Speaker 1: This is Bloomberg Daybreak Asia, but it is Tuesday February
Speaker 1: in Hong Kong, Monday February in New York and coming
Speaker 1: up today, the world's biggest minor b HP has cut
Speaker 1: its dividend after China's slowdown drove down b HPAs profit.
Speaker 1: Top Chinese scientists sketch out plans to circumvent US chip
Speaker 1: sanctions for the first time, and Hong Kong outlines a
Speaker 1: plan to allow retail investors to trade crypto coins. Biden
Speaker 1: surprise visit to Ukraine. China publishes a report on what
Speaker 1: it says is the US plan to dominate global public opinion.
Speaker 1: Turkey hit by another large quake. I'm at Baxter with
Speaker 1: Global News. That's all straight ahead on Bloomberg Daybreak Asia,
Speaker 1: the business news you need to start your day, and
Speaker 1: just one fifteen minute podcast available on Apple, Spotify, the
Speaker 1: Bloomberg Business App, and everywhere you get your podcasts. Good morning,
Speaker 1: I'm Brian Curtis and I'm Dak Krisner. Here are the
Speaker 1: stories were following today. Very interesting to take a look
Speaker 1: at BHP group. Here the world's biggest minor. It is
Speaker 1: slashing its dividend. Let's get the story from Bloomberg's Richard Salama,
Speaker 1: BHP will pay out ninety cents per share. That's down
Speaker 1: from last year's record of one dollar fifty. This comes
Speaker 1: as BHP commodities like iron, ore and copper slumped during
Speaker 1: the second half of the year. This drove a decline
Speaker 1: in b HP's half year profit. Prices were impacted by
Speaker 1: China's economic slowdown and hawk is policy from central banks.
Speaker 1: The world's mining giants have also been hurt by cost
Speaker 1: inflation on energy, labor, and other inputs. Even so, b
Speaker 1: HbCO Mike Henry says he's positive about demand looking ahead,
Speaker 1: Henry saying he's expecting strengthening activity in China to be
Speaker 1: a major driver in Hong Kong. I'm Richard salamat the
Speaker 1: Bloomberg day Break Asia. We go to China next, where
Speaker 1: some of the country's top scientists have outlined a plan
Speaker 1: to circumvent US sanctions on semiconductors. That's or from Bloomberg's
Speaker 1: Anabel Drulers. Senior academics Lord Jun Way and Lee shun
Speaker 1: Shin say Beijing should gather patents that govern the next
Speaker 1: generation of chip making. The patents would run from Nobel
Speaker 1: materials to new techniques. The scientists contributed their comments to
Speaker 1: the Chinese Academy of Sciences. The article offers a rare
Speaker 1: glimpse into how Beijing approaches hostilities from the U S
Speaker 1: over semiconductors. It also hints at how Beijing might react
Speaker 1: in the future. So far, Chinese officials have refrained from
Speaker 1: discussing countermeasures to US actions, reportedly even in closed door
Speaker 1: meetings in Hong Kong. I'm Annabel Rulers Bloomberg Daybreak Asia
Speaker 1: Hong Kong is taking a major step toward its goal
Speaker 1: of becoming a crypto hub. That story from Bloomberg's yvon Man.
Speaker 1: Hong Kong has outlined a plan to let retail investors
Speaker 1: trade larger digital tokens on exchanges licensed by the Securities
Speaker 1: of Futures Commission. In a consultation paper, the regulators said
Speaker 1: safeguards such as knowledge tests, risk profiles, and reasonable limits
Speaker 1: on exposed will be put in place. A consultation period
Speaker 1: on virtual asset trading regulation has begun and will end
Speaker 1: on March thirty one. The objective is to allow retail
Speaker 1: trading in the new licensing regime for crypto exchanges due
Speaker 1: on June one. We hear Bitcoin and ether, the two
Speaker 1: biggest digital assets by market value, are likely to be
Speaker 1: listed by Hong Kong platforms. I mean on Man, Bloomberg,
Speaker 1: Daybreak Asia. Well. In the U S. A federal regulator
Speaker 1: has asked Tesla for more information about one of its
Speaker 1: vehicles being involved in a fatal crash in the San
Speaker 1: Francisco Bay area. We have more from Bloomberg Scott Car.
Speaker 1: The U s National Highway Traffic Safety Administration reached out
Speaker 1: to Tesla after the incident in Contra Costa County this weekend.
Speaker 1: County fire officials say at Tesla hit one of its
Speaker 1: trucks that was blocking lanes while responding to an earlier accident,
Speaker 1: and it's not clear whether the driver, who was pronounced
Speaker 1: dad of the scene was using the Tesla's autopilot feature.
