WEBVTT - ECB Hikes, BOJ Decision and Intel's Upbeat Forecast

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<v Speaker 1>Good morning.

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

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<v Speaker 2>stories we're following today. The en has jumped against its

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<v Speaker 2>peers after a report said the Bank of Japan would

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<v Speaker 2>discuss tolerating higher bond yields. The story from Bloomberg's Bonnie.

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<v Speaker 3>Ol The Nikki reported the BOJ is considering letting long

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<v Speaker 3>term rates rise above its zero point five percent cap

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<v Speaker 3>in its youth curve control policy. The yen rose as

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<v Speaker 3>much as two percent against the euro and about one

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<v Speaker 3>percent against the dollar before easing. Markets have been speculating

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<v Speaker 3>on the timing of changes to the YCC program. It

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<v Speaker 3>might be seen as the beginning of a monetary tightening

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<v Speaker 3>campaign by the BOJ. That said, Bloomberg Economics expects the

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<v Speaker 3>BOJ to stand pad at today's meeting, and we'll hold

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<v Speaker 3>through the first half of twenty twenty four. In Hong Kong.

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<v Speaker 3>I'm Bonnie Ol Bloomberg Day Break Asia.

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<v Speaker 1>Next we go to the European Central Bank Today. The

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<v Speaker 1>ECB has expected hiked its key rate by twenty five

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<v Speaker 1>basis points. You know, this is the ninth straight increase

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<v Speaker 1>since last July. So the key deposit rate is now

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<v Speaker 1>at three point seven five percent. All of this comes

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<v Speaker 1>as ECB officials have flagged at their hiking campaign may

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<v Speaker 1>be close to ending. President Christine Legard said the ECB

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<v Speaker 1>would have an open mind as to what to do next,

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<v Speaker 1>and it will follow a data dependent approach.

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<v Speaker 4>Our future decisions will ensure that the key ECB interest

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<v Speaker 4>rates will be set at sufficiently restrictive levels for as

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<v Speaker 4>long as necessary to achieve a timely return of inflation

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<v Speaker 4>to our two percent medium term target.

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<v Speaker 1>Now, as Madame Leguard spoke, money markets began looking at

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<v Speaker 1>Betts for the September meeting. Right now, odds of another

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<v Speaker 1>rate hike only about forty percent. Earlier that had been

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<v Speaker 1>fifty percent. Madame Leguard may be offering some more clues

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<v Speaker 1>on her thinking when she gives a speech at the

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<v Speaker 1>fed's annual retreat in Jackson Hall. That will happen Brian.

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<v Speaker 1>Late August well.

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<v Speaker 2>The chip maker Intel saying that sales in the current

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<v Speaker 2>quarter will be as much as thirteen point nine billion dollars.

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<v Speaker 2>Analysts we're estimating thirteen point three billion. The outlook suggests

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<v Speaker 2>that Intel has turned a corner after a sluggish demand

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<v Speaker 2>for PC chips earlier we heard from Angeline Zino at

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<v Speaker 2>CFRA Research.

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<v Speaker 5>So it does look like that kind of inventory overhang

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<v Speaker 5>that we've seen over the last four or five quarters

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<v Speaker 5>at least is starting to stabilize here, and you know,

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<v Speaker 5>clearly on the guidance side of things, it also does

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<v Speaker 5>indicate that we are going to see more momentum going

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<v Speaker 5>into the second half of the year. So all good

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<v Speaker 5>signs for Intel, at least from a cyclical perspective.

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<v Speaker 2>Intel also reported second quarter revenue that fell fifteen percent

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<v Speaker 2>to twelve point nine billion dollars, but that did beat

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<v Speaker 2>analyst estimates of about twelve billion. Client computing and data

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<v Speaker 2>center sales both beat analyst expectations, and the shares really

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<v Speaker 2>popped in the after hours DOUG currently up seven point

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<v Speaker 2>nine percent.

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<v Speaker 1>Well top US regulators have unveiled plans for their most

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<v Speaker 1>comprehensive overhaul of banking rules in years. More from Bloombergs

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<v Speaker 1>and Kates.

