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Speaker 1: This is Bloomberg day Break Asia for this Monday, June

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Speaker 1: twenty sixth in Hong Kong, Sunday June twenty fifth in

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Speaker 1: New York and coming up.

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Speaker 2: Today, Asian equity markets may gyrate as traders gauge the

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Speaker 2: impact from instability In Russia.

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Speaker 1: Apollo leads a two billion dollar private debt deal for

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Speaker 1: the semiconductor firm wolf Speed.

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Speaker 2: And China's travel spending is somewhat disappointing over the dragon

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Speaker 2: Boat Festival.

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Speaker 3: The latest news on the events in Russia Elon musk

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Speaker 3: is confidence in SpaceX's changes to the starship vehicle. Greece's

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Speaker 3: prime minister wins a second term in a landslide, while

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Speaker 3: in sports, another Chelsea star heads to Saudi Arabia. I'm

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Speaker 3: Dan Schwartzman. I'll have your news in sports coming up.

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Speaker 4: That's all straight ahead on Bloomberg day Break Asia, the

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Speaker 4: business news you need to start your day, and just

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Speaker 4: one fifteen minute podcast available on Apple, Spotify, the Bloomberg

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Speaker 4: Business App and everywhere you get your podcasts.

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Speaker 1: Good morning, I'm Brian Curtis.

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Speaker 2: And I'm Doug Prisner. Here are the stories we're following today.

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Speaker 1: Well, another possible deal in the chip industry. Apollo is

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Speaker 1: leading a two billion dollar private debt deal for wolf Speed.

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Speaker 1: We get more from Bloomberg's Denise Pellegreney.

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Speaker 5: The financing makes one and a quarter billion dollars of

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Speaker 5: cash immediately available to the company and another seven hundred

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Speaker 5: and fifty million later, and a statement seen by Bloomberg

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Speaker 5: says the money is intended to support wolf Sweed's expansion

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Speaker 5: in the US during North Carolina Headquartered, wolf Sweed has

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Speaker 5: an enterprise value of over seven billion dollars. Its products

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Speaker 5: are used in automotive, renewable energy, defense, and aerospace industries,

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Speaker 5: and sources say wolf Speed chose this financing to limit

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Speaker 5: the number of parties that would have access to its

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Speaker 5: intellectual property, and also because the private lenders could provide

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Speaker 5: additional financing at a later date. Denise Pellegrene Bloomberg Day

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Speaker 5: Brickasia Well.

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Speaker 2: This week, New Zealand's Prime Minister Chris Hipkins is leading

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Speaker 2: a trade delegation to China, and a meeting with President

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Speaker 2: Shi Jinping is on the agenda. We have more from

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Speaker 2: Bloomberg's Paul Allen in Sydney.

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Speaker 6: While other countries have looked to diversify away from China

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Speaker 6: as a trading partner. New Zealand will be looking to

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Speaker 6: diversify the range of products it exports to China during

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Speaker 6: this visit. China currently accounts for twenty eight percent of

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Speaker 6: New Zealand's exports, including sixty percent of its forest products

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Speaker 6: and forty percent of its meat exports. The twenty nine

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Speaker 6: members of this delegation will include a video game developer,

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Speaker 6: a fitness company, as well as tourism executives who are

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Speaker 6: trying to encourage a rebound in Chinese visitors. Economic necessity

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Speaker 6: has often seen New Zealand walk a fine diplomatic line

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Speaker 6: in its relations with China. Prime Minister Chris Hopkins was

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Speaker 6: asked before this visit his thoughts on Joe Biden calling

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Speaker 6: President she a dictator. Hipkins said he wouldn't use those words.

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Speaker 6: Paul Allen Bloomberg day Break Asia.

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Speaker 1: Well more, Chinese ev makers are eyeing Thailand as a

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Speaker 1: manufacturing and distribution base. Let's get the story from Bloomberg's

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Speaker 1: Joan Wong in Hong Kong.

