WEBVTT - Trump's Third Indictment, Chinese Oil Demand

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<v Speaker 1>Good morning.

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

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<v Speaker 2>stories we're following today.

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<v Speaker 1>Advanced micro Devices reporting second quarter earnings that did top

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<v Speaker 1>analyst estimates. AMD says it's making further inroads in the

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<v Speaker 1>race to develop artificial intelligence technology. More from Bloomberg's tom busby.

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<v Speaker 3>AMD earning fifty eight cents a share, beating estimates by

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<v Speaker 3>a penny, with revenues of five point three six billion

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<v Speaker 3>dollars just topping estimates. It's also forecasting revenue for the

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<v Speaker 3>current quarter at upwards of six billion dollars thanks to

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<v Speaker 3>gains in making AI accelerators, an area now dominated by

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<v Speaker 3>rival in Vidia, which CEO Lisa Sue said in a

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<v Speaker 3>statement increased by more than seven times in the quarter

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<v Speaker 3>as customers initiated or expanded program supporting future deployments of

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<v Speaker 3>its Instinct accelerators at scale. Tom busby Bloomberg, day Break Asia.

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<v Speaker 1>And Doug the Stalk is firm in late trading at

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<v Speaker 1>the moment, up two point four percent.

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<v Speaker 2>We go to Starbucks next after the beld. The company

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<v Speaker 2>reported quarterly sales below analyst estimates. We have more from

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<v Speaker 2>Bloomberg's Charlie Pellett.

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<v Speaker 4>It is a sign that momentum may be slowing for

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<v Speaker 4>the coffee giant amid higher prices and tighter pocketbooks. The

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<v Speaker 4>results contrast with those of McDonald's, which topped estimates despite

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<v Speaker 4>warnings of slowing growth. Starbucks earnings show that American consumers

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<v Speaker 4>may be starting to cut back on discretionary services such

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<v Speaker 4>as dining out. International same store sales grew twenty four

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<v Speaker 4>percent in the quarter, in line with estimates, power by

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<v Speaker 4>higher traffic That included higher than anticipated growth in China,

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<v Speaker 4>which is still recovering after extended COVID nineteen restrictions in

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<v Speaker 4>New York, Charlie Pellett Bloomberg Daybreak Asia, and.

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<v Speaker 1>In late trading their Starbucks down just a little more

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<v Speaker 1>than one percent. Well investors looked beyond China sales weakness

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<v Speaker 1>for Caterpillar to send shares up to a new high,

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<v Speaker 1>and we'll get you details on that in just a moment.

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<v Speaker 1>More from Bloomberg's Tracy Junkie.

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<v Speaker 5>Demand for Caterpillars earth moving equipment is still going strong

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<v Speaker 5>on much of planet Earth, but China is an exception.

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<v Speaker 5>While Caterpillar's second quarter earnings and revenue climbed well about estimates.

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<v Speaker 5>Sales in China were softer than the company anticipated. The

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<v Speaker 5>Caterpillar CEO called out weakness in excavators most used for

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<v Speaker 5>Chinese construction projects. Even so, he says the company's full

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<v Speaker 5>year earnings will be better than expected. Tracy Jonkie Bloomberg,

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<v Speaker 5>Daybreak Asia.

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<v Speaker 2>US lawmakers on Capitol Hill are investigating two firms over

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<v Speaker 2>there China investments. The story from Bloomberg's and Kates.

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<v Speaker 6>How Select Committee is looking into whether black Rock and

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<v Speaker 6>MSCI allegedly helped to facilitate American investment into Chinese companies

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<v Speaker 6>that have been blacklisted by the federal government for human

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<v Speaker 6>rights abuses and aiding the military. Black Rock, the world's

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<v Speaker 6>largest asset manager, has been ordered to turn over information

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<v Speaker 6>about the inclusion of Chinese firms and its mutual and

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<v Speaker 6>other funds. Financial services provider ms C is reviewing the

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<v Speaker 6>panel's request. Lawmakers say American companies should not be profiting

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<v Speaker 6>from investments that fuel the military advancement of the US's

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<v Speaker 6>foremost foreign adversary. In Washington and Kates Bloomberg, day Break Asia.

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<v Speaker 1>China's oil demand may have peaked for twenty twenty three.

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<v Speaker 1>Bloomberg's Joan Wong has more from Hong Kong.

