WEBVTT - Fed Officials See More Hikes, Buffett Boosts LNG Deal

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Doug Prisner and I'm Brian Curtis. Here are the

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<v Speaker 2>stories we're following today. Three FED officials saying that higher

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<v Speaker 2>interest rates will be needed to curb price Pressures's Cleveland

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<v Speaker 2>FED President Lorettemester in.

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<v Speaker 3>Order to ensure that inflation is on a sustainable timely

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<v Speaker 3>path back to two percent. My view is that the

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<v Speaker 3>fund rate will need to move up somewhat further from

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<v Speaker 3>its current level and then hold there for a while

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<v Speaker 3>as we accumulate more information on how the economy is evolving.

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<v Speaker 2>In the meantime, FED Vice Chairman of Supervision Michael Barr

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<v Speaker 2>said there is a bit of work to do to

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<v Speaker 2>achieve restrictive rates. Also, San Francisco FED President Mary Daly

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<v Speaker 2>said that a couple more rate hikes are appropriate this year,

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<v Speaker 2>and she thinks future moves by the Fed will depend

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<v Speaker 2>on incoming data.

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<v Speaker 4>Now.

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<v Speaker 2>Atlanta FED President Raphael Bostik, as has been the case

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<v Speaker 2>of late, was the outlier. He argued today that officials

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<v Speaker 2>can be patient and see how prior increases play out

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<v Speaker 2>in slowing the economy. FMC meets next on July twenty

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<v Speaker 2>fifth and twenty six.

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<v Speaker 1>Well at the same time today we have the major

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<v Speaker 1>banks in the US facing one of the biggest regulatory

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<v Speaker 1>overhauls since the financial crisis. Today we heard from the

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<v Speaker 1>FED Vice Chair of Supervision. He is Michael Barr, and

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<v Speaker 1>he laid out recommendations for the nation's biggest lenders. He

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<v Speaker 1>said higher capital requirements should apply to banks and bank

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<v Speaker 1>holding companies with more than one hundred billion dollars in assets,

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<v Speaker 1>and Bar went on to say he also wants to

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<v Speaker 1>change the way banks assess risk.

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<v Speaker 5>The proposal would require banks to use a standardized approach

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<v Speaker 5>for hard to model risk, which is appropriate in light

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<v Speaker 5>of the weaknesses that were exposed in the two thousand

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<v Speaker 5>and eight financial crisis, when many firms did not have

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<v Speaker 5>acceptable models for their risks.

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<v Speaker 1>That is Michael Barr, he is the FED Vice Chair

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<v Speaker 1>for Supervision. He went on to say the fed's annual

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<v Speaker 1>stress tests should be reconfigured to better capture dangers that

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<v Speaker 1>firms can be facing. All of the changes stem from

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<v Speaker 1>a month's long review to align US rules with a

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<v Speaker 1>out of international standards known as Basel three.

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<v Speaker 6>Now.

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<v Speaker 1>Bar went on to say the changes will only take

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<v Speaker 1>effect if they are proposed and approved by the FED,

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<v Speaker 1>the FDIC, and the Office of the Comptroller of the Currency.

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<v Speaker 2>To Corporate News, Berkshire Hathaway Energy has agreed to buy

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<v Speaker 2>Dominion Energy stake in a Maryland LNG export project for

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<v Speaker 2>three point three billion dollars. We get more from Bloomberg's

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<v Speaker 2>Charlie Pellett.

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<v Speaker 7>Berkshire says the deal will boost the company's limited partnership

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<v Speaker 7>ownership of the terminal to seventy five percent, while a

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<v Speaker 7>unit of Brookfield Infrastructure Partners holds the remaining twenty five percent.

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<v Speaker 7>Berkshire first took a stake in the plant, with an

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<v Speaker 7>annual export capacity of five point two five million tons

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<v Speaker 7>in twenty twenty. The deal will give Berkshire control of

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<v Speaker 7>one of just seven operational US facilities, the connect Sport LNG,

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<v Speaker 7>at a time when the fuel has assumed an increased

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<v Speaker 7>economic and geopo polytical significance in New York. Charlie Pellett

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<v Speaker 7>Bloomberg Daybreak Asia.