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Speaker 7: The Tai Chinese Chamber of Commerce that the venturers are

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Speaker 7: backed by investment incentives. The amount of the incentives was

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Speaker 7: not mentioned. China's hose On New Energy Automobile will start

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Speaker 7: production in Thailand and twenty twenty four two other Chinese

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Speaker 7: ev makers will also invest a total of four hundred

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Speaker 7: and seventy million dollars in production facilities in the Kingdom. Meanwhile,

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Speaker 7: great Wallmotor and Byd have already established production plans in

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Speaker 7: Eastern Rayon profits. Thailand saw foreign investment applications more than

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Speaker 7: double in the three months through March from last year,

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Speaker 7: and Chinese firm's pledged investment was up eighty seven percent

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Speaker 7: from a year ago. In Hong Kong, joined Wang Bloomberg

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Speaker 7: day Bagasia.

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Speaker 2: China's travel spending during the Dragon Boat Festival last week

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Speaker 2: fell slightly short of pre COVID levels. We have more

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Speaker 2: from Bloomberg's Banaiaui.

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Speaker 8: In Hong Kong, China's Ministry of Culture and Tourism said

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Speaker 8: domestic spending revenue was about five point two billion dollars.

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Speaker 8: That's around ninety five percent of the amount recorded in

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Speaker 8: twenty nineteen before the pandemic. This comes as China's economy

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Speaker 8: is facing mounting evidence of a slowdown in recent weeks.

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Speaker 8: As a result, several investment banks have downgraded their growth

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Speaker 8: forecasts for China, but most banks still expect Beijing to

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Speaker 8: meet its relatively conservative growth target of around five percent

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Speaker 8: for the year. Even so, the weaker holiday spend may

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Speaker 8: prompt further course for stimulus in Hong Kong. I'm Bonnie L. Bloomberg,

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Speaker 8: Day Break Asia.

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Speaker 1: And Doug Back in the US Wall Street. Just a

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Speaker 1: week to go here in the second quarter, and we're

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Speaker 1: getting a look at the week ahead from Bloomberg's Charlie Pellett.

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Speaker 9: The second quarter stock market rally is fraying under the

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Speaker 9: threat of more rate hikes, and that's raising questions about

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Speaker 9: the outlook for corporate earnings. Alicia Levine is head of

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Speaker 9: Investment Strategy and Equity Advisory Solutions at Bank of New.

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Speaker 10: York Melon the earnings this version is enormous because if

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Speaker 10: we do have this long projective recession this year, earnings

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Speaker 10: can be as low as one ninety five for the year.

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Speaker 10: But if we get that soft landing, you really could

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Speaker 10: be in that two thirty to two thirty five, which

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Speaker 10: is where Simmiths were a year ago for twenty twenty three.

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Speaker 9: Among the name scheduled to report this week Constellation Brands,

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Speaker 9: General Mills, Nike, Walgreen's Boots Alliance, Micron Technology, and paychecks

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Speaker 9: in New York. Charlie Palett Bloomberg Daybreak Asia. I'm Brian

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Speaker 9: Curtis along with Doug Chrisners. So, Doug, extraordinary events over

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Speaker 9: the weekend in Russia, and one of the things that

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Speaker 9: I'll be looking at in the media review coming up

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Speaker 9: is the Chinese response to this, because it's pretty interesting.

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Speaker 9: The Global Times, a paper under the Communist Party, says

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Speaker 9: it's wishful thinking in the West that Vladimir Putin was

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Speaker 9: weakened by you have Jenny Pregosian's revolt. The paper quotes

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Speaker 9: Chinese experts as actually saying that Putin was strengthened by this,

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Speaker 9: and I think to many elsewhere, maybe outside of China,

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Speaker 9: that would be thought of wishful thinking.

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Speaker 1: And so it sets up as an interesting challenge in

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Speaker 1: how China responds to it.

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Speaker 2: Yeah, most definitely. I think the the official line for

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Speaker 2: Beijing over the weekend was that the Foreign Ministry is

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Speaker 2: supporting Russia's action to maintain national stability, which you're absolutely right.

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Speaker 2: So many things up for grabs here. We talked a

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Speaker 2: little bit about what's going on in the energy market

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Speaker 2: right now. Maybe some concern about supply pressure WTI right

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Speaker 2: now pushing higher. We're very close to seventy dollars a barrel.