Speaker 1: The NHTSA or NITZA has spent the last eighteen months
Speaker 1: in investigating how Tesla's autopilot system handles crash scenes. It
Speaker 1: has two active investigations into possible autopilot defects. Last week,
Speaker 1: Tesla recalled almost three hundred sixty three thousand cars that
Speaker 1: have full self driving beta software installed. The company says
Speaker 1: that its recall notice the feature could violate traffic laws
Speaker 1: before drivers are able to intervene. I'm Scott Carr, Bloomberg
Speaker 1: Daybreak Asia. From Home Depot to Walmart, The biggest US
Speaker 1: retailers are about to grab the earning spotlight. The story
Speaker 1: from Bloomberg, Susanna Palmer. The results this week will provide
Speaker 1: investors with crucial insight into consumer demand, the path of
Speaker 1: economic growth, and Corporate America's profitability. The group doesn't have
Speaker 1: nearly the influence of big tech in terms of sway
Speaker 1: over the broader market, but the companies will be closely watched,
Speaker 1: as consumer discretionary shares are the year's top performing cohort
Speaker 1: in the SMP five hundred index, this after getting battered
Speaker 1: in twenty two on rising inflation and smolen inventories. Susanna Palmer,
Speaker 1: Bloomberg Daybreak. Yeah, Bryan Curtis and Chrisoner Paul Allen coming
Speaker 1: up shortly, and we'll get to our guest, Chuck Camello
Speaker 1: in a few moments. From SX Financial Services, Doug, the
Speaker 1: b HP story is kind of interesting and that it
Speaker 1: might it might be a microcosm of what's happening with
Speaker 1: the global economy. Dismal second half last year, profits down
Speaker 1: thirty two. China was more or less closed, the central
Speaker 1: banks were obviously quite aggressive, and commodity prices dropped. You know,
Speaker 1: we still have a bear market in commodities down the
Speaker 1: bloomberg of commodity index from last summer. But now China
Speaker 1: has reopened and that changes everything. Uh, And it's just
Speaker 1: it's just curious. We don't know how soon this will happen.
Speaker 1: But does that restoke optimism and growth perhaps, But you
Speaker 1: have to look at the inflation component of what BHP
Speaker 1: is saying, they're dealing with rising cost and Brian I
Speaker 1: was struck by what ed Yar Denny of yard Any
Speaker 1: Research is saying he's got a fort chance of a
Speaker 1: soft landing in the US. I was struck by that
Speaker 1: are Denny saying that basically in this scenario, inflation moderates,
Speaker 1: which at this point seems hard to believe. Treasury bond
Speaker 1: yields remain below last year's peak. And get this, the
Speaker 1: SNP five dred ends the year at a new high. Yeah,
Speaker 1: and he's widely followed obviously, Doug Um. It's a real
Speaker 1: conundrum here. Um. Even though growth looks a little better
Speaker 1: based on the data we've seen of late, it looks
Speaker 1: like it'll be interest rates higher for longer. There's no
Speaker 1: denying that inflation is serving as very sticky, and as mentioned,
Speaker 1: we'll put that to Chuck Camello. Coming up now, it's
Speaker 1: time for Global News. US President Joe Biden's surprise visit
Speaker 1: to Ukraine is in the hopes of rallying new pledges
Speaker 1: of help from European allies for Ukraine. At Baxter has
Speaker 1: Global News in the newsroom at San Francisco ed, Yeah,
Speaker 1: that's a look forward, Brian. You're right, historic trip to
Speaker 1: mark one year of Russian invasion and to meet with
Speaker 1: President of Avlatimer's landscape. Keith stands and Ukraine stands, the
Speaker 1: democracy stands, the Americans stands with you, and the world
Speaker 1: stands with you, saying Ukraine has captured a part of
Speaker 1: his heart, and he said Russia cannot be allowed to
Speaker 1: even win try to win the war. Young town of
Speaker 1: Russians are fleeing at tens of thousands, not wanting to
Speaker 1: come back to Russia. Has Zelenski addressed the gathering, saying
Speaker 1: that he extended words of gratitude personally to President Biden
Speaker 1: and to his team to Congress and to all US people.