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<v Speaker 1>Well, some of the big tech companies are drawing protest

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<v Speaker 1>as they try to shape a new US trade deal

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<v Speaker 1>with countries in the Indo Pacific. We have more from

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<v Speaker 1>Bloomberg's Juan Wong In Hong Kong.

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<v Speaker 8>Tech companies including Alphabet and IBM will take part in

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<v Speaker 8>a fourth round of trade talks in Busan, South Korea,

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<v Speaker 8>this week, their giving input on the drafting of the

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<v Speaker 8>Indo Pacific Economic Framework. Activists are worried the companies will

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<v Speaker 8>use the agreement as a backdoor to heading off domestic

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<v Speaker 8>regulation and the enforcement of antitrust laws. Corporations have often

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<v Speaker 8>helped guide trade discussions in the past, but activists say

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<v Speaker 8>the big tech companies have gone too far in trying

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<v Speaker 8>to get car fouts, and in some cases have held

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<v Speaker 8>closed door meetings for negotiators. In Hong Kong, Joan Wong,

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<v Speaker 8>Bloomberg Day Briga Asia.

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<v Speaker 2>China is stepping up support for its ailing property market.

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<v Speaker 2>Bloomberg's Bunnyao has the story from Hong Kong.

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<v Speaker 9>In China, regulators have stepped up pressure on financial institutions

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<v Speaker 9>to east terms for property companies. They're encouraging negotiations to

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<v Speaker 9>extend relief measures through next year. China's real estate crisis

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<v Speaker 9>is struggling to recover. Home sales resumed declines in June

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<v Speaker 9>after a brief rebound earlier this year, and that's adding

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<v Speaker 9>pressure to dead layden developers. The regulators said the relief

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<v Speaker 9>measures are aimed at ensuring the delivery of homes that

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<v Speaker 9>are under construction in Hong Kong. I'm Bonnie al Bloomberg,

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<v Speaker 9>day Break Asia.

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<v Speaker 2>I'm Brian Curtis along with Doug Christner and Doug, you know,

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<v Speaker 2>there's a big difference between using a sledgehammer to crush

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<v Speaker 2>inflation and trying hard to thread the needle for a

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<v Speaker 2>soft landing. Now, the pause that we're in now sort

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<v Speaker 2>of leans on the ladder. But I wonder whether or

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<v Speaker 2>not we're about ready to see I mean, given the

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<v Speaker 2>audio that we just heard from some Fed policy makers,

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<v Speaker 2>we're about ready to switch with the FED moving to

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<v Speaker 2>the former and getting much more aggressive. And what does

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<v Speaker 2>that mean for markets? What does that mean for jobs?

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<v Speaker 1>Very strange as you heard from Mary Daily, and she

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<v Speaker 1>basically reflected what was or captured what was reflected in

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<v Speaker 1>the dot plot from the last meeting, another fifty basis

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<v Speaker 1>points of tightening. But look the price action in the

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<v Speaker 1>bond market today with the yields dropping. And I noted

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<v Speaker 1>earlier that the New York Fed's measure of inflation expectations

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<v Speaker 1>going out one year was down to a rate of

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<v Speaker 1>three point eighty three percent. So directionally things are moving lower.

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<v Speaker 1>We'll see how much confirmation we get on Wednesday with

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<v Speaker 1>the CPI print. But you're right, it's kind of very

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<v Speaker 1>confounding what the FED is saying and how markets are reacting.

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<v Speaker 2>And isn't it so interesting that we still have this

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<v Speaker 2>inflation issue with the US and now we're dealing with

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<v Speaker 2>deflation issues in China. It's completely the opposite story, And

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<v Speaker 2>so can we find some parallels? Well, if you think

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<v Speaker 2>about this, Chinese policymakers, they stuck too long with COVID

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<v Speaker 2>zero and they put in motion a deflationary force on

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<v Speaker 2>the economy that even though they switched down, it's been

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<v Speaker 2>what seven months, and they can't turn it around. So

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<v Speaker 2>once you get this kind of direction going, it's very,

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<v Speaker 2>very difficult to make wholesale changes to the direction of

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<v Speaker 2>an economy as complex and big and you know, multifaceted

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<v Speaker 2>as you see with the US or Chinese economy. So

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<v Speaker 2>I don't know, it seems like the Chinese economy is

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<v Speaker 2>now sliding into deflation and they're struggling to try to

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<v Speaker 2>turn things around.

