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Speaker 1: Good morning. I'm Doug Prisner and I'm Brian Curtis. Here

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Speaker 1: are the stories we're following today. Microsoft has been cleared

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Speaker 1: in the United States to buy Activision Blizzard for sixty

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Speaker 1: nine billion dollars. It comes after a San Francisco judge

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Speaker 1: denied the Federal Trade Commission's bid to block the gaming deal.

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Speaker 1: The ruling was that the FTC had not shown that

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Speaker 1: the merger would harm competition for gaming. Bloomberg Ed Ludlow

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Speaker 1: discussed just what this means for the industry going forward.

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Speaker 2: We've described this deal as transformative to the video games

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Speaker 2: industry because it would give Microsoft that mobile gaming component,

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Speaker 2: but it would also put into focus a hot property,

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Speaker 2: call of Duty. One of the compromises that Microsoft and

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Speaker 2: Activism put forward was to make Call of Duty available

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Speaker 2: in rival platforms, namely Sony's PlayStation and on Nintendo. Nintendo

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Speaker 2: were agreeable to that solution, and Sony wasn't. I guess

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Speaker 2: that Bobby Kotik and the Microsoft execuit will be more buoyant.

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Speaker 1: In the meantime, the UK Competition and Markets Authority said

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Speaker 1: that it's open to looking at the Microsoft Activision merger again.

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Speaker 1: It had vetoed the deal back in May, citing competition concerns.

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Speaker 1: Microsoft is currently appealing that decision. Both sides have agreed

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Speaker 1: to pause their legal battle. The UK regulator says it's

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Speaker 1: ready to consider any proposals from Microsoft on how to

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Speaker 1: restructure the transaction. Microsoft in activision cannot close until a

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Speaker 1: remedy is reached well.

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Speaker 3: The Walt Disney Company is reportedly exploring strategic options for

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Speaker 3: its streaming business in India, known as Star India. We

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Speaker 3: have that story from Bloomberg's Charlie Pellett.

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Speaker 4: Those options include a joint venture or a sale, according

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Speaker 4: to The Wall Street Journal, which site sources as saying

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Speaker 4: the company has talked to at least one bank about

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Speaker 4: ways to help the India business grow while sharing some

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Speaker 4: of the costs. It is a sign of strain at

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Speaker 4: one of the premier properties that are acquired from Fox,

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Speaker 4: according to the Journal. Back in twenty nineteen, Disney paid

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Speaker 4: seventy one point three billion dollars for the entertainment assets

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Speaker 4: of twenty first Century Fox, and at the time, Star

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Speaker 4: India was considered one of Fox's crown jewels in New York.

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Speaker 4: Charlie Pellett Bloomberg Daybreak Asia.

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Speaker 1: While President Shi Jinping has called for a greater opening

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Speaker 1: up of the Chinese economy. We get that story from

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Speaker 1: Bloomberg's Joan Wong.

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Speaker 5: She called for a greater focus on foreign cooperation in

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Speaker 5: areas including trade and investment. That's according to CCTVs Hading.

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Speaker 5: She in a meeting on deepening reform. She's call comes

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Speaker 5: as it's become clear that the economic recovery following the

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Speaker 5: end of Beijing's COVID zero policies is starting to waiver.

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Speaker 5: There's also been a clamdown this year on foreign consultancy

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Speaker 5: firms that help global investors and multinational firms understand China,

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Speaker 5: and this has weakened the appetite for investment from overseas firms.

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Speaker 5: As a result, China's attempts to encourage foreign investors have

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Speaker 5: rammed up in recent weeks. Earlier this Week's already took

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Speaker 5: a step towards supporting the yelling property markets by extending

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Speaker 5: loan really for developers in Hong Kong. Joined Wan Bloomberg Debrigasia.

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Speaker 3: And speaking of loans, China's new loans accelerated in the

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Speaker 3: month of June. This was after the PBOC lowered interest rates.

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Speaker 3: If nothing else, the big jump in loans show that

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Speaker 3: rates really do matter in China, even with lackluster demand.

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Speaker 3: Aggregate financing totaling four point two trillion one that's the

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Speaker 3: equivalent of about five hundred eighty three billion US dollars,

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Speaker 3: and that was higher than the estimate. The Bloomberg survey

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Speaker 3: was looking for only three point one trillion yuan in

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Speaker 3: new loans, and these were obviously above forecast. Meantime, new

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Speaker 3: household loans that's a proxy for Chinese mortgages, increased slightly

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Speaker 3: from last year. That suggests a modest pickup in the

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Speaker 3: property market in China. Overall, these figures do provide a

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Speaker 3: little bit of hope that the Chinese economy will see

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Speaker 3: faster sequential growth in the second half of the year

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Speaker 3: after slumping during the second quarter. Now, Bloomberg Economics is

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Speaker 3: saying the pboc's rate cut back in mid June may

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Speaker 3: have provided that lift. However, Bee Bloomberg Economics saying that

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Speaker 3: more support is needed.

