 00:08:32,760
Speaker 1: for us over the next many months, and thank goodness

161
00:08:32,760 --> 00:08:37,840
Speaker 1: we have these jobs. It's time now for global news. Well,

162
00:08:37,920 --> 00:08:40,880
Speaker 1: China's new ambassador to the United States is asking for

163
00:08:40,960 --> 00:08:45,440
Speaker 1: some cooperation from the White House to build relations at

164
00:08:45,440 --> 00:08:48,000
Speaker 1: Baxter has Global News in the nine to sixty newsroom

165
00:08:48,080 --> 00:08:49,240
Speaker 1: in San Francisco.

166
00:08:49,920 --> 00:08:53,640
Speaker 3: Yeah, exactly right. Ambassador Chiafang is a citing disputes over

167
00:08:53,720 --> 00:08:57,080
Speaker 3: technology spying allegations and Taiwan at.

168
00:08:56,960 --> 00:09:04,880
Speaker 6: Presence signo, US relations is facing serious difficulties and challenges.

169
00:09:05,760 --> 00:09:09,200
Speaker 6: We hope that the United States will work together with

170
00:09:09,320 --> 00:09:11,520
Speaker 6: China to increase dialogue.

171
00:09:11,920 --> 00:09:14,120
Speaker 3: So is he. He is here now. His appointment is

172
00:09:14,160 --> 00:09:18,040
Speaker 3: thought to try and normalize relations going forward. China says

173
00:09:18,040 --> 00:09:21,880
Speaker 3: it's firmly opposed to the US Taiwan trade agreement. It's

174
00:09:22,000 --> 00:09:24,720
Speaker 3: urging the US to honor the One China principle not

175
00:09:24,800 --> 00:09:30,600
Speaker 3: to support Taiwan independence. Russian Prime Minister Mikhail Mitsubishi has

176
00:09:30,840 --> 00:09:33,600
Speaker 3: kicked off a two day visit to China. This is

177
00:09:33,679 --> 00:09:37,480
Speaker 3: Bosco seeking to deepen trade ties with Beijing. Russia has

178
00:09:37,480 --> 00:09:41,840
Speaker 3: said the nation's farmers are ready to significantly increase agricultural

179
00:09:42,120 --> 00:09:45,640
Speaker 3: exports to China. While the staffs of the two sides

180
00:09:45,640 --> 00:09:47,960
Speaker 3: and the dead ceiling talks in the US meet today,

181
00:09:48,200 --> 00:09:53,240
Speaker 3: House Speaker Kevin McCarthy is sounding anything but optimistic. His

182
00:09:53,360 --> 00:09:56,800
Speaker 3: tone today not optimistic at all saying things are not

183
00:09:57,240 --> 00:09:58,040
Speaker 3: even close.

184
00:09:58,240 --> 00:10:01,000
Speaker 9: People spent too much money and the dim that want

185
00:10:01,040 --> 00:10:03,280
Speaker 9: to even spend more than the new spent last year.

186
00:10:03,520 --> 00:10:05,119
Speaker 9: That is not going to happen.

187
00:10:05,080 --> 00:10:06,720
Speaker 3: And he says things are far apart.

188
00:10:07,080 --> 00:10:08,960
Speaker 4: We could still finish this by June first.

189
00:10:10,040 --> 00:10:13,160
Speaker 3: In a timeline, Have McCarthy says Democrats are not showing

190
00:10:13,240 --> 00:10:16,720
Speaker 3: any urgency, though disputed by White House spokes when Kareine

191
00:10:16,760 --> 00:10:17,640
Speaker 3: Jean Pierre.

192
00:10:17,440 --> 00:10:22,839
Speaker 5: Republicans saying that the White House is not showing any

193
00:10:22,920 --> 00:10:25,480
Speaker 5: urgency is a ridiculous question. Is a ridiculous statement for

194
00:10:25,559 --> 00:10:26,880
Speaker 5: them to be making now.

195
00:10:27,000 --> 00:10:30,400
Speaker 3: On the negotiations, Bloomberg Michael Shepherd says, the sticking point

196
00:10:30,440 --> 00:10:33,679
Speaker 3: seems to be where to set the spending cap.

197
00:10:33,600 --> 00:10:36,360
Speaker 10: Whether it's twenty twenty three or twenty twenty four levels,

198
00:10:36,760 --> 00:10:40,000
Speaker 10: and how long they decided to keep these caps in place.