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<v Speaker 6>The Feeder Reserve, the FDIC, and the Office of the

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<v Speaker 6>Controller of the Currency would boost the amount of capital

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<v Speaker 6>that banks with at least one hundred billion dollars in

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<v Speaker 6>assets must hold by an average of sixteen percent. The

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<v Speaker 6>biggest banks face a nineteen percent increase to thicken their

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<v Speaker 6>financial cushions to absorb unexpected losses. The reforms are part

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<v Speaker 6>of an international overhaul that began more than a decade

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<v Speaker 6>ago in response to the two thousand and eight financial crisis.

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<v Speaker 6>The package isn't likely to be implemented for years, with companies,

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<v Speaker 6>consumer advocates, and others to weigh in on the proposal

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<v Speaker 6>over the next four months. In Washington and Kates Bloomberg

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<v Speaker 6>day Break.

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<v Speaker 2>Asia, China's top housing official has stepped up the pressure

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<v Speaker 2>on regulators and lenders to try to revive the property sector.

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<v Speaker 2>Bloomberg's Joan Wong has that story from.

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<v Speaker 7>Hong Kong, Housing Minister Niehong has called for home buyers

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<v Speaker 7>who've paid off previous mortgages to be considered first time

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<v Speaker 7>purchasers up until now. Buyers who have a mortgage history

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<v Speaker 7>but don't currently own a property are subject to higher

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<v Speaker 7>down payment rules. Home sales resumed declines in June, following

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<v Speaker 7>a brief rebound earlier this year. Earlier this month's financial

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<v Speaker 7>regulators did step up the pressure on banks to east

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<v Speaker 7>terms for property companies. Now. Ni is also calling for

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<v Speaker 7>further measures, such as tax and fee relief for housing

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<v Speaker 7>upgrades and replacement in Hong Kong. I'm Joanne Wong, Bloomberg

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<v Speaker 7>Day Brigasia Doug.

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<v Speaker 2>The move in the end was huge today, although it

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<v Speaker 2>did ease back. As we noted, Krishna guhad Evercore said

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<v Speaker 2>that obviously any change in this would have to be

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<v Speaker 2>really carefully managed, otherwise it could have a big impact

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<v Speaker 2>on markets. But Evercore also said that they believe that

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<v Speaker 2>this process has already been over discounted on what might happen,

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<v Speaker 2>and we noted at the end of our story that

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<v Speaker 2>Bloomberg Economics is expecting no change today and maintaining this

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<v Speaker 2>policy through next year or into next year.

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<v Speaker 1>Well, I was looking at a note from Alan Ruskin

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<v Speaker 1>over at Deutsche Bank, and he was saying that a

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<v Speaker 1>hawk policy tweak even rhetorically by the Bank of Japan

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<v Speaker 1>would likely be seen as an early step, a very

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<v Speaker 1>early step toward pulling short term rates in Japan into

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<v Speaker 1>positive terrain. I think the policy rate is what negative

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<v Speaker 1>ten basis points, and if that were to occur, it

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<v Speaker 1>would undoubtedly offer even more support to the Japanese end.

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<v Speaker 2>Well, it's another one of these adjustments that you have

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<v Speaker 2>to look at how much has already been discounted versus

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<v Speaker 2>the imagine total impact and you know it's probably somewhere

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<v Speaker 2>in there and it makes it difficult. But we'll of

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<v Speaker 2>course be watching that very closely today. Interesting the moves

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<v Speaker 2>in China. We had reported this a week ago, and

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<v Speaker 2>so you know, kudos to the reporters on that story

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<v Speaker 2>a week ago because we heard from the Housing Minister

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<v Speaker 2>just looking at making it a little bit easier for

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<v Speaker 2>people to acquire properties that otherwise had some restrictions.

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<v Speaker 1>Interesting that Goldman Sachs was saying today that each hedge

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<v Speaker 1>fund clients net purchased Chinese stocks at the fastest pace

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<v Speaker 1>in nine months on two day. And obviously, Brian, as

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<v Speaker 1>you know, this is going to be connected to a

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<v Speaker 1>lot of the policy support that we've been talking about

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<v Speaker 1>as a result of what's been coming out of the

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<v Speaker 1>Politburo meeting.