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<v Speaker 7>Crude imports reached a three year high in June after

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<v Speaker 7>exceeding twelve million barrels a day in May. That may

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<v Speaker 7>seem like music to the ears of the bulls, but

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<v Speaker 7>a lot of that oil has been stockpiled as buyers

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<v Speaker 7>took advantage of lower prices to replenish inventories. Energy Aspects

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<v Speaker 7>says China's oil demand likely peaked at about sixteen million

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<v Speaker 7>barrels a day in the last quarter. The possibility of

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<v Speaker 7>more stimulus looms and that would propel prices higher, but

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<v Speaker 7>analysts say that might be more of a twenty twenty

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<v Speaker 7>four story in Hong Kong and joined Wong Bloomberg day

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<v Speaker 7>Break Asia.

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<v Speaker 1>So, Doug, if we take that story there that Joan

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<v Speaker 1>just did about oil perhaps having peaked given the slower

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<v Speaker 1>growthing China, and put that with the comments from Caterpillar,

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<v Speaker 1>it doesn't sound too good. Caterpillar is saying that equipment

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<v Speaker 1>sales in China were worse than expected. But then again,

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<v Speaker 1>once again, looking at Starbucks and McDonald's, you know it's

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<v Speaker 1>a different area. It's these are smaller purchases, you know,

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<v Speaker 1>people going and buying a cup of coffee or or

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<v Speaker 1>you know, a Mickey Di's burger. It's a different kind

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<v Speaker 1>of sales outlook in China based on what you're.

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<v Speaker 2>Doing most definitely, So if you're an official in Beijing, Brian,

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<v Speaker 2>how do you begin to target stimulus based on those

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<v Speaker 2>data points that you've just laid out there? What do

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<v Speaker 2>you do if you want to apply a little bit

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<v Speaker 2>more juice to get the economy going.

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<v Speaker 1>Well, particularly when you know one of the one of

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<v Speaker 1>the approaches is they want to get consumer spending. But

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<v Speaker 1>we see consumer spending on things like travel and restaurants

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<v Speaker 1>and that sort of thing, the big purchase items. That's

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<v Speaker 1>a little different. Confidence in investing for the future. A

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<v Speaker 1>lot of that is tied up in the in the

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<v Speaker 1>property market. And even though Caterpillar spoke of weakness in China,

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<v Speaker 1>the shares rocketed today up eight point nine percent, and

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<v Speaker 1>so you can tell that at least in the US

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<v Speaker 1>there is confidence about the future. We know that there's

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<v Speaker 1>been a lot of deficit spending and on the fiscal

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<v Speaker 1>side is a lot of juice there. And Caterpillar over

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<v Speaker 1>the past month up sixteen point seven percent. So if

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<v Speaker 1>you're looking for a broadening in the market in the US.

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<v Speaker 1>You're seeing it in industrial.

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<v Speaker 2>Yeah, speaking of deficit spending it we want to remember

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<v Speaker 2>that after the bell here in the US, Fitch lowered

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<v Speaker 2>the long term debt rating of the US to double

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<v Speaker 2>A plus from triple A. Even so, Fitch calls the

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<v Speaker 2>outlook stable. It says the downgrade does reflect the expected

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<v Speaker 2>fiscal deterioration over the next three years and a high

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<v Speaker 2>and growing general government debt burden. So could be some

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<v Speaker 2>tough times for the bond market ahead.

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<v Speaker 1>Yeah, all right, the big story of the hour. Now

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<v Speaker 1>it's time for Global News. Donald Trump charged in the

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<v Speaker 1>January six Special Council investigation at Baxter has Global News

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<v Speaker 1>from a nine to sixty newsroom in San Francisco.

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<v Speaker 8>Yeah, big day in history. You're right, Brian. I. We're

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<v Speaker 8>joined by Bloomberg Sound on Balance of Power co host

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<v Speaker 8>Joe Matthew. Joe, thanks for staying with us. Donald Trump indicted.

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<v Speaker 8>I want to go through the charges with you and

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<v Speaker 8>get political stuff, but I want to play first. A

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<v Speaker 8>quick cut from Special counsel Jack Smith.

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<v Speaker 9>Today, an indictment was unsealed, charging Donald J. Trump with

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<v Speaker 9>conspiring to defraud the United States, conspiring to disenfranchise voters

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<v Speaker 9>and conspiring and attempting to obstruct an official proceeding.

