Speaker 1: Good morning.
Speaker 2: I'm Doug Prisner and I'm Brian Curtis. Here are the
Speaker 2: stories we're following today. Minutes from the fed's June meeting
Speaker 2: revealed that officials were somewhat less united than their unanimous
Speaker 2: decision had suggested. Some participants indicated that they favored a
Speaker 2: quarter point rate increase, but they went along with the
Speaker 2: move to leave policy unchanged. Those favoring high excited, tight
Speaker 2: labor markets, and relatively few signs that inflation was slowing
Speaker 2: slowing towards that goal of two percent. Now, traders are
Speaker 2: betting that the FED will likely hike rates in the
Speaker 2: meeting later this month. Heard from Evercore ISI founder Ed Hyman.
Speaker 3: At this point, the one more is baked in the Kate.
Speaker 3: I think anything from now is a mistake. They're just
Speaker 3: creating a deeper recession or the more likelihood of a recession.
Speaker 3: But at five and a quarter, with the banial at
Speaker 3: three eightyretty much done and inflation slowing.
Speaker 2: FED officials will get to analyze two key US economic
Speaker 2: reports before the next decision. We'll get the June employment
Speaker 2: report on Friday and readings on consumer prices on July twelfth.
Speaker 2: The FED meets next on July twenty fifth and twenty sixth.
Speaker 1: Well, US Treasury Secretary Janet Yellen will be visiting China
Speaker 1: at a time when tensions between Beijing and Washington are
Speaker 1: very high. We have more from Bloomberg's and Kates.
Speaker 4: Yellen's goal is to find common economic ground and open
Speaker 4: communication channels between the US and China, and it's the
Speaker 4: first major test of a policy she outlined in April
Speaker 4: that is geared toward defending US national security without trying
Speaker 4: to hold China back economically. Yellen's trip comes days after
Speaker 4: China imposed restrictions on exporting two medals that are crucial
Speaker 4: to key technology industries, and a mission comes exactly five
Speaker 4: years after the Trump administration imposed tariffs on the first
Speaker 4: wave of more than three hundred billion dollars worth of
Speaker 4: goods from China. In Washington and Kates Bloomberg Day Break Asia.
Speaker 2: The People's Bank of China is mixing its muscles on
Speaker 2: options regarding the slide in the Yuan. Bloomberg z von
Speaker 2: Mann has the story from Hong Kong.
Speaker 5: The commentary in the PBOC backed Financial News says China
Speaker 5: has ample tools even if the Yuen enters a panic slide.
Speaker 5: It's part of a campaign to reassure investors. The tools
Speaker 5: include the Ford Exchange Risk Reserves ratio, banks FX deposit
Speaker 5: reserve ratios, and so called counter cyclical factor that's used
Speaker 5: in determining the pboc's daily reference rate. The Chinese currency
Speaker 5: has recently slid towards as weak as level in fifteen
Speaker 5: years against the dollar. The commentary says China's yen market
Speaker 5: is resilient and that fox levels are stable in Hong Kong.
Speaker 5: I'm von Mann Bloomberg Day Breakasia.
Speaker 1: We go to Ali Baba next. The company is looking
Speaker 1: to work with its home province of Jijeong to develop
Speaker 1: artificial intelligence and the digital economy. Ali Baba's CEO Daniel Joan,
Speaker 1: saying that digital economy has entered a new age with
Speaker 1: artificial intelligence sweeping the world this year, and that Ali
Speaker 1: Baba wants to help build Chijiong into a world class
Speaker 1: digital economy cluster. There are not many details here on
Speaker 1: what the plan would be other than to create a
Speaker 1: better business environment. However, the agreement does show a degree
Speaker 1: of official backing for Ali Baba's efforts, and that may
Speaker 1: provide a little bit of a boost to investors. Sentiment.
Speaker 1: On that front, the company is pushing back against the
Speaker 1: perception that regulators were out to restrict Ali Baba's growth.
Speaker 2: Brian Well Back in the United States, there are signs
Speaker 2: of a big comeback in auto sales after the just
Speaker 2: completed second quarter. That story from Bloomberg's Tom Busby.
Speaker 6: After a few rough years, the auto industry is now back.
Speaker 6: All the major automakers posting their June and second quarter
Speaker 6: sales data this week, and so far, despite inflation and
Speaker 6: higher sticker prices, blowout sales thanks to pent up demand
Speaker 6: and dealership lots that are full again. Sales to General
Speaker 6: Motors up nearly nineteen percent from a year ago, on
Speaker 6: big sales of the Chevy Suburban and the trail blo
Speaker 6: At Toyota they were up seven percent on demand for
Speaker 6: cameras and rap fours, and at Stilantis up six percent
Speaker 6: thanks to Ram pickups and Jeep Grand Cherokees. FOD is
Speaker 6: that with its second quarter figures on Thursday, I'm Tom
Speaker 6: Buzby Bloomberg Daybreak Asia.