199
00:10:40,080 --> 00:10:42,520
Speaker 10: Those seem to be the two key issues. Once they

200
00:10:42,600 --> 00:10:44,600
Speaker 10: lock that down, the rest of the deal seems to

201
00:10:44,640 --> 00:10:46,679
Speaker 10: be falling into place more quickly.

202
00:10:46,640 --> 00:10:48,959
Speaker 3: So that could be good news. But Republicans are also

203
00:10:49,040 --> 00:10:52,560
Speaker 3: questioning how Treasury is figuring out the so called X

204
00:10:52,600 --> 00:10:55,199
Speaker 3: State Congressman Steve Scalise, we'd like.

205
00:10:55,160 --> 00:10:58,000
Speaker 9: To see more transparency on how they come to that date.

206
00:10:58,080 --> 00:11:01,000
Speaker 9: Pa Janet Yell and herself. She left the door open

207
00:11:01,040 --> 00:11:04,319
Speaker 9: to delaying that in her tweets yesterday. The comments that

208
00:11:04,360 --> 00:11:08,200
Speaker 9: she sent out yesterday implied that it's June first or later,

209
00:11:08,559 --> 00:11:12,160
Speaker 9: giving some openness to the idea that June first may

210
00:11:12,200 --> 00:11:13,760
Speaker 9: not be the so called XT stage.

211
00:11:13,559 --> 00:11:18,079
Speaker 3: So any transparency. Illinois Attorney General's Office has released results

212
00:11:18,080 --> 00:11:20,560
Speaker 3: of the investigation of sexual abuse at the hands of

213
00:11:20,640 --> 00:11:25,320
Speaker 3: clerics of the Catholic Church, ag Kawani Raul, saying that

214
00:11:25,640 --> 00:11:29,120
Speaker 3: it comes from roughly six hundred interviews with survivors abuse

215
00:11:29,200 --> 00:11:32,040
Speaker 3: between nineteen fifty and twenty nineteen.

216
00:11:32,200 --> 00:11:37,400
Speaker 11: This report reveals the names and detail informations information of

217
00:11:37,480 --> 00:11:41,280
Speaker 11: four hundred and fifty one Catholic clerics and religious brothers

218
00:11:41,559 --> 00:11:45,520
Speaker 11: who abuse at least one nine hundred and ninety seven

219
00:11:45,640 --> 00:11:50,120
Speaker 11: children across all of the diocese in the state of Illinois.

220
00:11:50,400 --> 00:11:53,079
Speaker 3: Raoul says because of the Statute of limitations, many of

221
00:11:53,120 --> 00:11:56,400
Speaker 3: the cases will never be prosecuted, but that decades of

222
00:11:56,480 --> 00:12:00,559
Speaker 3: Catholic leaders have allowed abuses to hide in planes site

223
00:12:00,920 --> 00:12:03,120
Speaker 3: and that the culture and that part of the church

224
00:12:03,480 --> 00:12:06,440
Speaker 3: needs to be exposed. Global News powered by more than

225
00:12:06,440 --> 00:12:09,120
Speaker 3: twenty seven hundred journalists and analysts in over one hundred

226
00:12:09,160 --> 00:12:12,440
Speaker 3: twenty countries in San Francisco. I'm Ed Baxter, and this

227
00:12:12,920 --> 00:12:13,600
Speaker 3: is Bloomberg.

228
00:12:13,760 --> 00:12:16,680
Speaker 1: Brian curtis here in Hong Kong along with Rishad Salamad,

229
00:12:16,720 --> 00:12:20,079
Speaker 1: and our guest is Mary Manning, global portfolio manager at

230
00:12:20,120 --> 00:12:25,040
Speaker 1: Alfinity Investment Management. So today, Mary, was a risk off day.

231
00:12:25,480 --> 00:12:28,560
Speaker 1: It's today that many people probably showed a little bit

232
00:12:28,600 --> 00:12:33,160
Speaker 1: of fear over COVID running through China, the inconsistency of

233
00:12:33,160 --> 00:12:36,400
Speaker 1: the negotiations on the debt ceiling, and also fears about

234
00:12:36,440 --> 00:12:39,000
Speaker 1: inflation and the Fed. Were you buying today or were

235
00:12:39,040 --> 00:12:41,040
Speaker 1: you part of the gang that was lightening up?