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<v Speaker 8>All right, Joe, that's a pretty straightforward and a punch

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<v Speaker 8>to the jaw that Donald Trump first participated in a

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<v Speaker 8>conspiracy to the fraud. Now, this needs to be adjudicated.

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<v Speaker 8>But in my thinking of it, and I want to

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<v Speaker 8>know whether it's your thinking as well, that means that

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<v Speaker 8>Donald Trump knew that he had lost the election, but

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<v Speaker 8>he went ahead with the attempt to overturn.

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<v Speaker 10>Well, that's right, and you know, we do have to

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<v Speaker 10>remind our listeners here that this is the beginning of

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<v Speaker 10>yet another long process. But these four charges are severe,

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<v Speaker 10>as you just heard from the Special Council, coming right

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<v Speaker 10>down to this conspiracy against the right to vote. That

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<v Speaker 10>was one that really jumped off the page for us.

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<v Speaker 10>And we can talk about that a little bit more.

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<v Speaker 10>But you know the fact that there was also no

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<v Speaker 10>charge related to the actual day of January sixth. There

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<v Speaker 10>was no insurrection charge for instance, that some thought might

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<v Speaker 10>be part of this package. It was, you know, affectionately

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<v Speaker 10>known as the January sixth investigation, but it's in fact

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<v Speaker 10>the attempts to overturn the election results. You know, think

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<v Speaker 10>about the pressure campaign against Mike Pence, the slates of

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<v Speaker 10>so called alternate electors. That's what these charges are getting

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<v Speaker 10>down to.

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<v Speaker 8>Yeah, so I do want to talk more about disenfranchised

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<v Speaker 8>voters and disrupt a proceeding. So I mean, yeah, they

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<v Speaker 8>were saying that basically, that he would say that people

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<v Speaker 8>who voted their vote didn't count, and then when that

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<v Speaker 8>didn't work, you know, going to the sending people to

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<v Speaker 8>the Senate. So you're right, there's a thin line between

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<v Speaker 8>whether he instigated the insurrection or whether he was separate

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<v Speaker 8>from it, isn't there.

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<v Speaker 10>Well, that's absolutely right, and it's a case that they

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<v Speaker 10>decided not to try to make here in terms of

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<v Speaker 10>inciting an insurrection or some other similar activity. These conspiracies,

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<v Speaker 10>and I will read directly from the indictment targeted a

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<v Speaker 10>bedrock function. It writes of the US federal government the

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<v Speaker 10>nation's process of collecting, counting, and certifying the results of

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<v Speaker 10>the presidential election. That would be the federal government function,

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<v Speaker 10>in this case, electing the president. It is remarkable to

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<v Speaker 10>read that on the page, even though many predicted that

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<v Speaker 10>this would be essentially where the grand jury was headed,

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<v Speaker 10>where this indictment was headed, but for a former president

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<v Speaker 10>to be running for reelection while this narrative is coming

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<v Speaker 10>from the Department of Justice.

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<v Speaker 8>Is historic now a recurring theme of sound on and

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<v Speaker 8>balance of power that you talk about almost every day.

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<v Speaker 8>Is it these things when they come down seem to

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<v Speaker 8>help Donald Trump? You know? So does this do the

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<v Speaker 8>same or are these more severe than the others?

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<v Speaker 10>Well, you better believe he's going to be fundraising off

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<v Speaker 10>of this. But the interesting wrinkle there is that many

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<v Speaker 10>of these folks who put in an average of thirty

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<v Speaker 10>four dollars and twenty cents based on his quarterly report

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<v Speaker 10>to sending money to the campaign and money spent by

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<v Speaker 10>the Political Action Committee, is in fact going to pay

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<v Speaker 10>his lawyers to the tune of forty million dollars. So

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<v Speaker 10>there are questions about what the feeling is going to

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<v Speaker 10>be right now, while motivated potentially by what some supporters

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<v Speaker 10>see as the weaponization of government, that's what he'll call

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<v Speaker 10>this third indictment. And again we are at number three

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<v Speaker 10>now with the potential for four to come. Number four

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<v Speaker 10>to come in August.

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<v Speaker 4>But they might.

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<v Speaker 10>Wonder where their money is going. Is it going to

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<v Speaker 10>help elect the former president or are we simply funding

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<v Speaker 10>his legal defense mechanism.