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<v Speaker 2>Yeah, and that's a big, big thing because the hedge

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<v Speaker 2>funds have been short the currency and short stocks for

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<v Speaker 2>a period of time. We've got Peter Sheer coming up

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<v Speaker 2>head of Macro's strategy at Academy Securities. He's great on

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<v Speaker 2>the bond market, done on rates generally, so he'll be

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<v Speaker 2>a fantastic guest to have on the program. That's all

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<v Speaker 2>dead ahead. Now it's time for global news. US Senate

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<v Speaker 2>is on a path to pass a military and a

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<v Speaker 2>package of sorts to counter China and Ukraine. Along the way,

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<v Speaker 2>let's get to Ed Baxter. He'll sort through all that

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<v Speaker 2>and bring you some pearls of wisdom.

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<v Speaker 8>Ed Yo, I don't know about the wisdom part. I

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<v Speaker 8>can start it through it, Brian thanks. Senate Appropriations Committee

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<v Speaker 8>is backed Communitions buill to counter China's military build up

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<v Speaker 8>as well as in Ukraine. So both things now. This

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<v Speaker 8>is the Pentagon's request to enter into a multi year

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<v Speaker 8>contract with Lockheed Martin and RTX Corporation. French President of

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<v Speaker 8>Maniu Macron says France is trying to position itself as

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<v Speaker 8>buffer between superpowers when it comes to the South Pacific.

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<v Speaker 8>He says the sovereignty of many states is threatened by

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<v Speaker 8>new imperialisms and power dynamics. Both China and the US

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<v Speaker 8>have sought to build influence in the region of Macron

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<v Speaker 8>wants Paris to act as a balance force. Even though

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<v Speaker 8>the month isn't through you and climate scientists say they'll

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<v Speaker 8>certainly go down as the warmest July on record. Secretary

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<v Speaker 8>General Antonio guteris using the strongest words yet.

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<v Speaker 9>Climate change is here, It is terrifying, and it is

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<v Speaker 9>just the beginning. The era of global warming has ended

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<v Speaker 9>the era of global boiling as it arrived.

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<v Speaker 8>And US President Joe Biden, at an event today with

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<v Speaker 8>Phoenix mayor, said heat is the number one weather related

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<v Speaker 8>killer in the United States.

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<v Speaker 1>There used to be a lot of time when I

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<v Speaker 1>first got here, a lot of people said, oh, it's

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<v Speaker 1>not a problem.

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<v Speaker 7>Well, I don't know anybody.

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<v Speaker 1>I shouldn't say that to anybody who honestly believes climate

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<v Speaker 1>change is not a serious problem.

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<v Speaker 8>Phoenix, by the way, top one hundred and ten degrees

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<v Speaker 8>today for the twenty seventh consecutive day, with the heat

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<v Speaker 8>expected last end of the weekend. Court official in Washington,

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<v Speaker 8>DC says there will be no Trump indictment today, although

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<v Speaker 8>his legal team is indicating it could come at any time.

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<v Speaker 8>This would involve charges related to the twenty twenty election results. Now,

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<v Speaker 8>Bloomberg Balance of Power co host Joe Matthews says, timing, well,

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<v Speaker 8>it's totally up to the Special prosecutor.

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<v Speaker 10>And one thing we do know is that the Special

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<v Speaker 10>Council can do this anytime he wants. A lot of

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<v Speaker 10>questions today about whether he's waiting for Congress to get

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<v Speaker 10>out of town. And we suspect that Jack Smith will

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<v Speaker 10>do this when he's good and ready.

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<v Speaker 8>Now, we also know there was a meeting today between

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<v Speaker 8>Trump attorneys and the Special Council Justice Department officials, declining

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<v Speaker 8>to comment and following now and this is the separate

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<v Speaker 8>indictment that's already dropped. A second Trump employee has been charged,

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<v Speaker 8>Carlos Dylara, who's a maintenance worker at mar A Lago.