236
00:12:41,360 --> 00:12:41,839
Speaker 5: Good morning?

237
00:12:41,840 --> 00:12:43,719
Speaker 12: Thank you very much for having me on the show.

238
00:12:44,520 --> 00:12:47,240
Speaker 12: Actually last night we weren't doing anything. Affinity is a

239
00:12:47,240 --> 00:12:50,640
Speaker 12: long term investor, and you know we don't invest or

240
00:12:50,679 --> 00:12:54,400
Speaker 12: divest based on what's happening daily on the market. But

241
00:12:54,480 --> 00:12:56,600
Speaker 12: you do raise a good point that we've had a

242
00:12:56,720 --> 00:12:59,200
Speaker 12: very good run year to date, particularly in some of

243
00:12:59,200 --> 00:13:02,839
Speaker 12: the larger caps, the megacap tech stocks, and yesterday was

244
00:13:03,200 --> 00:13:06,120
Speaker 12: definitely a down day. The other thing which happened yesterday

245
00:13:06,200 --> 00:13:07,960
Speaker 12: was there is quite a significant sell off in some

246
00:13:08,080 --> 00:13:10,400
Speaker 12: of the luxury stocks in Europe, which has been another

247
00:13:10,440 --> 00:13:13,400
Speaker 12: sector that's been on a tear for you know, eighteen months,

248
00:13:13,400 --> 00:13:16,640
Speaker 12: two years now. So we're definitely watching those developments very closely,

249
00:13:17,040 --> 00:13:19,880
Speaker 12: but not changing the portfolio, you know, based on what's

250
00:13:19,880 --> 00:13:20,679
Speaker 12: happening overnight.

251
00:13:21,000 --> 00:13:23,200
Speaker 13: So how are you at the moment, Then what's your

252
00:13:23,240 --> 00:13:27,280
Speaker 13: trajectory if you will you know, because you're obviously passive

253
00:13:27,360 --> 00:13:28,000
Speaker 13: yet active.

254
00:13:28,280 --> 00:13:30,880
Speaker 12: Yeah, so we're definitely active investors, but just taking a

255
00:13:30,920 --> 00:13:34,040
Speaker 12: long term view. So I think the trajectory is at alfinity,

256
00:13:34,080 --> 00:13:36,559
Speaker 12: we follow Earning's leadership, so that means we are investing

257
00:13:36,600 --> 00:13:38,880
Speaker 12: in stocks that are in an Earning's upgrade cycle or

258
00:13:39,000 --> 00:13:41,920
Speaker 12: you know, they're beating and raising every quarter or every half.

259
00:13:42,320 --> 00:13:44,880
Speaker 12: And I think what we've seen for maybe the last

260
00:13:45,120 --> 00:13:48,120
Speaker 12: year and a half is that there has been companies

261
00:13:48,160 --> 00:13:50,000
Speaker 12: have been in an earnings down grade cycle. So you

262
00:13:50,000 --> 00:13:52,720
Speaker 12: saw the big tech companies, there was pressure on cloud,

263
00:13:52,840 --> 00:13:55,600
Speaker 12: there was pressure in a lot of different aspects of

264
00:13:55,640 --> 00:13:59,400
Speaker 12: the economy of the market. But then this last quarterly

265
00:13:59,440 --> 00:14:02,440
Speaker 12: earnings were actually a little bit better than expected, and

266
00:14:02,520 --> 00:14:04,679
Speaker 12: so we have made some changes in the portfolio around

267
00:14:04,760 --> 00:14:08,120
Speaker 12: that earnings outlook. But two areas that I'll call out

268
00:14:08,559 --> 00:14:11,320
Speaker 12: for the trajectory going forward. One would be big tech,

269
00:14:11,679 --> 00:14:14,520
Speaker 12: and you know, you saw over the last year a

270
00:14:14,520 --> 00:14:16,960
Speaker 12: lot of these companies get into earnings downgrade cycles, whether

271
00:14:17,000 --> 00:14:20,960
Speaker 12: it's Microsoft because of cloud or Amazon because of consumer Meta,

272
00:14:21,000 --> 00:14:22,920
Speaker 12: had a lot of different things going on, and those

273
00:14:22,960 --> 00:14:25,160
Speaker 12: companies have all turned the corner now or an earning's

274
00:14:25,200 --> 00:14:27,720
Speaker 12: upgrade cycle. So we own more of those companies and