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<v Speaker 8>Well, I know it's not going to stop him. He's

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<v Speaker 8>going to want to get back out of the campaign

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<v Speaker 8>trailig would you think absolutely?

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<v Speaker 10>I'd say that he probably will schedule a roule tonight

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<v Speaker 10>as a matter of fact, and do whatever he can

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<v Speaker 10>to seize on this moment. Incidentally, and for just something

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<v Speaker 10>to note, by the way, Joe Biden, who's on vacation

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<v Speaker 10>in Delaware this beach this week on the beach, is

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<v Speaker 10>going to see Oppenheimer tonight. So two very different tracks

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<v Speaker 10>for these gentlemen.

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<v Speaker 8>Yeah, that really is ironic. So just very quickly going back,

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<v Speaker 8>does this hurt Donald Trump or no?

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<v Speaker 10>Well, it really depends on what timeline we asked that

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<v Speaker 10>question in and how we decide to, you know, kind

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<v Speaker 10>of fill in the blanks on what the reaction will be.

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<v Speaker 8>Here.

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<v Speaker 10>Look, if history is any short term history here, any guide,

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<v Speaker 10>it's going to help him in the meantime. We could

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<v Speaker 10>even go further to say that it might help him

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<v Speaker 10>win the nomination at it. But what happens in a

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<v Speaker 10>general election. We had to pull out today from the

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<v Speaker 10>New York Times and Seeena College a second round of

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<v Speaker 10>numbers that show him tied with Joe Biden in a

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<v Speaker 10>presumptive rematch forty three percent each. This is not going

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<v Speaker 10>to help him add to his base or win over

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<v Speaker 10>independent voters. So maybe I'll say no and yes in

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<v Speaker 10>the same answer.

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<v Speaker 8>All right, and we appreciate that. Joell, thank you for

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<v Speaker 8>staying with us and standing up. We really appreciate it.

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<v Speaker 8>That is the host of Sound on and Balance of Power.

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<v Speaker 8>Joe Matthew here on Bloomberg in San Francisco. I'm at

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<v Speaker 8>Baxter and this is Bloomberg.

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<v Speaker 2>Dave Breay, Kasha, and our guest this hour is George Bevoris.

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<v Speaker 2>He is executive director also the head of research at

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<v Speaker 2>K two Asset Management. He joins from Melbourne. George, thanks

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<v Speaker 2>for being with us. Were you surprised by that decision

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<v Speaker 2>on the part of the RBA yesterday?

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<v Speaker 11>Not so much. I mean the part of the RBI,

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<v Speaker 11>they've been quite aggressive with the right hawks and what's

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<v Speaker 11>unique to Australia very quickly for non Australian residences mortgages,

0:11:40.920 --> 0:11:42.800
<v Speaker 11>which are the key part of our economy on the

0:11:42.800 --> 0:11:47.280
<v Speaker 11>housing sector. I really prossed off the cash right unlock

0:11:47.360 --> 0:11:51.520
<v Speaker 11>the US example, and there's a lot of there's a

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<v Speaker 11>lot of fixed guide to floating. That's tripling the right

0:11:54.640 --> 0:11:57.760
<v Speaker 11>and so there's a lot of demand destruction underway and

0:11:57.800 --> 0:11:59.920
<v Speaker 11>the trajectory of in flash and will why to you

0:12:00.080 --> 0:12:01.800
<v Speaker 11>high from a purest point of view. From our point

0:12:01.840 --> 0:12:05.240
<v Speaker 11>of view, it's in the right direction and the poor

0:12:05.320 --> 0:12:10.079
<v Speaker 11>through the hawkish time seem like a reasonable outcome. But

0:12:10.840 --> 0:12:13.360
<v Speaker 11>the thing to reinforce I think Australians need to understand

0:12:13.440 --> 0:12:16.520
<v Speaker 11>is rates are staying higher for much longer and that's

0:12:16.520 --> 0:12:18.040
<v Speaker 11>a consequence of our soft landing.

0:12:18.160 --> 0:12:18.840
<v Speaker 4>Yeah, I'll have.

0:12:18.920 --> 0:12:22.360
<v Speaker 2>Issues Harby keeping rates on hold at four point one percent.