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<v Speaker 1>Boy they are. Indeed, I think nine straight months for

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<v Speaker 1>factory gate deflation on the mainland, and I want to

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<v Speaker 1>touch very quickly on the Berkshire Hathway deal that we

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<v Speaker 1>unpacked a moment ago, buying the stake in this Maryland

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<v Speaker 1>liquefied natural gas project. It's known as Cove Point LNG

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<v Speaker 1>and it's fully contracted on a long term basis to

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<v Speaker 1>two Japanese companies, Tokyo Gas and Sumi Toomol Corporation. So

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<v Speaker 1>that's consistent with the bet that Warren Buffett has been

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<v Speaker 1>making on Japan.

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<v Speaker 2>Yeah, absolutely strong bet on Japan. And you wonder whether

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<v Speaker 2>or not ultimately, you know, China will enter the picture

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<v Speaker 2>on something like this too. Now we need to get

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<v Speaker 2>into the details and the capabilities, and because a lot

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<v Speaker 2>of these export terminals, you know that they have some limitations.

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<v Speaker 2>But it is a very interesting story. It's time for

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<v Speaker 2>Global News. Turkey has agreed to have its parliament vote

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<v Speaker 2>on Sweden's membership bid for NATO at back to with

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<v Speaker 2>Global News in the nine to sixty news room in

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<v Speaker 2>San Francisco, ed.

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<v Speaker 6>Yeah, major turnaround today, Brian source to say Turkey received

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<v Speaker 6>assurances on some key demands, including Stockholm's approach to supporters

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<v Speaker 6>of Kurdish separatists operating in its territory. Now NATO Secretary

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<v Speaker 6>General Jahan Stoltenberg says, an issue important to all allies.

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<v Speaker 10>It's important that we stand together in the fight against tourism,

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<v Speaker 10>but at the same time it's also important dot we

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<v Speaker 10>address the legitimate security concerns of all allies that don't

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<v Speaker 10>want to see Sweden as a member of the Alliance

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<v Speaker 10>as soon as possible.

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<v Speaker 6>Now, as I said, there's a turnaround today for Turkey.

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<v Speaker 6>Earlier in the day, President recept high Up Airedwan was

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<v Speaker 6>demanding Turkey be given assurances that it would be considered

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<v Speaker 6>for EU membership. Well, sources say it got those assurances

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<v Speaker 6>and the process would be sped up, as well the

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<v Speaker 6>reports that it got US assurances of F sixteen sales.

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<v Speaker 6>The White House has issued a statement saying President Biden

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<v Speaker 6>is standing by to work with air Dewan and enhancing

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<v Speaker 6>defense and deterrence in the Euro Atlantic area. So with

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<v Speaker 6>a major feat already accomplished now for NATO, Bloomberg's Margaret

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<v Speaker 6>Collins on Balance of Power says, for Ukraine.

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<v Speaker 11>Certainly, the overhang of this meeting is, you know, as

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<v Speaker 11>the NATO discussions keep going on, is like where do

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<v Speaker 11>we go from here with this now very long conflict

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<v Speaker 11>between and war between Russia and the Ukraine, and where

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<v Speaker 11>do leaders go and how much longer are they ready

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<v Speaker 11>to support this?

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<v Speaker 6>As well? The Hill is reporting that presidents of Biden

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<v Speaker 6>and Zelenski will meet on the sidelines of NATO as

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<v Speaker 6>well during the meetings, pomp and ceremony at Windsor Castle

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<v Speaker 6>today as US President Joe Biden meets with King Charles. Yeah,

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<v Speaker 6>Biden taking part in what's being called a climate engagement

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<v Speaker 6>with King Charles on his visit to Windsor, Climate Envoy

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<v Speaker 6>John Kerry says, the message is very clear when scientists.

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<v Speaker 4>Are telling us that they are terrified by what they're seeing,

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<v Speaker 4>and when we hear most same scientists telling us that

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<v Speaker 4>we are in uncharted territory.