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<v Speaker 8>North Korea showcased its nuclear weapons and its military parade

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<v Speaker 8>marking the Korean War armistice. Delegations from China and Russia

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<v Speaker 8>were present. Satellite imagery of preparations indicated the event included ICBMs,

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<v Speaker 8>designed to deliver nuclear warheads to the US mainland. So far,

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<v Speaker 8>there has been no mention of the event in its

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<v Speaker 8>official media. Global News powered by more than twenty seven

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<v Speaker 8>hundred journalists and analysts in over one hundred and twenty countries.

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<v Speaker 8>In San Francisco, I'm Ed Baxter, and this is Bloomberg.

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<v Speaker 2>This is Bloomberg Daybreak Asia. I'm Brian Curtis. In Hong Kong,

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<v Speaker 2>along with Rashad, so I'm not in London. Our guest

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<v Speaker 2>is Peter Shecher, head of macro strategy at Academy Securities. Well,

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<v Speaker 2>a lot to talk about, and I like it that

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<v Speaker 2>you've got David Bowie in your notes, So I think

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<v Speaker 2>this is going to go very well. Let's talk first

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<v Speaker 2>about the yen and the big move today and the

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<v Speaker 2>hints that the boj will do what we've always thought

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<v Speaker 2>they were going to do at some point. Your thoughts

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<v Speaker 2>on that.

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<v Speaker 11>Yeah, it's not very often that the markets have been

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<v Speaker 11>taken by surprise lately, but I think we are all

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<v Speaker 11>in this mode that, Okay, the Fed's kind of done,

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<v Speaker 11>maybe completely done, hiking the ECB actually sound a little

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<v Speaker 11>bit more dubbish than people were expecting. Markets were rallying,

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<v Speaker 11>we were all looking at Meta and all of a sudden,

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<v Speaker 11>the boj talked about changing the rumors came out that

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<v Speaker 11>they changed their yell cre control allowed the tenure to

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<v Speaker 11>go to fifty BIPs, and that sent everything spiraling because

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<v Speaker 11>I think that's been such a huge driver of US rates,

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<v Speaker 11>global rates, as Japanese buying of foreign debt, and that

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<v Speaker 11>could change if this really occurs.

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<v Speaker 12>Peter it's strange. I mean, it is history about to

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<v Speaker 12>repeat itself because ever since the start of the modern

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<v Speaker 12>boj we're talking about the BOJ Act in nineteen ninety eight,

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<v Speaker 12>there've only been two occasions when the Center Bank has

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<v Speaker 12>shifted to policy tightening. Once was in August two thousand,

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<v Speaker 12>the other was in July two thousand and six. And

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<v Speaker 12>guess what both of them happened after the FED finished

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<v Speaker 12>a series of rate hikes.

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<v Speaker 7>Spooky.

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<v Speaker 11>Yeah, And it's almost like there's a coordinated effort, right, Okay,

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<v Speaker 11>maybe globally you can't handle everyone hiking or tightening at

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<v Speaker 11>the same time. So now's Japan's turn to take the

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<v Speaker 11>mantle and run with this, which would be really interesting

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<v Speaker 11>if true. But again, there's no reason for Japanese yields

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<v Speaker 11>to stay as well as they are. I think you

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<v Speaker 11>will get more and more Japanese domestic buyers of JGB.

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<v Speaker 11>So what's started with the end today in terms of

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<v Speaker 11>strength could well continue, and I think that's going to

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<v Speaker 11>be a trend. I'm not sure why stocks reacted as

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<v Speaker 11>negatively as they did in the US saying that could

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<v Speaker 11>reverse itself, but I do think higher yields is probably

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<v Speaker 11>here to stay a little bit, and yen strength is

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<v Speaker 11>a new thing.

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<v Speaker 2>Yeah, And let's face it, I mean US doocs may

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<v Speaker 2>have just used it as an excuse to pull back

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<v Speaker 2>a little bit after some pretty solid gains. But I

0:11:44.800 --> 0:11:47.679
<v Speaker 2>mean we had the yield curve control adjusted from twenty

0:11:47.720 --> 0:11:50.880
<v Speaker 2>five basis points to fifty, and what they were suggesting

0:11:50.880 --> 0:11:53.760
<v Speaker 2>in the Nick story was just to a certain degree

0:11:54.120 --> 0:11:57.120
<v Speaker 2>a move from that. The end really strengthened back after

0:11:57.160 --> 0:11:59.760
<v Speaker 2>that call in December, but then gave most of it

0:11:59.800 --> 0:12:01.839
<v Speaker 2>back and we went back into the one forties on

0:12:01.960 --> 0:12:05.320
<v Speaker 2>dollar yen. So it's not like this is totally.