0:12:22.400 --> 0:12:26.080
<v Speaker 2>That's the target for the key rate there. In terms

0:12:26.120 --> 0:12:27.800
<v Speaker 2>of what happened after the bell here in the US,

0:12:27.840 --> 0:12:31.080
<v Speaker 2>we had Fitch, the ratings agency, lowering the long term

0:12:31.080 --> 0:12:34.240
<v Speaker 2>debt rating for the US to double A plus from

0:12:34.360 --> 0:12:38.800
<v Speaker 2>triple A. The outlook has been labeled stable. Fitch says

0:12:38.880 --> 0:12:43.360
<v Speaker 2>that this adjustment really reflects the expectation for some fiscal

0:12:43.400 --> 0:12:45.920
<v Speaker 2>deterioration in the US over the next three years. We're

0:12:46.160 --> 0:12:48.760
<v Speaker 2>going to be dealing with a high and growing general

0:12:48.800 --> 0:12:49.959
<v Speaker 2>government debt burden.

0:12:50.160 --> 0:12:51.520
<v Speaker 4>We knew that was the case.

0:12:52.320 --> 0:12:54.720
<v Speaker 2>One of the things that we're expecting tomorrow is the

0:12:54.760 --> 0:12:59.360
<v Speaker 2>government's plan for quarterly financing. What is your outlook for

0:12:59.360 --> 0:13:01.560
<v Speaker 2>the US bomb market right now? If the FED is

0:13:01.720 --> 0:13:04.400
<v Speaker 2>near the end of its tightening cycle, and maybe some

0:13:04.480 --> 0:13:08.080
<v Speaker 2>policy makers appearing to be a little confident that at

0:13:08.200 --> 0:13:11.520
<v Speaker 2>least in terms of direction, inflation is coming down, we

0:13:11.600 --> 0:13:13.840
<v Speaker 2>may not get much more in the way of tightening.

0:13:13.840 --> 0:13:15.920
<v Speaker 2>What's your outlook for the US bond market?

0:13:17.240 --> 0:13:19.920
<v Speaker 11>Yeah, and of the good question, and the FITCH is interesting,

0:13:19.960 --> 0:13:23.920
<v Speaker 11>but high level the FED. Hats off to the Fed.

0:13:24.000 --> 0:13:27.480
<v Speaker 11>So far it's done quite well. There is stubborn inflation

0:13:27.760 --> 0:13:31.160
<v Speaker 11>services component that's seventy two percent of that core index

0:13:31.200 --> 0:13:34.239
<v Speaker 11>that is stubbornly too high, but that's been again pedantic,

0:13:35.400 --> 0:13:37.600
<v Speaker 11>while we acknowledge its way too high. The core the

0:13:37.679 --> 0:13:41.440
<v Speaker 11>trajectory is in the right place. And then the resilience

0:13:41.440 --> 0:13:44.800
<v Speaker 11>throat across the North American economy and the pragmatism with

0:13:44.920 --> 0:13:49.760
<v Speaker 11>corporate America and winding down inventories, adjusting and pivoting to

0:13:49.760 --> 0:13:53.400
<v Speaker 11>protect margins, et cetera. Reflecting in the aggurate earnings basically

0:13:53.480 --> 0:13:56.360
<v Speaker 11>says that the bond market and yield inversion was way

0:13:56.360 --> 0:14:01.520
<v Speaker 11>too pessimistic, and it seems like that soft landing implies

0:14:01.720 --> 0:14:05.040
<v Speaker 11>high for longer rates, which is an issue for equity valuations,

0:14:05.360 --> 0:14:07.600
<v Speaker 11>but the pitch rating. The key point here is that

0:14:07.600 --> 0:14:10.520
<v Speaker 11>that the nuances the stateness can be unwound a bit

0:14:10.559 --> 0:14:13.400
<v Speaker 11>and reverse a little bit because of the warning shot

0:14:13.480 --> 0:14:15.640
<v Speaker 11>from a rating agency and plays be a bit more

0:14:15.880 --> 0:14:18.840
<v Speaker 11>prudent on the fiscal side. And that's an important discussion

0:14:18.880 --> 0:14:22.640
<v Speaker 11>to reinforce right across the developed world because it hasn't

0:14:22.680 --> 0:14:26.360
<v Speaker 11>been the case from rating agencies this open for a

0:14:26.440 --> 0:14:28.160
<v Speaker 11>number of years, and that's the question to ask for

0:14:28.200 --> 0:14:31.160
<v Speaker 11>both sovereigns and the developed world, and also provincial and

0:14:31.200 --> 0:14:32.520
<v Speaker 11>semi governments in Australia.