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<v Speaker 6>Now, Kerry says, a commitment to figure out how to

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<v Speaker 6>attack and invest in the fighting climate change. And then

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<v Speaker 6>a meeting for Biden with UK Prime Minister Rishu Sunak

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<v Speaker 6>as they prepare for the NATO summit. This is soun a.

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<v Speaker 12>We head from here to NATO and Vilnius.

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<v Speaker 5>Well, we stand as two of the firmest.

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<v Speaker 12>Allies in that alliance, and I know want to do

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<v Speaker 12>everything we can to strengthen your Atlantic security.

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<v Speaker 6>Yeah, Sunak says continue also working on their bilateral agreement

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<v Speaker 6>on North Atlantic security. China has issued an unusual warning

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<v Speaker 6>to its citizens traveling to the US. It says beware

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<v Speaker 6>of rap meant by American law enforcement. Quote Chinese nationals

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<v Speaker 6>who travel to the US should be more vigilant and

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<v Speaker 6>beware of falling into US snares and arrest entrapment. China

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<v Speaker 6>regularly reminds its citizens of gun and racial violence in

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<v Speaker 6>the US, but now rarely arbitrary detention. And from Vermont

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<v Speaker 6>to North Carolina cruise making sure that people are safe

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<v Speaker 6>from the torrential rain that hit the area over the weekend.

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<v Speaker 6>Kathy Hokel, the governor, saying it's a one in a

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<v Speaker 6>thousand year cycle and the horrific heat that has plagued

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<v Speaker 6>the US Southwest forecast to last at least into the weekend.

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<v Speaker 6>Global news power by more than twenty seven hundred journalists

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<v Speaker 6>and analysts in over one hundred twenty countries. In San Francisco,

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<v Speaker 6>I'm Ed Baxter, and this is Bloomberg.

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<v Speaker 2>I'm Brian Curtis along with Doug Chrisner. Our guest is

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<v Speaker 2>Brian frank Cio at Frank Funds to take a look

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<v Speaker 2>at the markets, Brian. As Doug mentioned, with yields moving

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<v Speaker 2>lower this morning, is that the market expressing a little

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<v Speaker 2>bit of fear that the Fed may go too far

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<v Speaker 2>and thus you bring sort of recession more clearly into

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<v Speaker 2>the picture.

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<v Speaker 12>Oh hi, Brian, thanks for having me. Yes, I agree

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<v Speaker 12>with that statement absolutely. I think any sustained move lowers

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<v Speaker 12>just one day in rates here could definitely show that

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<v Speaker 12>the market is much more worried about economic activity, a

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<v Speaker 12>lack of growth, and the Fed perhaps is definitely going

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<v Speaker 12>too far.

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<v Speaker 1>It's going to be very interesting to take a look

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<v Speaker 1>at these earnings reports in the coming week. The big

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<v Speaker 1>banks begin on Friday, so it's JP Morgan, City Group, Wells.

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<v Speaker 1>Bloomberg's Gina Martin Adams was saying today there's earnings risk here,

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<v Speaker 1>particularly among the financials where top line growth may weeken.

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<v Speaker 1>How do you feel about the banks these days?

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<v Speaker 12>I would one hundred percent agree with that.

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<v Speaker 7>Yeah.

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<v Speaker 12>If you look at the Dallas Fed Banking Condition survey

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<v Speaker 12>that came out just a few weeks ago, it just

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<v Speaker 12>showed across the board tightening in credit. Not only are

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<v Speaker 12>the banks reluctant to increase the support live loans, but

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<v Speaker 12>the actual demand for credit is going down as well,

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<v Speaker 12>so the interest rates are definitely biting here, and that

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<v Speaker 12>that's really going to make for a tough situation on

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<v Speaker 12>earnings for banks.

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<v Speaker 2>I guess it puts a lot of focus on the

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<v Speaker 2>forecasts that we get from companies during earnings, and obviously

0:12:20.280 --> 0:12:24.199
<v Speaker 2>with the banks, it's difficult for them to see exactly,

0:12:24.679 --> 0:12:28.040
<v Speaker 2>you know, what will happen going forward. But with other companies,

0:12:28.080 --> 0:12:29.760
<v Speaker 2>do you think the picture might be clearer?