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Speaker 2: But Brian, as you well know, I mean, it's been

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Speaker 2: a really, really tough period for the oil market. A

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Speaker 2: lot of concern about weaker demand given the outlook for

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Speaker 2: global recession. Some of the PMI data that we've seen

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Speaker 2: recently has been disappointing. The US number on manufacturing now

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Speaker 2: at the lowest level since December, so there is still

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Speaker 2: a great deal of concern about the outlook right now.

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Speaker 1: Yeah, it's really interesting. We could be coming to an

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Speaker 1: important change or inflection point. All this year the bond

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Speaker 1: market has essentially been wrong, first in predicting gloom and

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Speaker 1: then in predicting FED rate cuts in the second half

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Speaker 1: of the year, and we had market pricing for upwards

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Speaker 1: of fifty basis points of cuts. That's all been taken

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Speaker 1: away now. But interestingly, even though conditions on the ground

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Speaker 1: have been pretty good up until now, all of a sudden,

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Speaker 1: you've got quite a lot of gloom. You know, most

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Speaker 1: of the equity markets were down pretty sharply in the

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Speaker 1: past couple of days, and it sets up as a

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Speaker 1: week where markets and the actual data will be really

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Speaker 1: interesting to pair up and see, you know which way

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Speaker 1: we're moving.

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Speaker 2: And speaking of the data, I think we can agree

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Speaker 2: that the most important number of the week is the

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Speaker 2: Personal Consumption Expenditures price index reading from May. This is

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Speaker 2: the Fed's preferred measure. It's expected to show that inflation

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Speaker 2: remained a little elevated in the month of May. And

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Speaker 2: I think what's going to make life extremely tricky for

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Speaker 2: the FED when it comes to tightening is the pressure

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Speaker 2: that this may put on the commercial real estate market. Today,

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Speaker 2: FT saying that the financial storm is bearing down on

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Speaker 2: us commercial real estate, and the latest edition of bloom

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Speaker 2: BusinessWeek the cover story commercial real estate is getting scary.

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Speaker 11: Yeah.

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Speaker 1: I'm going to make the point to our first guest

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Speaker 1: that the focus is about to switch from inflation as

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Speaker 1: the top concern to recession. The guest is Walter Toddy's

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Speaker 1: coming up from Greenwood Capitol and we'll put that to

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Speaker 1: him in a few moments. But now it's time for

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Speaker 1: Global News. Well, the latest on the events in Russia.

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Speaker 1: Here's Dan Schwarzman in the newsroom in New York.

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Speaker 3: Dan, Yeah, Brian, there were certainly bizarre events this weekend

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Speaker 3: in Russia. They seemly have subsided Wagner mercenary forces pulling

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Speaker 3: out of the city Arrostov after taking control early Saturday,

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Speaker 3: Wagner Boston Russian oligarchy of Genny Prigosin accepting a deal

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Speaker 3: broken by Belarusian President Alexander Lukashenko to leave Russia and

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Speaker 3: head to Belarus, with all charges being dropped against Progosian

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Speaker 3: and Wagner soldiers for treason. A column of Wagner armored

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Speaker 3: vehicles had reportedly advanced to within one hundred and twenty

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Speaker 3: five miles of Moscow before stopping and turning around. Secretary

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Speaker 3: of State Anthony Blinken on what this means for the

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Speaker 3: reign of Russian President Vladimir Putin.

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Speaker 12: This raises profound questions. It shows real cracks. We can't

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Speaker 12: speculate or know exactly where that's going to go. We

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Speaker 12: do know that Putin has a lot more to answer

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Speaker 12: for in the weeks and months ahead now.

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Speaker 3: According to British security sources speaking to The Telegraph, if

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Speaker 3: Geinny Progosion called off his military advance towards Moscow after

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Speaker 3: Russia's intelligence services had threatened harmed to the families of

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Speaker 3: Wagner leaders. The analysis also said that the size of

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Speaker 3: the Wagner mercenary forces stood at only eight thousand troops

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Speaker 3: and not twenty five thousand as Progotion has advertised. Sources

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Speaker 3: say the Kremlin is likely to try to incorporate the

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Speaker 3: remaining Wagner soldiers into its military after taking out leaders.