Speaker 1: Biden promised an additional sixty million dollars in military aid,
Speaker 1: and in Poland will meet with Eastern European leaders to
Speaker 1: make sure they're all on the same page. Now, there
Speaker 1: is a large list of comments and responses. Today. In
Speaker 1: an interview with South China Morning Post, Lensky War in
Speaker 1: China of becoming allies with Russia against Ukraine, saying it
Speaker 1: would bring on a world war, and the e U
Speaker 1: s Joseph Burrows says that China Counselor Wang Ye and
Speaker 1: their meeting said Wang told him that China has no
Speaker 1: lands to arm Russia and that it will convince the
Speaker 1: world it is a neutral actor and wants to broker peace. Shinhwa, meanwhile,
Speaker 1: is published a four thousand word piece criticizing the US
Speaker 1: and everything from war policy to culture, and saying it
Speaker 1: will write a plan for peace. The article called US
Speaker 1: Hedgemony and its Perils. Wang's next stop is Russia. The
Speaker 1: Kremlin says a meeting with President Vladim Raputin has not
Speaker 1: been excluded. Now. This leads US Secretary of State Anthony
Speaker 1: Blinkoln to repeat the warning about bringing lethal weapons in
Speaker 1: to help Russia in the war. China understands what's uh,
Speaker 1: what's at risk, where to proceed with providing material support
Speaker 1: of that kind to to Russia and Blincoln says the
Speaker 1: concerns are real and in responds China's Foreign Ministry spokesman
Speaker 1: at Juan wam Band, saying that China won't accept any
Speaker 1: finger pointing from the US over its relations with Russia.
Speaker 1: Turkey has been hit by a new six point four
Speaker 1: magnitude Earth Week today. It has killed three people injured
Speaker 1: more than two hundred in the same area that was
Speaker 1: devastated two weeks ago. USS Secretary of State Blanket in
Speaker 1: Turkey surveying the damage there by helicopter. United States is
Speaker 1: here to support you in your time of need, and
Speaker 1: we will be by your side for as long as
Speaker 1: it takes to recover and to rebuild, pledging another one
Speaker 1: hundred million dollar aid package, and the Philippines and US
Speaker 1: will discuss a joint coastguard patrols in the South China.
Speaker 1: See writer's report says China's aggressive stance in the area
Speaker 1: needs to be monitored. Global News powered by more than
Speaker 1: journalists and analysts and over one hundred twenty countries in
Speaker 1: San Francisco. I'm at Baxter and this is Bloomberg. This
Speaker 1: is Bloomberg Daybreak Asia. I'm Brian Curtis along with Paul Allen,
Speaker 1: and our guest is Chuck Cumello, President and CEO at
Speaker 1: Essex Financial Services. Chuck, how do you see the balance
Speaker 1: of risk shifting here? Where it looks like inflation will
Speaker 1: stay stay sticky, rates will stay up for a while,
Speaker 1: but then growth will will be stronger as well. Well, yeah,
Speaker 1: thank you so much for having me. Um. Yeah, listen,
Speaker 1: it's we're We're at a really interesting time and just
Speaker 1: when the market was almost trying to convince itself that
Speaker 1: thought that the Fed made pause or even cut I
Speaker 1: think this month, which February, which you know is the
Speaker 1: shortest month of the year, but it's certainly punching above
Speaker 1: its weight in terms of economic and financial data that
Speaker 1: we're getting this month. The data this month certainly puts
Speaker 1: a lot of cold water on that argument, and I
Speaker 1: think it will. And we've already seen the market react
Speaker 1: to the employment number, c p I, p p I,
Speaker 1: retail sales, etcetera. I think we're in for a more
Speaker 1: volatile ride, and I think the market is finally waking up.
Speaker 1: The rates are going to stay long higher for longer.
Speaker 1: Maybe we get a pause, but I don't think it
Speaker 1: cut anytime soon. We had some commentary from Muhammad al Arian,
Speaker 1: chief economic advisor at Alians, is also a Bloomberg opinion columnist,
Speaker 1: but he was saying that this two percent inflation target
Speaker 1: for the FID just isn't realistic, that it's going to
Speaker 1: crush the economy. That does that need to be revisited
Speaker 1: in your view? Yeah, So I was reading something today
Speaker 1: and it said three percent might be the new two
Speaker 1: percent um And you know, getting getting from peak inflation
Speaker 1: from where we were um to this, you know six
Speaker 1: point for um, you know number that we're at right now,
Speaker 1: give or take. Getting from that, you know that that
Speaker 1: might be the more easiest move if you if you will,
Speaker 1: not certainly pain free by any stretch, but getting from
Speaker 1: six and change down to two, that's that's painful. And
Speaker 1: I think the FED at some point, especially if you
Speaker 1: start to see the impact to the jobs in employment
Speaker 1: situations in the United States, I think they may need
Speaker 1: to sort of revisit that and potentially again three is
Speaker 1: the new two. You call it a win and you
Speaker 1: move on. Yeah, it's one of those things where you
Speaker 1: don't actually change the target, but you just kind of