0:12:31.200 --> 0:12:35.880
<v Speaker 12>I think just you know, even looking at Apple, it's

0:12:35.920 --> 0:12:38.880
<v Speaker 12>training at thirty times earnings and earnings are actually down,

0:12:39.040 --> 0:12:42.240
<v Speaker 12>so it's not so much what they're going to report

0:12:42.240 --> 0:12:44.800
<v Speaker 12>and what the expectations are, which you know, certainly we

0:12:44.880 --> 0:12:47.840
<v Speaker 12>have to look at it's already what's priced in. You know,

0:12:47.880 --> 0:12:51.760
<v Speaker 12>these valuations are extremely high, especially on the megacap tech stocks.

0:12:51.840 --> 0:12:57.200
<v Speaker 12>So I find it very difficult to believe that, you know,

0:12:57.280 --> 0:13:00.640
<v Speaker 12>the market is kind of the it's kind of price

0:13:00.679 --> 0:13:03.640
<v Speaker 12>for perfection here. I really think if there's any kind

0:13:03.679 --> 0:13:06.480
<v Speaker 12>of weakness up ahead, any kind of forward guidance that's

0:13:06.520 --> 0:13:09.520
<v Speaker 12>lower here, there's definitely a lot of thin air underneath.

0:13:10.200 --> 0:13:12.640
<v Speaker 12>Because we've come so far, you know, it's been probably

0:13:12.679 --> 0:13:14.840
<v Speaker 12>the best first half of the Nasdaq in its history.

0:13:14.880 --> 0:13:18.120
<v Speaker 12>It's that's usually an environment you would see when the

0:13:18.120 --> 0:13:20.920
<v Speaker 12>economy is growing really well, in credit is increasing. But

0:13:22.120 --> 0:13:24.720
<v Speaker 12>I think the equities are certainly looking at a different

0:13:24.760 --> 0:13:26.920
<v Speaker 12>market than bonds are looking at.

0:13:27.280 --> 0:13:31.120
<v Speaker 1>So when you're talking about inequity trade, I'm sorry to interrupt, Brian.

0:13:31.200 --> 0:13:33.320
<v Speaker 1>So when you talk about inequity trade, is the move

0:13:33.440 --> 0:13:35.720
<v Speaker 1>just to become defensive across the board.

0:13:36.480 --> 0:13:39.280
<v Speaker 12>I'm certainly there. In our mid cap fund, the Frank

0:13:39.400 --> 0:13:43.679
<v Speaker 12>Value Fund, we've gotten mostly out of cyclicals and we're

0:13:43.760 --> 0:13:46.080
<v Speaker 12>much more in defensives and that served us well. In

0:13:46.120 --> 0:13:48.840
<v Speaker 12>twenty twenty two, the fund was actually up and we're

0:13:48.880 --> 0:13:51.160
<v Speaker 12>one of the only two percent of funds that's actually

0:13:51.280 --> 0:13:55.480
<v Speaker 12>up last year and up this year. So defenses are defensive.

0:13:55.480 --> 0:13:58.360
<v Speaker 12>Stocks are still paying you. We're finding lots of good

0:13:58.400 --> 0:14:02.280
<v Speaker 12>dividend yields. We're finding these defensive stocks are being shareholder friendly,

0:14:02.320 --> 0:14:05.600
<v Speaker 12>so they're buying back shares, and because their valuations are lower,

0:14:05.640 --> 0:14:08.040
<v Speaker 12>they're able to buy back a material amount of shares.

0:14:08.160 --> 0:14:10.880
<v Speaker 12>Unlike a big tech company, say that's you know, rallied

0:14:10.920 --> 0:14:13.080
<v Speaker 12>fifty percent this year. It's just a lot more expensive

0:14:13.080 --> 0:14:19.000
<v Speaker 12>for those guys. So it's odd with seemingly consensus expectations

0:14:19.120 --> 0:14:21.840
<v Speaker 12>showing a recession in the second half, you would think

0:14:21.920 --> 0:14:24.880
<v Speaker 12>defensive stocks would be more expensive than the market. But

0:14:25.040 --> 0:14:28.520
<v Speaker 12>we're able to fill out a portfolio with defensives that

0:14:28.560 --> 0:14:30.880
<v Speaker 12>are cheaper than the market. So it doesn't make a

0:14:30.920 --> 0:14:33.280
<v Speaker 12>lot of sense. But you get to hang on and

0:14:33.360 --> 0:14:37.360
<v Speaker 12>get those dividends and share repurchases and wait for perhaps

0:14:37.440 --> 0:14:38.880
<v Speaker 12>sentiment to change on equities.