Speaker 2: Doug. I don't know if the auto market can serve
Speaker 2: as a microcosm for what's happening with the consumer, but
Speaker 2: you look at at loan rates, there be like six
Speaker 2: to ten percent to buy a car, and it is
Speaker 2: not stunting the demand. Look at these sales that we've
Speaker 2: seen and if you look at the stock of you know,
Speaker 2: everybody crows about what Tesla has done, but even General
Speaker 2: Motors has gone from thirty two to thirty nine just
Speaker 2: here in about the last month or so. So you're
Speaker 2: talking more than a twenty percent gain. Let me just
Speaker 2: get the exact gain for the last month. It is
Speaker 2: over the last month up sixteen percent in the market.
Speaker 2: So it shows you that there are parts of the economy,
Speaker 2: maybe not manufacturing, but parts of the economy that are
Speaker 2: working pretty well well.
Speaker 1: And you didn't even mention the story on byd in China, right,
Speaker 1: the incredible sales growth that company is seeing on the mainland,
Speaker 1: which then kind of takes us to the visit of
Speaker 1: Janet Yellen to Beijing. It's going to start a Thursday,
Speaker 1: we know. I think we can agree, Brian that the
Speaker 1: relations are frayed. I think the US and Europe as
Speaker 1: well have both realized the vulnerabilities of the dependency that
Speaker 1: the West is created in dealing with China. The question
Speaker 1: now is how much decoupling is really possible.
Speaker 2: Yeah, I mean, I think finding common ground is easy
Speaker 2: because the relationship has so many layers to it. But
Speaker 2: how do you turn the aircraft carrier around? That is
Speaker 2: going to be I would say nearly impossible. But you
Speaker 2: get a sense that investors will appreciate the effort. It
Speaker 2: won't be easy. But Yellen is pretty you know, she's
Speaker 2: pretty good on this type of level. She's a pretty
Speaker 2: good communicator. She's a bit like Leoha on the Chinese side,
Speaker 2: you know, not exactly sharp elbow.
Speaker 1: Interesting comment from David Loveinger today over TCW. He was saying,
Speaker 1: it's to him at any rate, talking how little the
Speaker 1: US and Chinese governments have been speaking at all levels,
Speaker 1: and he kind of pointed to the fact that key
Speaker 1: economic officials in both countries really don't know one another
Speaker 1: all that.
Speaker 2: Well. Yeah, absolutely, it ebbs and flows. It feels like
Speaker 2: it needs to go into a period where it flows
Speaker 2: a little bit. But anyway, very nice segue from the
Speaker 2: car talk to the China talking. I'll have to be
Speaker 2: on my toes to keep up with you today. All right,
Speaker 2: now it's time for global news. US President Joe Biden,
Speaker 2: expressing his full support of Sweden for NATO admission at
Speaker 2: backs to with Global News in the nine to sixty
Speaker 2: newsroom in San Francisco.
Speaker 7: Ed'll right, Brian Wright at their bilateral meeting today at
Speaker 7: the White House, Biden expressing that support you mentioned, and
Speaker 7: Prime Minister Christensen saying that his full desire is to
Speaker 7: be a full contributing member Sweden that.
Speaker 8: Is going to make our alliance stronger and as the
Speaker 8: same value set that we have in NATO and really
Speaker 8: looking axiously looking forward for your membership.
Speaker 4: We do seek common protection, but we also do think
Speaker 4: that we have things to contribute with to be a
Speaker 4: security provider for the whole on.
Speaker 7: NATAS Now that next NATO summit is next week in
Speaker 7: Lithuania and Turkey's rebuffed US attempts to link a request
Speaker 7: to buy F sixteen warplanes to Sweden membership. The deadlock
Speaker 7: has continued for more than a year, and Turkey has
Speaker 7: downplayed Sweden acceptance as a possibility next week. It's being
Speaker 7: reported today that China's President Jihiping personally warned Russian President
Speaker 7: of Vladimir Putin against using nuclear weapons in Ukraine. Telegraph
Speaker 7: reporting it happened in their face to face meeting in March.