0:14:32.680 --> 0:14:36.960
<v Speaker 2>Speaking of being overly pessimistic, a number of analysts for

0:14:37.360 --> 0:14:40.920
<v Speaker 2>the US equity market have been calling for correction. Today

0:14:41.200 --> 0:14:44.320
<v Speaker 2>I noted the JP Morgans saying that the US equity

0:14:44.360 --> 0:14:47.560
<v Speaker 2>market may be pulling back in the coming weeks, although

0:14:48.440 --> 0:14:50.880
<v Speaker 2>JP Morgan Chase is expecting the S and P five

0:14:50.960 --> 0:14:54.680
<v Speaker 2>hundred to reassert itself around September before climbing to an

0:14:54.680 --> 0:14:57.120
<v Speaker 2>all time high. A lot of the earnings that we

0:14:57.160 --> 0:14:59.960
<v Speaker 2>have seen have been positive. And just to go back

0:15:00.040 --> 0:15:01.760
<v Speaker 2>to the point that we were discussing a moment ago

0:15:01.760 --> 0:15:04.840
<v Speaker 2>about the FED being near the end of its tightening cycle.

0:15:05.360 --> 0:15:07.560
<v Speaker 2>Do you think there is a lot to argue for

0:15:07.800 --> 0:15:08.960
<v Speaker 2>higher US equities.

0:15:10.760 --> 0:15:15.480
<v Speaker 11>Yeah, we're cautiously optimistic and we are overweight as not

0:15:15.520 --> 0:15:18.040
<v Speaker 11>as overweight as earlier on this year, but we like

0:15:18.120 --> 0:15:21.920
<v Speaker 11>the overweight and coarsely optimistic on the equities and underweight

0:15:21.960 --> 0:15:24.640
<v Speaker 11>the high yield and overweight the scene un security for

0:15:24.760 --> 0:15:27.760
<v Speaker 11>its worth. But going back to the equities, it's navigating

0:15:27.800 --> 0:15:30.760
<v Speaker 11>itself into that soft landing. Again, it was higher cash

0:15:30.840 --> 0:15:33.640
<v Speaker 11>rates for longer, so therefore that's not price into the

0:15:33.680 --> 0:15:36.800
<v Speaker 11>equity market. That could be a negative, but the positive

0:15:36.880 --> 0:15:41.040
<v Speaker 11>is the resilience again that Corporate America is pivoting, protecting margins,

0:15:41.120 --> 0:15:44.040
<v Speaker 11>running down inventory. We're required and obviously it's got the

0:15:44.560 --> 0:15:46.720
<v Speaker 11>tech rally to has been a bit of a tall wind,

0:15:46.760 --> 0:15:49.120
<v Speaker 11>and that narrow rally. Acknowledge that, you know, it's a

0:15:49.200 --> 0:15:52.160
<v Speaker 11>multi decade narrow rally for the SMP five hundred or

0:15:52.280 --> 0:15:54.760
<v Speaker 11>pretty much in Nasdaq as well. It is broadening out

0:15:54.800 --> 0:15:59.280
<v Speaker 11>because soft landing more predictability that the fedce engineered to

0:15:59.480 --> 0:16:03.160
<v Speaker 11>date calls that why doesn't that rally go into undervalued

0:16:03.200 --> 0:16:05.520
<v Speaker 11>stocks and say the Russell two thousand, where there's more

0:16:05.560 --> 0:16:08.840
<v Speaker 11>economic sensitivity. So there's a number of nuances playing there,

0:16:08.920 --> 0:16:13.320
<v Speaker 11>but the overweight and that measured overweight cautiously optimistic to

0:16:13.400 --> 0:16:16.160
<v Speaker 11>be maintained into next year. But that high for longer

0:16:18.040 --> 0:16:21.600
<v Speaker 11>rate levels, I should say, are basically a function of

0:16:21.680 --> 0:16:24.600
<v Speaker 11>success and that soft landing that's been engineered because of

0:16:24.600 --> 0:16:27.760
<v Speaker 11>the silience. Again, week by week we just get more confirmations. Yes,

0:16:27.840 --> 0:16:30.120
<v Speaker 11>IM is a little bit weaker, but in the aggregate

0:16:30.160 --> 0:16:33.960
<v Speaker 11>of the past few months, overwhelmingly there is a resilience

0:16:34.000 --> 0:16:36.840
<v Speaker 11>across there. And notwithstanding there is demand destruction happening, but

0:16:36.920 --> 0:16:39.840
<v Speaker 11>at a much much slower pace. And the Bears were

0:16:39.840 --> 0:16:41.280
<v Speaker 11>looking at earlier this year.