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Speaker 3: Space X CEO Elon Musk telling Bloomberg's Actually Advance that

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Speaker 3: over one thousand changes have been made to its Starship

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Speaker 3: vehicle following its first test launch back in April. According

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Speaker 3: to Musk, investment in the Starship project is expected to

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Speaker 3: be near three billion dollars this year. The company hopes

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Speaker 3: that its next generation Rocky will be able to carry

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Speaker 3: for first cargo then people to deep space destinations such

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Speaker 3: as the Moon in Mars. During the first launch of Starship,

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Speaker 3: the vehicle suffered multiple engine failures during its climb. After

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Speaker 3: successfully clearing the launchpad, Musk talked about his expectations this year.

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Speaker 13: You know, if things go well and we don't have

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Speaker 13: a launch failure, tuck on word, SpaceX will quit approximately

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Speaker 13: eighty percent of all Earth payload to orbit. China will

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Speaker 13: put approximately ten percent, I think just over ten percent,

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Speaker 13: and then the rest of the world, we'll do about

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Speaker 13: I don't know, eight or nine percent. So you know

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Speaker 13: this year, if I were like Holds, we'll do eighty

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Speaker 13: percent of birth Master Orbit. That's the that's the key metric.

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Speaker 3: Musk was speaking to Bloomberg's Ashley Vance. Taiwan has asked

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Speaker 3: Australia to post a military attest shade of Taipei Foreign

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Speaker 3: Minister Joseph Who, in an interview told The Australian that

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Speaker 3: he wanted Australia to post a military officer as a

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Speaker 3: liaison to local security forces, the way that Japan, Singapore,

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Speaker 3: the US and other countries do. Who also stated that

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Speaker 3: the Taiwanese government wanted to post an attache in their

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Speaker 3: de facto embassy in Canberra. Global News twenty four hours

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Speaker 3: a day, power by more than twenty seven hundred journalists

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Speaker 3: and analysts and more than one hundred and twenty countries.

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Speaker 3: I'm Dan Schwarzman. This is Bloomberg.

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Speaker 1: I'm Brian Curtis in Hong Kong along with Rashad Salamat.

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Speaker 1: Our guest is Walter Todd, President, Chief Investment Officer and

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Speaker 1: Managing director at Greenwood Capital. Walter great to have you

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Speaker 1: on the program. Normally I wouldn't ask the guests and

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Speaker 1: the business section about politics and about events like we

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Speaker 1: saw in Russia, but you have them in your notes

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Speaker 1: right at the top, so I guess it's fair ground.

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Speaker 1: Whether or not this news crosses over into market action

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Speaker 1: is interesting. It puts China in an interesting position. Perhaps

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Speaker 1: you heard us chatting about this. And in terms of

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Speaker 1: whether or not it's weakness or strength for Vladimir Putin,

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Speaker 1: it's hard to imagine you could consider it being strength

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Speaker 1: when Progosian gets immunity from prosecution and safe passage to Belarus,

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Speaker 1: if that's indeed where he goes, so if he can

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Speaker 1: summon up a little bit. What do you think of

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Speaker 1: these weekend developments on on markets?

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Speaker 11: Uh?

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Speaker 14: Yeah, well, good evening from from the US. I personally

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Speaker 14: just can't wait to see the movie in about six months.

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Speaker 14: But uh no, I mean listen, it's you know, in

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Speaker 14: a year that's been full of you know, kind of

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Speaker 14: strange things.

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Speaker 11: Uh really the past three years.

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Speaker 14: I guess you could say this just adds to the list, right,

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Speaker 14: And you know, I would agree with with kind of

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Speaker 14: everything you said. It's it's certainly hard to handicap going forward,

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Speaker 14: but it doesn't seem like a stable outcome, even though

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Speaker 14: it's kind of you know, the near term threats maybe

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Speaker 14: been quelled here. And I do think it it will

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Speaker 14: be interesting to see how kind of China responds to this,

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Speaker 14: you know, do they want to back Putin who seems

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Speaker 14: to be weakened. I would, I would argue, you know,

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Speaker 14: weakened by this, by this move and threat uh to

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Speaker 14: his power.