275
00:14:27,760 --> 00:14:30,800
Speaker 12: more of them than we did twelve months ago. And

276
00:14:30,840 --> 00:14:33,080
Speaker 12: then the second thing which is developing is probably the

277
00:14:33,160 --> 00:14:35,440
Speaker 12: US consumer and there was some news on that last night,

278
00:14:35,480 --> 00:14:38,000
Speaker 12: particularly with lows coming out. You've seen a lot of

279
00:14:38,040 --> 00:14:42,080
Speaker 12: downgrades from US consumer or maybe not downgrades, but negative

280
00:14:42,080 --> 00:14:44,880
Speaker 12: commentary in the earnings releases, and that's something that we're

281
00:14:44,880 --> 00:14:45,760
Speaker 12: watching very closely.

282
00:14:45,880 --> 00:14:48,520
Speaker 1: Let's talk a little bit about big tech. Many investors

283
00:14:48,560 --> 00:14:51,920
Speaker 1: obviously last year worried about having long duration assets like

284
00:14:52,000 --> 00:14:54,800
Speaker 1: that with interest rates as high as they were, and

285
00:14:54,880 --> 00:14:57,120
Speaker 1: it seemed like coming into this year they were planning

286
00:14:57,160 --> 00:14:59,600
Speaker 1: for a pivot on the FED. We still haven't got

287
00:14:59,640 --> 00:15:02,920
Speaker 1: that yet, but the stocks have run. The comment that

288
00:15:02,960 --> 00:15:04,840
Speaker 1: I mentioned a few moments ago, if you heard the

289
00:15:04,840 --> 00:15:07,920
Speaker 1: beginning of our program, you talked about Savita SUPERMANI and

290
00:15:07,960 --> 00:15:10,920
Speaker 1: from Bank of America, who had been pretty bearish now

291
00:15:10,960 --> 00:15:13,560
Speaker 1: turning a little more bullish and making the point that

292
00:15:13,560 --> 00:15:16,760
Speaker 1: the big tech doesn't actually have to weaken a lot

293
00:15:17,120 --> 00:15:19,480
Speaker 1: if their duration risk you short. And I think what

294
00:15:19,520 --> 00:15:22,080
Speaker 1: she means by that is, if you're not such a

295
00:15:22,080 --> 00:15:25,359
Speaker 1: long duration asset, if you're starting to pay some dividends

296
00:15:25,400 --> 00:15:30,640
Speaker 1: and return capital to shareholders and cut costs so that

297
00:15:31,360 --> 00:15:35,560
Speaker 1: you're able to put forward better returns in the shorter term,

298
00:15:35,880 --> 00:15:37,720
Speaker 1: that they can still hold onto those games. Do you

299
00:15:37,800 --> 00:15:39,120
Speaker 1: see that happening in big tech?

300
00:15:39,240 --> 00:15:41,920
Speaker 12: Yeah, you've raised some really interesting points there. I don't

301
00:15:41,960 --> 00:15:45,640
Speaker 12: necessarily think it's a duration factor, but I think there

302
00:15:45,680 --> 00:15:48,240
Speaker 12: are some things that have changed in big tech which

303
00:15:48,640 --> 00:15:51,920
Speaker 12: will result in earnings upgrades more in the near medium term,

304
00:15:52,000 --> 00:15:54,720
Speaker 12: which is, you know, sort of consistent with a duration argument.

305
00:15:55,000 --> 00:15:56,280
Speaker 5: So a few things I'll call out.

306
00:15:56,400 --> 00:15:59,840
Speaker 12: One is AI AI or maybe at like peak AI

307
00:16:00,760 --> 00:16:03,520
Speaker 12: in the media and talking about it, but for certain

308
00:16:03,520 --> 00:16:05,520
Speaker 12: of the big tech stocks, it really is a game

309
00:16:05,640 --> 00:16:08,200
Speaker 12: changer versus where we were maybe middle of last year.