Speaker 1: quietly adjust to it. I suppose one thing I'm curious about,
Speaker 1: Chuck that doesn't seem to fit for me is that
Speaker 1: I understand that retail sales look buoyant partially because inventories
Speaker 1: are high and retailers cut their prices. But they cut
Speaker 1: their prices, then why did inflation pop up? So is
Speaker 1: inflation not seasonal and sales are or what? Yeah, well
Speaker 1: soon the inflation number, Well, two things. One the January
Speaker 1: retail sales number. There could be there's a lot of
Speaker 1: noise in that number, and I don't think you're going
Speaker 1: to see February be anywhere near what January was due
Speaker 1: to timing factors and um, you know, especially money that
Speaker 1: people have not spent in December but then push things
Speaker 1: into January. But inflation, you know, listen, it's the Fed
Speaker 1: raising rates has certainly impacted anything that needs to be financed, cars, houses,
Speaker 1: You see that. You see that across the economy, but
Speaker 1: it hasn't really hurt services and wage inflation even when
Speaker 1: this last number came down a little bit but still
Speaker 1: persistently high. So you know, inflation, it's going to be
Speaker 1: very sticky, and that's why the Fed is going to
Speaker 1: have such a hard job of trying to drive it
Speaker 1: down from here, Which goes back to the last point
Speaker 1: about is two even realistic with given what the market
Speaker 1: is dealing with, what the economy is dealing with, and
Speaker 1: there certainly are enough factors at play that you can
Speaker 1: make the argument that again two is not realistic. Inflation
Speaker 1: is going to be with us longer, and the FED
Speaker 1: got us into this and they're going to have to
Speaker 1: get us out. And that's why you're seeing hearing more
Speaker 1: hawkish tones coming out, and that's why the market is
Speaker 1: going to react and has already started to react to this.
Speaker 1: This you know, I don't we even call it a
Speaker 1: new reality, but just the reality that rates are going
Speaker 1: to be higher and we're going to have to the
Speaker 1: market's going to have to adjust. Yeah, has the market
Speaker 1: reacted that we got the SMP up six and a
Speaker 1: quarter percent so far this year despite all of that
Speaker 1: hawkish rhetoric. Is this a bit of a game of
Speaker 1: chicken being played here? I think I think a little
Speaker 1: bit of one, right, I mean, I think you've already
Speaker 1: you've certainly seen a nice bounce right in the SMP.
Speaker 1: I think it's six off its lows close Friday at
Speaker 1: six and a quarter. Let's call it. Um. And and
Speaker 1: there is again that optimism UM that started the year
Speaker 1: off with a maybe we're going to get that pause
Speaker 1: or a cut later in the year. Again, I think
Speaker 1: you're gonna enter into a new volatile stretch here. And look,
Speaker 1: we haven't even talked about the debt ceiling coming up
Speaker 1: in June, which is you know, one of the biggest
Speaker 1: things we're starting to hear from clients. So I think
Speaker 1: again we're going to be in for a volatile stretch here. UM.
Speaker 1: And I think coming off of Q four that was
Speaker 1: so so ugly and it was a tremendous amount of
Speaker 1: tax law selling, especially in Q four. You've seen this match,
Speaker 1: You've seen this bounce, and I think there's always sort
Speaker 1: of a natural optimism to a new year, and especially
Speaker 1: after the midterm elections being over. Um. But you know,
Speaker 1: we're running into the cold, hard phase of reality, which
Speaker 1: is higher rates and an inflation air environment, and that
Speaker 1: is a really hard wall for the market to climb. Yeah,
Speaker 1: everything you outlined there is perhaps to wind down equities
Speaker 1: a little I suppose or to rationalize a bit. You
Speaker 1: like bonds here, So how how would you tinker with
Speaker 1: your portfolio as you know, as it relates to this
Speaker 1: latest news. You know, well, bonds of you have gotten
Speaker 1: more into resting at these higher at these higher rates,
Speaker 1: I mean with equities again, you have seen a nice
Speaker 1: run up on some of the growth areas, So starting
Speaker 1: to take advantage of that little pop and trim a
Speaker 1: little bit there, especially if you haven't already done so
Speaker 1: adding more to the value side of someone's portfolio. And
Speaker 1: with fixed income, you know, we're we're up one call
Speaker 1: it one at a quarter on the egg so far
Speaker 1: this year. And I was looking at my screen today
Speaker 1: and pretty much fixed income anywhere in on mutual founder
Speaker 1: et f land is up anywhere from call at one
Speaker 1: to three um, not including high yield. But the biggest
Speaker 1: change there, quite honestly, is you don't have to get
Speaker 1: to get too fancy and fixed income when treasury bills
Speaker 1: are paying you know, four and a half five percent
Speaker 1: and money markets are paying four percent. This is Bloomberg
Speaker 1: Daybreak Asia, your morning brief on the story is making
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Speaker 1: Asia