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Speaker 11: So again, hard to.

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Speaker 14: You know, make any rategy from an investment standpoint on this,

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Speaker 14: but it is just an interesting, you know, kind of

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Speaker 14: headline to add to the mix of of a year

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Speaker 14: full of interesting headlines.

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Speaker 15: Now, well, you know, the thing is, does China's sort

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Speaker 15: of reaction here in any way make a difference whether

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Speaker 15: the country is investible as it has remained somewhat of

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Speaker 15: a pariah for investment from the West.

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Speaker 14: With China, with the investment in China, is what you're saying, correct? Yeah, yeah, uh,

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Speaker 14: I don't on the margin, I don't think it really

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Speaker 14: makes a difference in terms of their you know, kind

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Speaker 14: of kind of their response here. Perhaps, you know, if

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Speaker 14: if we were to see a hard yeah, if you

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Speaker 14: were to see a hard turn away from Putin, maybe

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Speaker 14: that would you know, help you know, ties a little

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Speaker 14: bit with the US. But I think for China, honestly,

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Speaker 14: I think it's more than just this uh subdued reopening

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Speaker 14: that's really you know, putting people off at this point,

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Speaker 14: because you saw some pretty good performance late last year

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Speaker 14: as people were anticipating the reopening, but just has panned out,

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Speaker 14: and so that's I think that's really what's kind of

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Speaker 14: kept people away from China. And certainly some of the

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Speaker 14: unknowns around the you know, potential restrictions and so forth

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Speaker 14: between the US and China is also a problem.

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Speaker 1: China has its own problems in domestic consumption, but it's

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Speaker 1: also concerned about external growth, and so this sort of

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Speaker 1: feeds back into the question I told Doug, I would

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Speaker 1: put to you that the focus maybe on the ground

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Speaker 1: could switch from inflation to recession. Do you think that's possible?

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Speaker 11: Yeah?

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Speaker 14: Absolutely, I mean I think you know, the bomb market

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Speaker 14: kind of went that direction about a year ago, and

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Speaker 14: is you know, has been been squarely focused on the recession.

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Speaker 14: I think threat really, I mean, if you look at

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Speaker 14: one year break evens, for example, we were at five

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Speaker 14: and a half percent a year ago, we're at one

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Speaker 14: point eight today, the two tens at you know, minus

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Speaker 14: one hundred three month, ten years.

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Speaker 11: At one fifty minus one fifty.

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Speaker 14: So bomb mark is definitely squarely focused on the recession

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Speaker 14: dynamic or threat. But the stop market seemingly, at least

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Speaker 14: the headline index itself is you know, just screen continues

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Speaker 14: to work higher and not seem to be really concerned

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Speaker 14: about the recession threat for us personally at our firm,

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Speaker 14: that is, you know, the forefront for us, not I

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Speaker 14: think inflations in the rear view mirror. And I do

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Speaker 14: think the question around growth going forward is the real

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Speaker 14: question to be focused on.

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Speaker 1: Yeah, well, what I found interesting is that the bond

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Speaker 1: market has been predicting you know, tough times and rate

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Speaker 1: cuts by the FED, and now it's actually given all

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Speaker 1: those rate cuts up and it's actually projecting a slight tightening,

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Speaker 1: a modest tightening in the second half. So wouldn't it

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Speaker 1: be funny if now that the bond market in the US.

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Speaker 1: And it's a little different with Europe because there you've

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Speaker 1: got you know, the biggest inversion in decades, But wouldn't

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Speaker 1: it be interesting in the US if now actually you

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Speaker 1: start to really focus on the ground on recession and

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Speaker 1: the bond market has to start thinking about FED cuts again.

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Speaker 1: It's quite interesting.

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Speaker 11: Yeah, no, no, no question.