310
00:16:08,360 --> 00:16:11,280
Speaker 12: So Microsoft obviously with open AI and the implications for

311
00:16:11,360 --> 00:16:13,720
Speaker 12: chat GPT that you'll be able to see that in

312
00:16:13,760 --> 00:16:15,920
Speaker 12: their earnings in twenty twenty four, so that is sort

313
00:16:15,920 --> 00:16:19,000
Speaker 12: of like a near and present opportunity, whereas before it

314
00:16:19,040 --> 00:16:22,880
Speaker 12: was maybe longer term. Similarly, for Google, Google had its

315
00:16:22,920 --> 00:16:25,440
Speaker 12: Google Io day maybe two weeks ago, and I think

316
00:16:25,480 --> 00:16:28,360
Speaker 12: the market really changed their view on what generative AI

317
00:16:28,480 --> 00:16:31,360
Speaker 12: can do for Google's earnings in the near term. And

318
00:16:31,400 --> 00:16:35,120
Speaker 12: then you very rightly point out that these big tech companies,

319
00:16:35,120 --> 00:16:37,600
Speaker 12: for the first time since I can remember, have actually

320
00:16:37,640 --> 00:16:41,080
Speaker 12: started focusing on costs, and that's really important. Meta is

321
00:16:41,120 --> 00:16:43,960
Speaker 12: probably the best example there. The cost cutting the five

322
00:16:44,000 --> 00:16:47,840
Speaker 12: point five billion dollars is quite significant. And then also

323
00:16:47,840 --> 00:16:50,600
Speaker 12: in other companies you've seen layoffs which don't make a

324
00:16:50,720 --> 00:16:53,280
Speaker 12: huge impact on the bottom line, but it shows that

325
00:16:53,480 --> 00:16:57,160
Speaker 12: these companies are actually focused on costs to the extent

326
00:16:57,200 --> 00:16:59,840
Speaker 12: that they haven't been before. So I do agree with

327
00:17:00,440 --> 00:17:04,119
Speaker 12: you know, the the thesis that big tech can continue

328
00:17:04,119 --> 00:17:08,080
Speaker 12: to to continue to perform. Well, I will add one

329
00:17:08,080 --> 00:17:10,720
Speaker 12: other thing is about valuation. So you know, a lot

330
00:17:10,720 --> 00:17:14,040
Speaker 12: of times when people think about the technology sector and duration,

331
00:17:14,960 --> 00:17:17,359
Speaker 12: you know, those unprofitable tech companies where you have to

332
00:17:17,440 --> 00:17:19,960
Speaker 12: use some sort of DCF or some sort of very

333
00:17:19,960 --> 00:17:23,600
Speaker 12: extended valuation metric to justify the stock prices. That is

334
00:17:23,640 --> 00:17:25,520
Speaker 12: not the case at all for the you know, the

335
00:17:25,600 --> 00:17:28,040
Speaker 12: sort of feg Mans or the former fang Man's. Right now,

336
00:17:28,160 --> 00:17:30,840
Speaker 12: Google is training at sixteen times pe a few weeks ago.

337
00:17:30,960 --> 00:17:33,360
Speaker 12: Now it's at twenty. But these are still very reasonable

338
00:17:33,440 --> 00:17:35,639
Speaker 12: valuations where you don't need to fiddle with your whack

339
00:17:35,720 --> 00:17:37,159
Speaker 12: to justify the share prices.

340
00:17:37,720 --> 00:17:39,679
Speaker 13: So tell me something here, Mary's, well, you know, you

341
00:17:39,720 --> 00:17:43,080
Speaker 13: look at big tech and then you see, are they

342
00:17:43,160 --> 00:17:46,680
Speaker 13: morphing now into becoming more like utilities in a funny

343
00:17:46,680 --> 00:17:47,160
Speaker 13: sort of way.

344
00:17:47,760 --> 00:17:49,760
Speaker 12: No, I don't think so, because the growth is still there.

345
00:17:50,080 --> 00:17:52,720
Speaker 12: So generally, you know, conceptually, I would consider something a

346
00:17:52,800 --> 00:17:55,720
Speaker 12: utility where there's no growth and there's no more opportunities,

347
00:17:55,760 --> 00:17:57,360
Speaker 12: so they just become sort of dividend.

348
00:17:57,520 --> 00:17:59,000
Speaker 5: They're highly regulated.

349
00:17:58,560 --> 00:18:01,000
Speaker 12: And they become you know, end payers, and I think

350
00:18:01,040 --> 00:18:04,040
Speaker 12: we're far away from that sort of characterization for Big Tech.