Speaker 7: A report says it indicates underlying Chinese misgivings about the
Speaker 7: Russian invasion. Despite public tacit approval for two days in
Speaker 7: a row now, measures used by climatologists say the record
Speaker 7: for hottest day ever recorded on Earth has been broken
Speaker 7: two days in a row, Monday first, then Yesterday even warmer,
Speaker 7: and they say today worldwide could even be warmer still
Speaker 7: Now Noah has not seemed deemed it official as of yet,
Speaker 7: but says likely the hottest in several hundred years and
Speaker 7: probably more and maybe ever. Experts on global warmings say
Speaker 7: they are alarmed but not surprised, and the warmer weather
Speaker 7: could be contributing to five shark attacks in New York
Speaker 7: over the holiday weekend. This more than half the number
Speaker 7: of total attacks in all of last year. George Gorman,
Speaker 7: the Long Island Regional Parks Director, says the coast has
Speaker 7: become a new feeding ground.
Speaker 9: We've seen bait and bunker fish, which are the feet
Speaker 9: of fish for the larger fish, all along the.
Speaker 7: Shoreline, and he says they have to boost oversight.
Speaker 9: You've increased the amount of drones we have on the
Speaker 9: beaches at Long Island State Park, beaches as well as
Speaker 9: wave runners or jet skis, so that we have lifeguards
Speaker 9: in front of the water is patrolling.
Speaker 7: He says, it appears to be the new normal. Hong
Speaker 7: Kong's National Security Police arresting four men who'd been members
Speaker 7: of the now disbanded political group Demostosis CMP, reporting concerted
Speaker 7: effort to keep pressure up on the now defunct protest movement.
Speaker 7: New Jersey Governor Phil Murphy is touting his fifty four
Speaker 7: point three billion dollar budget is having the largest safety
Speaker 7: net on the state's history. In an exclusive Bloomberg Radio
Speaker 7: and television interview today, he says it prepares for the future.
Speaker 10: The fact of the matter is, I do expect that
Speaker 10: the economy will soften, and when you look at our
Speaker 10: big drivers of revenue corporate business tax, personal income tax,
Speaker 10: sales tax, we monitor those literally on a daily basis,
Speaker 10: and we think we've got a big enough surplus and
Speaker 10: enough latitude of this budget that we'll be able to
Speaker 10: withstand a softness and frankly come out the other side
Speaker 10: of that stronger than ever before.
Speaker 7: Murphy also said he'll continue to participate in the fight
Speaker 7: to get Washington, DC to do something about the salt
Speaker 7: tax battle, saying it punishes New Jersey, New York and
Speaker 7: California disappropriately. Global News powered by more than twenty seven
Speaker 7: hundred journalist and analysts over one hundred and twenty countries.
Speaker 7: In San Francisco, I'm Ed Baxter, and this is Bloomberg.
Speaker 2: Hi, Brian Curtis in Hong Kong, alongside Rashad silamat. Our
Speaker 2: guest is Chuck Camello, President and CEO at Essex Financial Services.
Speaker 2: Chuck in looking at the US economy, We've seen a
Speaker 2: little bit of a change in the last month, particularly
Speaker 2: as relates to the market. I just mentioned you probably
Speaker 2: heard us chatting there, Doug and I about the auto
Speaker 2: market GM up sixteen percent over the past month, the
Speaker 2: queues only up four percent. Yet everybody all they're talking
Speaker 2: about what a great first half it was, and there's
Speaker 2: no doubt about that. The NASDAK and the Nasdaq one
Speaker 2: hundred have soared over the first half of the year.
Speaker 2: But in the last month things have changed. Does that continue?
Speaker 11: Yeah, well, thank you so much for having me, and
Speaker 11: I think that what you just described is what we've
Speaker 11: been hearing and sort of seeing about this broadening of
Speaker 11: the market where you know, obviously with NASDAK finishing the
Speaker 11: first half up over thirty two percent, and the S
Speaker 11: and P five hundred up you know, close to seventeen.
Speaker 11: But you know, the equally way did S and P
Speaker 11: five hundred was just up about a little over seven.
Speaker 11: So I think what you're seeing over the past month,
Speaker 11: especially also even in small caps, is starting to see
Speaker 11: a more broadening of the market, which generally should be
Speaker 11: a healthier thing looking into hopefully a good second half
Speaker 11: of twenty twenty three. But there certainly are a lot
Speaker 11: of headwinds and a lot of obstacles in the way, Chuck, I.
Speaker 12: Mean, there was very little breadth in the markets. I
Speaker 12: mean there's only five stocks which drove in there as
Speaker 12: like one hundred to where it's got to this year,
Speaker 12: So I mean, there's no point chasing this surely. Unlet's
Speaker 12: I suppose you ignore those five.