0:12:04.880 --> 0:12:08.000
<v Speaker 11>New, you know. I think maybe it was the timing

0:12:08.080 --> 0:12:11.120
<v Speaker 11>of this that really everyone had just got so comfortable

0:12:11.120 --> 0:12:14.200
<v Speaker 11>with Powell. It was just after the ECB presser, where

0:12:14.360 --> 0:12:18.600
<v Speaker 11>again Madame Leguard came out as relatively dubbish. So the

0:12:18.679 --> 0:12:20.360
<v Speaker 11>timing I think had something to do. People have been

0:12:20.360 --> 0:12:23.000
<v Speaker 11>positioned aggressively. I think people have been buying into this rally.

0:12:23.120 --> 0:12:25.280
<v Speaker 11>People have been buying into that central banks are down

0:12:25.360 --> 0:12:27.600
<v Speaker 11>the tightening, So I think it was probably more the

0:12:27.640 --> 0:12:30.199
<v Speaker 11>shock value. My gut feel is you want to fade

0:12:30.200 --> 0:12:33.160
<v Speaker 11>this move, at least in stocks and US dollar yields,

0:12:33.320 --> 0:12:36.000
<v Speaker 11>I think in I do like the end though, because

0:12:36.120 --> 0:12:38.800
<v Speaker 11>it probably is a shift in mentality and it should

0:12:38.800 --> 0:12:39.839
<v Speaker 11>be supportive to the end.

0:12:41.160 --> 0:12:43.040
<v Speaker 12>Just sort of bring something up here as well. And

0:12:43.160 --> 0:12:45.959
<v Speaker 12>you know, we look at what's what happened just about

0:12:45.960 --> 0:12:49.760
<v Speaker 12>what six weeks ago, you know, still and I'm talking

0:12:49.760 --> 0:12:52.720
<v Speaker 12>about the ECB here they were projecting your pick up

0:12:52.800 --> 0:12:55.360
<v Speaker 12>in a second quarter, growth and solidity for the second

0:12:55.360 --> 0:12:57.720
<v Speaker 12>half of the year, and then you know it didn't

0:12:57.720 --> 0:13:01.000
<v Speaker 12>look unreasonable. Composite pmis in the euro Zone were reasonable,

0:13:01.320 --> 0:13:04.079
<v Speaker 12>and then after two months of day to the pictures

0:13:04.280 --> 0:13:08.040
<v Speaker 12>entirely different, pmis collapsing, the nascent recovery, especially for Germany

0:13:08.080 --> 0:13:09.360
<v Speaker 12>looking more like a blip, and.

0:13:09.960 --> 0:13:11.120
<v Speaker 8>They raised rates.

0:13:11.320 --> 0:13:13.680
<v Speaker 12>Now this reminds me of tell me, Louise, there's no

0:13:13.760 --> 0:13:15.440
<v Speaker 12>stopping them.

0:13:15.760 --> 0:13:17.840
<v Speaker 11>Well, you know, I think I can talk more about

0:13:17.880 --> 0:13:19.719
<v Speaker 11>the FED. I think they are still making up for

0:13:19.800 --> 0:13:21.880
<v Speaker 11>mistakes that were made in twenty twenty one when everything

0:13:21.920 --> 0:13:24.960
<v Speaker 11>was transitory, transitory, transitory, and it turned out not to

0:13:25.000 --> 0:13:27.040
<v Speaker 11>be transitory at all. And I think that's one of

0:13:27.080 --> 0:13:29.200
<v Speaker 11>the big things all these central banks are facing is

0:13:29.240 --> 0:13:32.480
<v Speaker 11>they missed it. They missed the inflation so badly that