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Speaker 14: And you know, Powell to that extent has done, I guess,

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Speaker 14: a good job and kind of re reconnecting the bomb

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Speaker 14: market with what the Fed's outlook is, and that is

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Speaker 14: no cuts in.

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Speaker 11: The in the near, in the near really intermediate future.

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Speaker 14: And so he's done a good job of talking the

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Speaker 14: market back to to to be in sync. And uh,

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Speaker 14: I guess now it's really is more kind of data dependent.

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Speaker 14: You know, you talked about the PCEE later uh this week,

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Speaker 14: and then we of course we'll start earnings in a

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Speaker 14: couple of weeks and uh and and go from there.

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Speaker 14: But so I do think it's going to be more

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Speaker 14: kind of data dependent as the FED will that will

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Speaker 14: kind of push around the bomb market and the stock

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Speaker 14: market going going forward.

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Speaker 4: Uh.

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Speaker 15: If you wanted to, you know, get into now into

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Speaker 15: this tech croad on the NASDAK. You know, we're up

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Speaker 15: about what twenty nine percent on the broader composite? Would

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Speaker 15: you be just chasing what didn't be a fool's Errand.

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Speaker 14: Uh, yeah, I think I think it's a little bit

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Speaker 14: late for that.

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Speaker 11: Uh yet to be to be chasing this.

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Speaker 14: I think you know, listen, I think some of this

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Speaker 14: is for real and some of it's kind of not.

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Speaker 14: And from an earning standpoint, and I think a lot

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Speaker 14: of these stocks have gotten in the near term, you know,

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Speaker 14: even if you believe in in the stories, fundamental stories

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Speaker 14: have gotten overbought, and so I think there there will

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Speaker 14: be an opportunity to put more money to work in

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Speaker 14: those areas, probably at better prices as we move through

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Speaker 14: the summer. I just think just from a purely technical standpoint,

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Speaker 14: they're overbought and and will likely come in from the

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Speaker 14: levels that they're at right now.

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Speaker 1: So let's talk a little bit about where the absolute

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Speaker 1: best value is. It sounds like you don't think that

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Speaker 1: it's in in megacap tech. Would it be in some

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Speaker 1: sort of other portion of the stock market. Would you

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Speaker 1: be looking at sovereigns here and maybe credit?

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Speaker 9: What do you think?

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Speaker 11: Yeah?

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Speaker 14: So, I think you know, pretty much everywhere else outside

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Speaker 14: the top ten there's some value to be found. I mean,

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Speaker 14: I think think healthcare is very interesting here. You know,

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Speaker 14: it's got a good mix of growth and value at

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Speaker 14: growth at a reasonable price.

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Speaker 11: Right now.

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Speaker 14: I mean, if the if the bull case is that

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Speaker 14: we're going to have a soft landing. I mean energy

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Speaker 14: is probably over sold here and undervalued there. From a

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Speaker 14: from the bond market perspective, I think there's opportunities to

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Speaker 14: be active kind of in a Barbelle strategy. I think

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Speaker 14: spreads kind of the five to seven year range are

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Speaker 14: actually pretty attractive and really high quality corporate. You really

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Speaker 14: don't have to go down the quality scale to get

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Speaker 14: pretty decent spreads there. And then on the front end,

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Speaker 14: of course, we've got very attractive yields in the treasury

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Speaker 14: market out to two years, so I think there's some

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Speaker 14: opportunities for positioning and in the bond market, but also

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Speaker 14: there there's plenty of opportunities in stocks.

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Speaker 11: It's just in our opinion it's not in the the

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Speaker 11: top ten or.

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Speaker 15: So names classic defensive plays.

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Speaker 14: Then yeah, certainly those those two that I mentioned, our

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Speaker 14: energy would would not be a defensive area. And even

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Speaker 14: within tech, you know, if you go down the cap scale,

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Speaker 14: their opportunities to be had there as well. So I

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Speaker 14: really think it. I don't think you have to choose

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Speaker 14: the defense versus offense. I think you can go sector

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Speaker 14: by sector and kind of look for opportunities that have

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Speaker 14: maybe been lost in the scramble for AI over the

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Speaker 14: past few months.

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