Speaker 11: I think you probably ignore those five at your own peril,
Speaker 11: given you know their historical performances, and obviously they had
Speaker 11: a really, really tough last year in twenty twenty two
Speaker 11: and twenty twenty three, with you know, AI and everything
Speaker 11: else you know, technology wise behind them. But true, I
Speaker 11: think there's a lot of other areas you can allocate
Speaker 11: assets to, especially in given the very vast difference in
Speaker 11: valuation of small cap versus large cap value versus growth. Listen,
Speaker 11: those the the tech stocks, whether it's five, seven or nine,
Speaker 11: you know that we all know the names of you
Speaker 11: know there they can they're great companies to look at
Speaker 11: Meta today, you know up again I think three percent
Speaker 11: with their with their you know they're planning on rolling
Speaker 11: out of competitor to Twitter. But I mean it's it's
Speaker 11: really just, you know, a pretty wild time to be
Speaker 11: in technology. But again, I think the market also gives
Speaker 11: you other really interesting areas to invest in that haven't
Speaker 11: had this kind of run that you've seen.
Speaker 2: Away from the market as a reflection of the economy,
Speaker 2: what what tells the more apt story what's happening in
Speaker 2: the auto market, as we mentioned a few moments ago,
Speaker 2: versus manufacturing.
Speaker 11: Well, I think they're intertwined, to be honest, and I think,
Speaker 11: you know, you still have a very strong US consumer
Speaker 11: that's able to you know, to look with, especially whether
Speaker 11: you're looking at new autos, used autos obviously talking about new,
Speaker 11: but you know the other thing that's out there is
Speaker 11: there are some really attractive financing rates. I mean, yes,
Speaker 11: depending upon your credit and depending on what you're buying.
Speaker 11: But you know, I've seen rates for financing as low
Speaker 11: as point nine percent for three years and one point
Speaker 11: seven or one point nine percent on new GM trucks.
Speaker 11: So I mean there is a market out there, and
Speaker 11: the US consumer continues to be extremely resilient. And I
Speaker 11: think what you just mentioned about autos is another great
Speaker 11: example of the resiliency of the US economy because even
Speaker 11: in the face of higher rates, autos, anything that's financed
Speaker 11: is generally the first thing that's going to bear the
Speaker 11: brunt of the SPED increases.
Speaker 2: That's my point is you'd think that autos would be
Speaker 2: suffering with these high interest rates, and if you look
Speaker 2: at manufacturing, it really is suffering. I mean, the pmis
Speaker 2: have been in the mid to low forties. If you
Speaker 2: look at Chicago, if you look at the broader ism
Speaker 2: that was just out a few days ago, it seems
Speaker 2: to be a completely different story than what you see
Speaker 2: in some consumer.
Speaker 11: Activity one hundred percent. And that's the biggest conundrum, right
Speaker 11: it's this economy has been so resilient, but it's if
Speaker 11: you look at different parts of it, it tells a
Speaker 11: different story, which again I think is what's complicating FED
Speaker 11: and their decision. And again I think with this decision
Speaker 11: in June to pause to sort of see what the
Speaker 11: impacts are. But you know, every week with a different numbers,
Speaker 11: a lot of them are telling two different stories, you know.
Speaker 11: So you've got some good news on inflation with this
Speaker 11: expectation as consumers look forward. The most recent report that
Speaker 11: just came out said people expect inflation to be backed
Speaker 11: down around twenty nineteen levels, which with the FED is
Speaker 11: a great thing, but the numbers don't bear that out.
Speaker 11: So it's really a fascinating period of time that we're in,
Speaker 11: but one that makes it very difficult for the FED,
Speaker 11: which in turn makes it very difficult for the markets.
Speaker 12: Well, Chuck, I mean, you know, this is the conundrum
Speaker 12: which is facing all these Western economies, essentially for central banks.
Speaker 12: And what it is is that, you know, you've got
Speaker 12: this economic resilience in the face of the cost of
Speaker 12: borrowing continually rising, which means that they're going to have
Speaker 12: to go even higher, which is not exactly a helpful
Speaker 12: backdrop for equity.
Speaker 11: Surely, No, that's one hundred percent correct. That is the
Speaker 11: biggest challenge, right, So I think without a doubt personally,
Speaker 11: I think the Fed's going to you know, they're going
Speaker 11: to increase rates in July. We got that coming up.