0:14:39.280 --> 0:14:44.000
<v Speaker 2>So you like utilities obviously, what about consumer staples? Some

0:14:44.080 --> 0:14:47.680
<v Speaker 2>of those are even more expensive than utilities, with pees

0:14:47.800 --> 0:14:50.360
<v Speaker 2>up there in the twenty eight, twenty nine to thirty range,

0:14:50.440 --> 0:14:52.760
<v Speaker 2>which if you think about it, for a consumer staple

0:14:52.840 --> 0:14:55.200
<v Speaker 2>like a proper and gamble or Coca Cola, these types

0:14:55.240 --> 0:14:56.560
<v Speaker 2>of companies, is pretty high.

0:14:56.800 --> 0:14:59.720
<v Speaker 12>Oh yeah, certainly. I really don't think this is the

0:14:59.760 --> 0:15:02.800
<v Speaker 12>mar to blanket by, you know, an ETF and utilities

0:15:02.880 --> 0:15:05.160
<v Speaker 12>or consumer staples, both of them, like you said, are

0:15:05.200 --> 0:15:08.600
<v Speaker 12>over twenty times earnings, and traditionally, if we end up

0:15:08.640 --> 0:15:12.080
<v Speaker 12>in a bad bear market because of a recession, those

0:15:12.160 --> 0:15:15.000
<v Speaker 12>valuations that come down, so you really have to stock

0:15:15.080 --> 0:15:18.760
<v Speaker 12>pick there. I prefer more of the middle of the market,

0:15:18.800 --> 0:15:22.400
<v Speaker 12>kind of the midcaps, you're finding some of these that

0:15:22.440 --> 0:15:25.440
<v Speaker 12>are ignored. Perhaps they're entering into the indices and the

0:15:25.480 --> 0:15:28.760
<v Speaker 12>ets and getting some flows that way. But you can

0:15:28.800 --> 0:15:34.200
<v Speaker 12>definitely find low double sorry like price earnings ratio is

0:15:34.200 --> 0:15:36.360
<v Speaker 12>in like the ten to twelve range in some of

0:15:36.400 --> 0:15:40.280
<v Speaker 12>these MidCap utilities and consumer staples. And you can also

0:15:40.320 --> 0:15:42.960
<v Speaker 12>find things that are recession proof there as well, you know,

0:15:43.080 --> 0:15:46.120
<v Speaker 12>companies that do well in a recession or able to

0:15:47.200 --> 0:15:49.320
<v Speaker 12>resist declining consumer spending.

0:15:49.400 --> 0:15:52.000
<v Speaker 1>So when you survey global markets, Brian, what are you seeing?

0:15:52.040 --> 0:15:54.960
<v Speaker 1>I mean, we talked earlier about the difficulties of facing

0:15:55.000 --> 0:15:57.520
<v Speaker 1>the Chinese economy. Right now we know what the situation

0:15:57.640 --> 0:16:01.160
<v Speaker 1>in Europe seems to be. Japan's seems to be enjoying

0:16:01.800 --> 0:16:05.480
<v Speaker 1>a bright moment here in terms of equity market price action. Yes,

0:16:05.520 --> 0:16:09.440
<v Speaker 1>we're all from three decade highs just a bit, but

0:16:09.640 --> 0:16:11.840
<v Speaker 1>there seems to be a lot of positivity in terms

0:16:11.840 --> 0:16:14.800
<v Speaker 1>of momentum, and clearly the economy seems to be forming

0:16:15.200 --> 0:16:18.560
<v Speaker 1>a little bit better. Are you apt to put any

0:16:18.560 --> 0:16:19.640
<v Speaker 1>money to work offshore?