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Speaker 1: Brian Well the Reserve Bank of New Zealand is expected

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Speaker 1: to keep the country's cash rate on hold when it

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Speaker 1: meets today, and this could signal the end of the

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Speaker 1: aggressive tightening cycle done by the Central Bank.

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Speaker 6: Bloomberg's Paul Allen has more from Sydney.

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Speaker 7: After five hundred and twenty five basis points of rate increases,

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Speaker 7: the Reserve Bank of New Zealand is expected to call

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Speaker 7: time today on a tightening cycle that began back in

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Speaker 7: October twenty twenty one. All eighteen economists survey by Bloomberg

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Speaker 7: see the cash rates staying put at five and a

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Speaker 7: half percent. The aggressive tightening has pushed New Zealand into

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Speaker 7: a technical recession, but inflation moderated to six point seven

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Speaker 7: percent in the first quarter and is expected to decelerate

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Speaker 7: again when second quarter data is released next week. While

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Speaker 7: there won't be a press conference after today's announcement, the

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Speaker 7: ARBYNZ has previously said it doesn't see any further rate

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Speaker 7: increase and expects inflation to return, so it's one to

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Speaker 7: three percent target range next year. Paul Avan, Bloomberg Daybreak Asia.

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Speaker 1: I'm Brian Curtis along with Doug Krisner and Doug a

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Speaker 1: big win here for Microsoft, a loss for Lena Kon

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Speaker 1: and the FTC. But I think we should say not

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Speaker 1: a huge loss, because even the judge cited a number

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Speaker 1: of concessions by Microsoft were cited there for instance keeping

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Speaker 1: Call of Duty on PlayStation for ten years in the

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Speaker 1: agreement with Nintendo, and she wrote that the scrutiny that

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Speaker 1: this case brought on the deal paid off, and in

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Speaker 1: the end this may satisfy some of those who think,

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Speaker 1: you know, big is bad for consumers. In this case,

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Speaker 1: the court ruled this was actually okay for consumers.

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Speaker 3: It's the gaming industry, right, and we know the footprint

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Speaker 3: globally is huge. I don't even know in terms of

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Speaker 3: overall dollars what this market is worth. It's obviously in

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Speaker 3: China very popular. How the gaming end is though, has

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Speaker 3: become or was an early playground for developments in artificial intelligence.

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Speaker 3: That's very interesting to me. I think we talk a

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Speaker 3: lot about what we are accustomed to now in the

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Speaker 3: evolution of video games, but if you go back to

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Speaker 3: the nineteen seventies when this was still a very young industry,

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Speaker 3: a lot of the guys now that we refer to

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Speaker 3: as being the sharp minds behind AI had their early

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Speaker 3: start in the gaming industry.

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Speaker 8: Yeah.

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Speaker 1: I mean, think about this activision Blizzard being sold for

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Speaker 1: sixty nine billion dollars. It's amazing the strides that have

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Speaker 1: been made, but I can seguay into this.

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Speaker 6: Everybody always talks.

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Speaker 1: About the massive gains in AI stocks and the Magnificent seven,

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Speaker 1: those big seven tech companies. We had today the industrial

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Speaker 1: shares spider hitting an all time high, and that is

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Speaker 1: good for people looking for health in the market. It's

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Speaker 1: a more broadening out of the gains that you see

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Speaker 1: on Wall Street.

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Speaker 3: I think one of the big questions going forward now

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Speaker 3: is where is the FED and all of this Tomorrow

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Speaker 3: obviously in the US we're going to get the CPI data,

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Speaker 3: Bloomberg expecting the core rate to moderate to around month

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Speaker 3: over month three tens of one percent. Year over year

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Speaker 3: increase in the core of around five percent now, Bloomberg's

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Speaker 3: John Authors was saying in one of his columns, if

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Speaker 3: those numbers prove to be true, that would kind of

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Speaker 3: support the notion that the FED won't have to hike

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Speaker 3: too much more aggressively. Maybe we get a soft landing,

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Speaker 3: maybe we avoid the hard recession. But here's the question,

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Speaker 3: what if the forecast are overly optimistic. Remember that May

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Speaker 3: reading on the PCE was a disappointment.