Speaker 11: I think, you know, twenty fifth, twenty sixth, I think
Speaker 11: in July is the next FED meeting. And listen, that
Speaker 11: is the big conundrum in that they have one tool
Speaker 11: to apply, and that is to crush demand. And you know,
Speaker 11: really the other thing that's making their life very very
Speaker 11: difficult is the labor market. You know, employment and the
Speaker 11: job's picture is extremely strong and given the importance obviously
Speaker 11: to each individual consumer's pocketbook in terms of their job,
Speaker 11: that picture is extremely strong. So yes, the market, though,
Speaker 11: I think, realizes what the future may look like. They've
Speaker 11: baked some of these FED increases in even these the
Speaker 11: meeting minutes that just came out really weren't a huge
Speaker 11: surprise to I think people that were paying attention, you know,
Speaker 11: in terms of what that last meeting was like and
Speaker 11: where they wound up in more importantly, how they got there, right.
Speaker 11: I mean, it was unanimous decision at the end, but
Speaker 11: there were obviously some people there would have been very
Speaker 11: comfortable raising rates a quarter of a point and quite candidly,
Speaker 11: probably had good reason too.
Speaker 2: Let's switch to another discussion US China. There's a lot
Speaker 2: of I think there's a huge gap between de risking
Speaker 2: and decoupling. But every time the US says d risk,
Speaker 2: China says, you mean de couple.
Speaker 9: Uh.
Speaker 2: Do you expect much out of the Yellen meetings this week?
Speaker 11: Yeah, That's that's one of the biggest wildcards I think
Speaker 11: going forward when you look at geopolitical risks. I mean,
Speaker 11: you know, our you know, our relationship with China is
Speaker 11: so important on a lot of different levels, but so
Speaker 11: fraught with problems on every other level. I personally don't
Speaker 11: expect an awful lot, you know, from the Yellen visit.
Speaker 11: I think it's good that it's happening, but these issues
Speaker 11: with you know, the US obviously restricting supply of chips,
Speaker 11: and you know, with ASML, now with the Dutch, you know,
Speaker 11: and China's reaction in terms of limiting materials and minerals
Speaker 11: coming out of China that support you know, obviously chips,
Speaker 11: and national events and things of that nature. That is
Speaker 11: a very very difficult not to try to untie. And
Speaker 11: you know, it's it has a lot of ramifications I
Speaker 11: smarter people than me hopefully can figure it out, but
Speaker 11: it seems like a very very intractable problem right now.
Speaker 11: Which is is I think one of the biggest headwinds
Speaker 11: going into the rest of this year.
Speaker 3: Jack.
Speaker 12: I know we say this every few days before that,
Speaker 12: the first Friday of every month, and I'm talking about
Speaker 12: the jobs report. How important will this one be?
Speaker 11: I think it's I think it's incredibly important, and to
Speaker 11: your point, it's always important. You know, the last job's
Speaker 11: number was what I think it was, three hundred and
Speaker 11: thirty three hundred and thirty nine thousand new jobs past
Speaker 11: prior months were raised upwards of one hundred thousand jobs.
Speaker 11: It's I think it's the biggest It's absolutely the biggest
Speaker 11: thing that's going to be happening. And honestly, when you
Speaker 11: look at all the talk about recession, the one missing
Speaker 11: piece of that is labor and is employment, and that
Speaker 11: just hasn't happened. So I don't know. I think it's
Speaker 11: going to be another strong number. Personally, we'll see what
Speaker 11: Friday brings us, but it's going to be a huge
Speaker 11: bell weather for to make the Fed's job a lot
Speaker 11: harder or a lot easier and I think it's probably
Speaker 11: going to make it harder.
Speaker 2: Okay, thirty second elevator pitch, give me your number one
Speaker 2: call at the moment.
Speaker 11: Boy, So I would say. I would say the number
Speaker 11: one call at the moment is to take advantage of
Speaker 11: areas of the market that haven't performed well, the vast
Speaker 11: disparity and valuations between small caps and large caps value
Speaker 11: versus growth. And again, be choosy when we're talking about value,
Speaker 11: not regional banks and things that might still have some problems.
Speaker 11: But I certainly think looking at small caps value and
Speaker 11: some international exposure, given how far the markets run, would
Speaker 11: be a very nice addition to someone's portfolio. And again,
Speaker 11: if your technology stocks have run, there's nothing wrong with
Speaker 11: trimming some winners. It seems to be something we forget
Speaker 11: to do. I would take a little bit of money
Speaker 11: off the table attack.
Speaker 2: This is Bloomberg Daybreak Asia, your morning brief on the
Speaker 2: story's making news from Hong Kong to Singapore and Wall Street.
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