351
00:18:04,320 --> 00:18:07,359
Speaker 12: As I mentioned before, AI is a huge growth driver

352
00:18:07,480 --> 00:18:10,200
Speaker 12: going forward. They still have high growth, and they're still

353
00:18:10,240 --> 00:18:14,560
Speaker 12: actually you know, finding internal projects, and without internal projects,

354
00:18:14,600 --> 00:18:16,720
Speaker 12: they're using that money to buy back shares that that's

355
00:18:16,880 --> 00:18:19,000
Speaker 12: you know, better than paying dividends. So I would say

356
00:18:19,040 --> 00:18:20,120
Speaker 12: no in terms of utility.

357
00:18:20,520 --> 00:18:22,520
Speaker 1: Okay, We've got to finish on this. We have this

358
00:18:22,640 --> 00:18:27,720
Speaker 1: omicron variant XBB that's seemingly sweeping through China, and one

359
00:18:27,720 --> 00:18:32,520
Speaker 1: of your picks is LVMH LVMH and Hermez and others

360
00:18:32,760 --> 00:18:36,879
Speaker 1: got whacked pretty good. Are you concerned about the recovery

361
00:18:36,880 --> 00:18:40,040
Speaker 1: in China? In say, forty seconds.

362
00:18:40,040 --> 00:18:41,440
Speaker 5: Yes, I am.

363
00:18:41,680 --> 00:18:45,000
Speaker 12: I think there's a lot of momentum baked into what's

364
00:18:45,080 --> 00:18:48,159
Speaker 12: going to happen in China. And you know, particularly in

365
00:18:48,200 --> 00:18:51,040
Speaker 12: Europe or for portfolio managers in Europe, they are very

366
00:18:51,040 --> 00:18:54,720
Speaker 12: strongly positioned in those luxury stocks because there's no big

367
00:18:54,760 --> 00:18:57,600
Speaker 12: tech in Europe and the China macro data has been

368
00:18:57,680 --> 00:19:00,440
Speaker 12: quite mixed. So I'm actually going to China this weekend

369
00:19:00,480 --> 00:19:02,359
Speaker 12: and I'm going to spend next week there getting an

370
00:19:02,359 --> 00:19:04,480
Speaker 12: on the ground view. But for right now, I'm probably

371
00:19:04,520 --> 00:19:06,760
Speaker 12: more concerned than I was three weeks ago.

372
00:19:06,760 --> 00:19:10,240
Speaker 1: Well, you better swing by Hong Kong and visit us then, Mary, Yes,

373
00:19:10,280 --> 00:19:13,840
Speaker 1: that's very bleach. Thanks for being on the show. Mary

374
00:19:13,840 --> 00:19:20,080
Speaker 1: Manning from Alfinity Investment Management. This is Bloomberg Daybreak Asia,

375
00:19:20,080 --> 00:19:22,680
Speaker 1: your morning brief on the stories making news from Hong

376
00:19:22,760 --> 00:19:24,760
Speaker 1: Kong to Singapore. And Wall Street.

377
00:19:24,760 --> 00:19:28,760
Speaker 2: Look for us on your podcast feed every day, on Apple, Spotify,

378
00:19:29,000 --> 00:19:30,960
Speaker 2: and anywhere else you get your podcasts.

379
00:19:31,000 --> 00:19:33,600
Speaker 1: You can also listen live each day on Bloomberg eleven

380
00:19:33,640 --> 00:19:36,000
Speaker 1: three to zero in New York, Bloomberg ninety nine to

381
00:19:36,040 --> 00:19:39,240
Speaker 1: one in Washington, Bloomberg one oh six to one in Boston,

382
00:19:39,560 --> 00:19:42,040
Speaker 1: and Bloomberg nine sixty in San Francisco.

383
00:19:42,080 --> 00:19:44,960
Speaker 2: Our flagship New York station is also available on your

384
00:19:45,000 --> 00:19:50,000
Speaker 2: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.

385
00:19:49,880 --> 00:19:53,080
Speaker 1: Plus listen coast to coast on the Bloomberg Business app,

386
00:19:53,359 --> 00:19:57,560
Speaker 1: serious XM Channel one nineteen, the iHeartRadio app, and on

387
00:19:57,600 --> 00:20:00,240
Speaker 1: Bloomberg dot Com. I'm Brian Curtis.

388
00:20:00,600 --> 00:20:03,040
Speaker 2: And I'm Doug Prisoner. Join us again tomorrow for all

389
00:20:03,080 --> 00:20:05,520
Speaker 2: the news you need to start your day right here

390
00:20:05,640 --> 00:20:09,080
Speaker 2: on Bloomberg Daybreak Asia