0:13:32.480 --> 0:13:34.880
<v Speaker 11>they've been over correcting, and now I think we're sitting

0:13:34.880 --> 0:13:36.480
<v Speaker 11>here in the US a little bit and now obviously

0:13:36.520 --> 0:13:39.400
<v Speaker 11>within Europe saying have we gone too far? I think

0:13:39.440 --> 0:13:41.240
<v Speaker 11>they've gone too far. I think they are supposed to

0:13:41.280 --> 0:13:44.080
<v Speaker 11>allow the economy to play out. See what impact has

0:13:44.120 --> 0:13:46.560
<v Speaker 11>already gone on from the global rates. You're starting to

0:13:46.559 --> 0:13:49.120
<v Speaker 11>see a lot of the COVID stimulus prestricted in the US,

0:13:49.120 --> 0:13:52.280
<v Speaker 11>but probably across the globe diminished. I think they're supposed

0:13:52.280 --> 0:13:55.400
<v Speaker 11>to be much more dubbish, see how this plays out.

0:13:55.880 --> 0:13:58.280
<v Speaker 11>And that's been the since and that's why I think

0:13:58.360 --> 0:14:00.800
<v Speaker 11>Japan today was so surprising, because they kind of went

0:14:00.840 --> 0:14:01.280
<v Speaker 11>the other way.

0:14:02.559 --> 0:14:04.640
<v Speaker 2>Oh we get a lot of pop culture into this,

0:14:04.720 --> 0:14:07.000
<v Speaker 2>so with the Thelma and Louise and David Bowie and

0:14:07.040 --> 0:14:11.679
<v Speaker 2>the changes. But let's talk a little bit about the

0:14:11.720 --> 0:14:15.360
<v Speaker 2>better economic data in the US. I wonder whether or

0:14:15.400 --> 0:14:18.440
<v Speaker 2>not that emboldens the FED to maybe not worry too

0:14:18.520 --> 0:14:21.840
<v Speaker 2>much about the lagged effect and to stay strong on inflation.

0:14:22.640 --> 0:14:26.320
<v Speaker 2>I heard Jan Hatzias at Goldman Sachs talking earlier on

0:14:26.320 --> 0:14:28.680
<v Speaker 2>a rival network, and he thinks the FED is done,

0:14:28.800 --> 0:14:30.360
<v Speaker 2>that they're not going to hike again.

0:14:30.920 --> 0:14:33.160
<v Speaker 11>What do you think so I think they are actually

0:14:33.200 --> 0:14:35.840
<v Speaker 11>truly data dependent, and I think data dependency has been

0:14:35.840 --> 0:14:37.960
<v Speaker 11>a word that gets way overused or a phrase this

0:14:38.080 --> 0:14:40.440
<v Speaker 11>gets way overused. They weren't really data dependent for the

0:14:40.480 --> 0:14:42.640
<v Speaker 11>last year and a half. They were looking for data

0:14:42.640 --> 0:14:45.720
<v Speaker 11>that justified hiking. And the message I'm taking away from

0:14:45.760 --> 0:14:48.240
<v Speaker 11>Powell recently in the said is they are really going

0:14:48.280 --> 0:14:51.520
<v Speaker 11>to look the preponderance of data over the next two months.

0:14:51.600 --> 0:14:54.480
<v Speaker 11>It's going to include inflation data, jobs data, and it's

0:14:54.520 --> 0:14:56.880
<v Speaker 11>going to have to send a really strong signal either

0:14:57.000 --> 0:14:58.960
<v Speaker 11>one way or the other for them to do something.

0:14:59.040 --> 0:15:01.280
<v Speaker 11>So I think they're really on and that kind of

0:15:01.360 --> 0:15:04.400
<v Speaker 11>brought back to David Bowie and she changes. Is My

0:15:04.520 --> 0:15:06.480
<v Speaker 11>view is we're going to see a leadership change in

0:15:06.520 --> 0:15:08.440
<v Speaker 11>the US and it's going to go from the quote

0:15:08.480 --> 0:15:13.000
<v Speaker 11>unquote magnificent seven to a broader based rally.

0:15:14.080 --> 0:15:16.280
<v Speaker 12>Where will that come from.