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Speaker 1: Yeah, you know, you never know with the data. That's

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Speaker 1: why you know, it's very important to be mindful of

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Speaker 1: what we actually get. Like for instance, we mentioned that

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Speaker 1: the loan data yesterday, both for new loans and also

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Speaker 1: for the aggregate financing well above expectations the forecast. I mean,

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Speaker 1: these numbers are like twenty five to thirty three percent

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Speaker 1: above the expectations. And I think you made a good

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Speaker 1: point there in saying that you know, at the right

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Speaker 1: price there is demand, because you hear a lot of

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Speaker 1: people in China saying, well, you can't really stimulate the

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Speaker 1: economy with monetary policy because there's no demand for loans.

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Speaker 6: Well, the data yesterday showed there is.

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Speaker 3: Next big data point is the China trade data that

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Speaker 3: we'll get on Thursday to see how well the economy

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Speaker 3: is performing.

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Speaker 9: Yeah.

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Speaker 1: Yeah, it's definitely a little give and take up and down.

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Speaker 1: Now it's time for global news at the NATO summit.

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Speaker 1: Ukraine is top of mind. Ed Baxter has Global News

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Speaker 1: from the n sixty newswomen in San Francisco.

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Speaker 10: Ed, Yeah, sure is, Brian. NATO Secretary General Jan Stoltenberg

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Speaker 10: pledged full NATO support for Ukraine.

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Speaker 9: We need to stand by Ukraine for as long as

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Speaker 9: it takes, and we need to step up and sustain

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Speaker 9: our support to Ukraine. That will be the claar message

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Speaker 9: from this submit. That does been the from NATO on

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Speaker 9: alines and partners now since the war is started.

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Speaker 10: Yeah, Stoltenberg says NATO will shorten the path for Ukraine

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Speaker 10: membership in NATO.

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Speaker 9: Do you affirmed that Ukraine will become a member of

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Speaker 9: NATO and agreed to remove the requirement for a membership.

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Speaker 10: Action time when Ukraine is ready, and that will bring

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Speaker 10: the membership process, by the way, from two step to one.

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Speaker 10: And also today I'll welcome to Finland.

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Speaker 9: This would change Ukraine's membership path from a two step

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Speaker 9: process to one step process.

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Speaker 10: Yeah, and pledge to work further on Sweden's acceptance. So

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Speaker 10: waiting for Turkey's parliament now. US Secretary of State Anthony

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Speaker 10: Blincoln says it is a must.

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Speaker 11: That sends a very strong message to Vladimir Putin that

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Speaker 11: he's not going to outlast Ukraine, He's not going to

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Speaker 11: outlast NATO.

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Speaker 10: Now if F sixteen from the US are an important

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Speaker 10: component of the Sweden deal, and US National Security Advisor

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Speaker 10: Jake Sullivan says President Biden is going to make that happen,

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Speaker 10: and Doltenberg says not to be forgotten the threat to

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Speaker 10: the globe from China.

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Speaker 9: China is increasingly challenging, challenging the rules based in national order,

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Speaker 9: refusing to condemn Russia's war against Ukraine, fitning Taiwan and

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Speaker 9: carrying out substantial military build.

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Speaker 10: Up, and says the rat at which the world has

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Speaker 10: not seen before with no transparency that China that is.

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Speaker 10: Taiwan meanwhile says it detected dozens of Chinese warplanes and

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Speaker 10: other military aircraft conducting training with warships off Taiwan's south

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Speaker 10: east coast. It says twenty nine pla aircraft crossed the

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Speaker 10: median line of the Strait or entered into its defense zone.

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Speaker 10: Now Taiwan did deploy aircraft and naval vessels, along with

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Speaker 10: deploying land based missile systems. Senate hearings today us on

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Speaker 10: a merger between the PGA and Live Gulf Saudi Arabia.

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Speaker 10: Senator Richard Blumenthal says it challenges American values to even

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Speaker 10: think about it.

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Speaker 12: Today's hearing is about much more than the game of golf.

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Speaker 12: It's about how a brutal, repressive regime can buy influence,

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Speaker 12: indeed even take over a cherished American institution.

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Speaker 10: He says, of as sums of money can induce individuals

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Speaker 10: and institutions to betray their own values and sell a

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Speaker 10: cherished sport to a foreign government. US Secretary of State

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Speaker 10: Anthony Blincoln says US is still analyzing the break and

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Speaker 10: then subsequent talks between Russian President Vladimir Putin and Wagner

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Speaker 10: groups Yevgeny Pergoshion and how it will play off. But

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Speaker 10: he does say what.

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Speaker 11: It means for President Putin remains to be seen. But

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Speaker 11: it does raise all sorts of questions, and it does

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Speaker 11: suggest there's some cracks in the armor.

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Speaker 10: He says, profound questions that Putin has to answer. Global

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Speaker 10: News powered by more than twenty seven hundred journalists and

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Speaker 10: analysts in over one hundred and twenty countries. In San Francisco,

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Speaker 10: I'm at Baxter and this is Bloomberg.