0:16:20.120 --> 0:16:24.400
<v Speaker 12>Yes, we've actually we had a great run in One

0:16:24.440 --> 0:16:26.840
<v Speaker 12>of the frank value funds holding is Coca Cola FEMSA,

0:16:26.880 --> 0:16:29.400
<v Speaker 12>which is the largest coke distributor in the world, and

0:16:29.480 --> 0:16:33.440
<v Speaker 12>their markets are primarily Mexico and Brazil, and kind of

0:16:33.480 --> 0:16:37.320
<v Speaker 12>following that company down the rabbit hole, Brazilian assets have

0:16:37.440 --> 0:16:40.240
<v Speaker 12>just been wiped out, you know, because of all the

0:16:40.240 --> 0:16:43.120
<v Speaker 12>political fears going on there. But we were able to

0:16:43.160 --> 0:16:46.520
<v Speaker 12>actually find another company we haven't disclosed yet in Brazil.

0:16:47.280 --> 0:16:50.480
<v Speaker 12>So there's a good chunk of the fund that's invested

0:16:50.520 --> 0:16:54.120
<v Speaker 12>in Brazil because the valuations are just so bombed out.

0:16:54.240 --> 0:16:56.360
<v Speaker 12>But if you look at the global picture, and I

0:16:56.400 --> 0:17:01.160
<v Speaker 12>think that's what Buffet is seeing in Japan, the companies

0:17:01.200 --> 0:17:07.199
<v Speaker 12>that are able to provide resources to Japan, specifically being Brazil,

0:17:07.359 --> 0:17:10.280
<v Speaker 12>a big producer there, are actually in a great position

0:17:10.400 --> 0:17:15.240
<v Speaker 12>because we're not building enough commodity supply even for the

0:17:15.280 --> 0:17:17.600
<v Speaker 12>Green Revolution. A lot of that stuff runs on copper

0:17:17.640 --> 0:17:20.200
<v Speaker 12>and steel. So Brazil, I think, is in a great

0:17:20.240 --> 0:17:23.960
<v Speaker 12>spot because the expectations are so low there, but they're

0:17:24.040 --> 0:17:27.760
<v Speaker 12>still in a phenomenal position with their riches and their resources.

0:17:27.560 --> 0:17:32.399
<v Speaker 2>Just briefly, probably the last question, could could you see

0:17:32.680 --> 0:17:37.320
<v Speaker 2>earnings actually kind of troth in this next quarter or so,

0:17:38.040 --> 0:17:40.560
<v Speaker 2>and you know, if you start to see improvement there,

0:17:40.640 --> 0:17:44.840
<v Speaker 2>then the valuations don't look so high. Could that ensue?

0:17:45.200 --> 0:17:47.960
<v Speaker 12>Well, anything could happen. That's why you don't make a

0:17:48.000 --> 0:17:50.840
<v Speaker 12>market call. That's why we try and stay fully invested

0:17:50.920 --> 0:17:54.600
<v Speaker 12>most of the time. But I just think the expectations,

0:17:54.680 --> 0:17:57.000
<v Speaker 12>even if we do get some surprises on the upside

0:17:57.000 --> 0:17:59.720
<v Speaker 12>on earnings, I think the expectations are there for surprises.

0:18:00.400 --> 0:18:04.600
<v Speaker 12>We saw on Nvidia beat expectations by fifty percent. That's

0:18:04.640 --> 0:18:07.080
<v Speaker 12>always one of the largest beats I ever saw last quarter,

0:18:07.200 --> 0:18:09.640
<v Speaker 12>so I think the analysts are starting to catch up

0:18:09.680 --> 0:18:14.240
<v Speaker 12>and everybody's kind of excited. So I'm much more in

0:18:14.280 --> 0:18:17.080
<v Speaker 12>the camp of disappointment. But of course we could always

0:18:17.080 --> 0:18:19.960
<v Speaker 12>surprise on the upside. A lot of this stuff is lagging.

0:18:20.359 --> 0:18:22.720
<v Speaker 12>Earnings are quoted in nominal terms, so we still have

0:18:22.760 --> 0:18:27.120
<v Speaker 12>some inflation. So definitely anything could happen. But the expectations

0:18:27.160 --> 0:18:28.200
<v Speaker 12>to me seem pretty high.

0:18:29.119 --> 0:18:31.920
<v Speaker 2>This is Bloomberg Daybreak Asia, your morning brief on the

0:18:32.040 --> 0:18:35.679
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0:18:35.760 --> 0:18:38.959
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