0:15:16.600 --> 0:15:18.560
<v Speaker 11>I think it's really going to come from money that's

0:15:18.600 --> 0:15:21.200
<v Speaker 11>on the sidelines that's starting to feel well, if the

0:15:21.200 --> 0:15:23.400
<v Speaker 11>Fed's almost done, if the ECB is almost done, the

0:15:23.520 --> 0:15:26.040
<v Speaker 11>data continues to come in, Okay, I've got to put

0:15:26.080 --> 0:15:28.360
<v Speaker 11>this money to work. And you can either close your

0:15:28.360 --> 0:15:32.040
<v Speaker 11>eyes and buy something that's already up to one hundred

0:15:32.080 --> 0:15:34.080
<v Speaker 11>two hundred percent this year, or we can buy something

0:15:34.120 --> 0:15:35.960
<v Speaker 11>that's up three or five percent. So I think the

0:15:36.000 --> 0:15:38.400
<v Speaker 11>money is going to flood into those things that people

0:15:38.440 --> 0:15:41.120
<v Speaker 11>are generally underweight or still short. And that's the next

0:15:41.160 --> 0:15:43.760
<v Speaker 11>stage of this rally. Isn't going to be the big

0:15:43.840 --> 0:15:47.000
<v Speaker 11>megacaps continuing to drive it. It's going to be everything

0:15:47.040 --> 0:15:49.440
<v Speaker 11>else running up. And I think you're going to see

0:15:49.440 --> 0:15:51.520
<v Speaker 11>a lot of the laggers, including commercial real estate, to

0:15:51.520 --> 0:15:54.000
<v Speaker 11>be honest, really outperform over the next month or so.

0:15:54.640 --> 0:15:56.800
<v Speaker 2>We've we've really already seen it. I mean we've been

0:15:56.960 --> 0:15:59.600
<v Speaker 2>squawking about that a lot in this program about Industrials

0:15:59.600 --> 0:16:01.280
<v Speaker 2>have moved a lot, of transports have moved a lot.

0:16:01.440 --> 0:16:03.640
<v Speaker 2>Even banking now has been moving a lot. And I

0:16:03.720 --> 0:16:08.520
<v Speaker 2>note that in terms of earnings, the financial sector and

0:16:08.600 --> 0:16:11.960
<v Speaker 2>the industrial sector are actually raising their earnings now, So

0:16:12.000 --> 0:16:15.560
<v Speaker 2>that means that earnings have trost and they're actually raising

0:16:15.680 --> 0:16:19.840
<v Speaker 2>rather than just reporting earnings that are less bad than expected.

0:16:20.280 --> 0:16:24.080
<v Speaker 2>So what you're saying is a process that is unfolding.

0:16:24.120 --> 0:16:27.080
<v Speaker 2>I think for many the question is would that continue

0:16:27.280 --> 0:16:30.200
<v Speaker 2>if we drifted toward recession. But it seems like the

0:16:30.280 --> 0:16:32.200
<v Speaker 2>data is suggesting now that's not happening.

0:16:32.520 --> 0:16:34.560
<v Speaker 11>Yeah, And so about two weeks ago I was taking

0:16:34.560 --> 0:16:36.440
<v Speaker 11>some of that risk off the table. We'd had a

0:16:36.440 --> 0:16:39.160
<v Speaker 11>good run on commercial real estate on the laggards, and

0:16:39.200 --> 0:16:41.080
<v Speaker 11>it felt time to take some chips off the table.

0:16:41.440 --> 0:16:44.560
<v Speaker 11>But given the FEDS messaging, given the current data, I

0:16:44.560 --> 0:16:46.960
<v Speaker 11>think it's really hard to bet coming into August that

0:16:47.000 --> 0:16:49.040
<v Speaker 11>we're going to see this slowdown. So I think you

0:16:49.080 --> 0:16:51.680
<v Speaker 11>want to own those things that people are underweight and

0:16:51.880 --> 0:16:54.200
<v Speaker 11>talking to clients, I still think that's where people are

0:16:54.200 --> 0:16:56.600
<v Speaker 11>going to be much more comfortable putting their next dollar in.