0:16:41.480 --> 0:16:43.400
<v Speaker 2>George, in the time we have left, let's take a

0:16:43.520 --> 0:16:46.680
<v Speaker 2>quick look at China. We did have numbers from Caterpillar

0:16:46.760 --> 0:16:50.240
<v Speaker 2>that cited very weak sales there. On the other hand,

0:16:50.280 --> 0:16:52.520
<v Speaker 2>if you look at the numbers from both Starbucks and

0:16:52.840 --> 0:16:55.440
<v Speaker 2>McDonald's Brian and I were talking about this a moment ago,

0:16:56.240 --> 0:16:59.080
<v Speaker 2>the consumer seems to be holding up reasonably well. What

0:16:59.280 --> 0:17:02.040
<v Speaker 2>is your outlook for China going forward? And talk to

0:17:02.120 --> 0:17:04.840
<v Speaker 2>me a little bit too about the extent to what

0:17:04.920 --> 0:17:07.040
<v Speaker 2>you would like to see a little bit more in

0:17:07.080 --> 0:17:08.400
<v Speaker 2>the way of targeted stimulus.

0:17:09.720 --> 0:17:12.520
<v Speaker 11>Yeah, very quickly, so bias here. So we're underweight China,

0:17:12.560 --> 0:17:14.399
<v Speaker 11>but we did pick up some short term alibarba in

0:17:14.440 --> 0:17:18.280
<v Speaker 11>the past five weeks or so, but underway structurally overweight

0:17:18.320 --> 0:17:21.639
<v Speaker 11>Southeast Asia as the consequence, but very quickly targeted policy.

0:17:21.680 --> 0:17:24.000
<v Speaker 11>They've been trying to do targeted policy now for two years.

0:17:24.320 --> 0:17:27.399
<v Speaker 11>It's not working. And if I can paraphrase Larry Summers

0:17:27.400 --> 0:17:30.000
<v Speaker 11>is always on your shows, it's all about the ultimate

0:17:30.080 --> 0:17:32.000
<v Speaker 11>confidence of mainland China.

0:17:32.040 --> 0:17:32.840
<v Speaker 4>It's just not there.

0:17:33.119 --> 0:17:36.479
<v Speaker 11>It's not coming through that animal spirits. So Beijing's got

0:17:36.520 --> 0:17:39.560
<v Speaker 11>to continue to pivot and be innovative and how it

0:17:39.680 --> 0:17:43.359
<v Speaker 11>targets this. And obviously these sentiments linked to a labor market,

0:17:43.400 --> 0:17:47.320
<v Speaker 11>then employment optimism, and obviously the housing market, which is

0:17:47.400 --> 0:17:50.680
<v Speaker 11>the largest housing market correction we've seen in the world

0:17:50.760 --> 0:17:53.480
<v Speaker 11>on the planet. So there's a lot of nuances there.

0:17:53.840 --> 0:17:56.960
<v Speaker 11>Beijing's just going to keep working at being innovative finding

0:17:57.359 --> 0:18:00.480
<v Speaker 11>how to target it because we're all waiting for to

0:18:00.560 --> 0:18:03.640
<v Speaker 11>be pretty much domestic demand to be a bigger proportion

0:18:04.040 --> 0:18:06.800
<v Speaker 11>of a jdpay for the decades ahead. That's an obvious

0:18:06.800 --> 0:18:10.040
<v Speaker 11>statement given where they've been coming from the export sector

0:18:10.080 --> 0:18:13.639
<v Speaker 11>of the path two and a half decades, but it's

0:18:13.680 --> 0:18:15.840
<v Speaker 11>got an nuance there, and it's very difficult to be

0:18:15.960 --> 0:18:19.800
<v Speaker 11>overweight long duration in mainland China, but tactically in a

0:18:19.960 --> 0:18:21.840
<v Speaker 11>very very short term, you can play it there.

0:18:24.200 --> 0:18:27.000
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