0:16:57.120 --> 0:16:59.560
<v Speaker 11>Is the things that seem a little bit cheap, smaller

0:16:59.600 --> 0:17:02.880
<v Speaker 11>pe ratios than the quote unquote magnificent seven.

0:17:03.880 --> 0:17:06.560
<v Speaker 12>All right, well, okay, Peter, The thing is what are

0:17:06.600 --> 0:17:09.560
<v Speaker 12>the dangers that lie ahead? Because you know they could

0:17:09.600 --> 0:17:13.040
<v Speaker 12>be overtightening, but at the same time hasn't. Now, you know,

0:17:13.119 --> 0:17:17.320
<v Speaker 12>the conversation tilted towards not how far rates will go,

0:17:17.400 --> 0:17:19.800
<v Speaker 12>but how long they'll stay at those levels. And I

0:17:19.880 --> 0:17:21.520
<v Speaker 12>just want to just ask you, do you think that

0:17:21.720 --> 0:17:24.480
<v Speaker 12>this is normalization and they don't need to perhaps cut

0:17:24.520 --> 0:17:27.040
<v Speaker 12>in the future for any and meaningful way as they wait,

0:17:27.040 --> 0:17:28.280
<v Speaker 12>perhaps with the next downturn.

0:17:28.680 --> 0:17:30.320
<v Speaker 11>Yeah, so I don't think they have to cut any

0:17:30.320 --> 0:17:33.120
<v Speaker 11>time in the future. I think they will wait until

0:17:33.160 --> 0:17:35.760
<v Speaker 11>at least December January, even if the data is week.

0:17:36.160 --> 0:17:38.200
<v Speaker 11>My biggest fear is obviously now all of a sudden,

0:17:38.240 --> 0:17:41.280
<v Speaker 11>bullishness has become a consensus view, and as a contrarian,

0:17:41.600 --> 0:17:43.240
<v Speaker 11>I always kind of, you know, hate to be on

0:17:43.280 --> 0:17:45.160
<v Speaker 11>the consensus side of you. So maybe I'm a little

0:17:45.160 --> 0:17:48.560
<v Speaker 11>bit more aggressive with the laggers. But also August tends

0:17:48.560 --> 0:17:51.200
<v Speaker 11>to be a time where consensus can win. Whether it's

0:17:51.200 --> 0:17:54.000
<v Speaker 11>people are on vacation or whatever's going on. It's hard

0:17:54.040 --> 0:17:55.920
<v Speaker 11>to fight the trend in August. So that's why I

0:17:55.920 --> 0:17:57.879
<v Speaker 11>think we could see some good news in August. But

0:17:57.920 --> 0:17:59.480
<v Speaker 11>as we near September, I think people are going to

0:17:59.520 --> 0:18:02.440
<v Speaker 11>start focused on Hey, recession risk is probably still real.

0:18:02.720 --> 0:18:06.240
<v Speaker 11>Everyone got squeezed out of the recession trades. But I

0:18:06.240 --> 0:18:08.080
<v Speaker 11>think we kind of have this two to three week

0:18:08.119 --> 0:18:10.200
<v Speaker 11>window where everyone's gonna be a little bit more calm,

0:18:10.680 --> 0:18:13.560
<v Speaker 11>assuming that boj doesn't do anything, you know, to really

0:18:13.560 --> 0:18:15.600
<v Speaker 11>shock us, and then after that we can start thinking

0:18:15.640 --> 0:18:18.080
<v Speaker 11>about the promise, is the recession coming? What's happening in

0:18:18.119 --> 0:18:22.720
<v Speaker 11>the US with student loan, debt, repayments, et cetera, deglobalization,

0:18:22.840 --> 0:18:24.840
<v Speaker 11>the function between US and China. There's a lot of

0:18:24.920 --> 0:18:26.600
<v Speaker 11>risks out there. I think they're just gonna be ignored

0:18:26.600 --> 0:18:27.719
<v Speaker 11>for the next two to three weeks.

0:18:28.720 --> 0:18:31.560
<v Speaker 2>This is Bloomberg Daybreak Asia, your morning brief on this

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