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Speaker 1: This is Bloomberg Deaybreak Asia. I'm Brian Curtis, along with

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Speaker 1: Doug Grisner. Our guest is Jay Puloski, founder and principal

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Speaker 1: at Tea Advisory.

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Speaker 6: Jay. When Doug and I were musing.

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Speaker 1: A short while ago, I talked about the broadening out

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Speaker 1: of the gains on the S and P five hundred

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Speaker 1: with the industrial shares spider xli moving to an all

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Speaker 1: time high.

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Speaker 6: I might have spoken a little too early.

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Speaker 1: Part of it is a broadening story, but is it

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Speaker 1: also kind of like a reshoring story too for the

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Speaker 1: US economy.

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Speaker 8: Well, I think it's both, guys, And yeah, I was

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Speaker 8: impressed that you've raised that because so many people focus

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Speaker 8: on the tech leadership. But there's been a powerful rotation

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Speaker 8: taking place over the last several months in the US

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Speaker 8: equity market. We wrote a piece even titled it rotation

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Speaker 8: two months ago in the middle of May. And just

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Speaker 8: to give you some numbers, over the last three months,

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Speaker 8: home builders are up twenty four percent, transports are up

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Speaker 8: fourteen percent, the spy is up eight and the queues

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Speaker 8: technology you're up sixteen. Over the last one month, the

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Speaker 8: transports are up ten, home builders up eight, and the

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Speaker 8: queues and the S and P up only two. So

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Speaker 8: you add the industrials as you pointed out, and there's

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Speaker 8: the market is telling us, right. I mean, we're big

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Speaker 8: believers and letting the market tell us, not us try

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Speaker 8: to tell the market, and the market is clearly saying

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Speaker 8: no recession, clearly saying that manufacturing is going to catch

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Speaker 8: up to services and not services catch down and manufacturing,

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Speaker 8: and as you point out, a part of it, and

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Speaker 8: I think a big part is the reshoring what we

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Speaker 8: call the New Industrial Policy, what the President calls bidnomics.

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Speaker 8: We think it's a major, major factor that's going to

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Speaker 8: drive the global economy over the next several years.

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Speaker 3: So, Jay, as you know, the earning season is going

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Speaker 3: to kick off at the end of the week. When

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Speaker 3: we get guidance from some of these companies, will it

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Speaker 3: confirm what the market is telling us, Will we get

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Speaker 3: confirmation from Corporate America.

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Speaker 8: Well, we're already seeing that you've had the most the

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Speaker 8: most pre released positives on earnings for Q two in

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Speaker 8: over two years. So the news is already good news

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Speaker 8: and it's going to continue. And the bar is low, right,

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Speaker 8: I mean the bar is I think seven percent down

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Speaker 8: year on year, and this is supposed to be the

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Speaker 8: trough quarter. So let's remember that the Atlanta Fed just

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Speaker 8: came out with its way toest update now cast for

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Speaker 8: Q two GDP at over two percent. So you know

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Speaker 8: that's the reason why the market is acting well. The numbers,

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Speaker 8: the earnings estimates are strong, growth is strong, Inflation expectations

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Speaker 8: are collapsing. Cleveland ten year forward inflation expectations at a

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Speaker 8: forty year low, forty year low. Financial conditions the loosest

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Speaker 8: since the pre SVP period. A lot of positive news

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Speaker 8: out there.

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Speaker 1: Yeah, but you know, when you listen to the bears,

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Speaker 1: they also make some persuasive points. I find myself on

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Speaker 1: this show where we get such a good variety of guests,

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Speaker 1: sometimes getting bared up and sometimes getting bulled up. When

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Speaker 1: I come back to when I come back to square one,

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Speaker 1: I note at the moment the strength in the housing

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Speaker 1: market and the auto market, and that's what usually tips

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Speaker 1: me to the point of being slightly more positive going

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Speaker 1: forward than the bears would be.

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Speaker 8: And I think you agree, Oh, yes, we've been constructive

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Speaker 8: for basically the last year, and not only in the

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Speaker 8: US but other markets around the world. And look to Bears,

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Speaker 8: I just don't understand how you can still be bearers.

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Speaker 8: Because the ACQUI global equities are up about fourteen percent

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Speaker 8: first half of the year. The best first half of

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Speaker 8: the year is something like twenty five or thirty years. Cash,

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Speaker 8: which everybody talked about over the last six months, got

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Speaker 8: to be in cash. Cash is great, Cash is king.

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Speaker 8: Cash has been one of the worst places to be

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Speaker 8: in the first part of this year. So I think

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Speaker 8: the time is rapidly running out for the bears. I

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Speaker 8: don't really see the case for it at all. And

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Speaker 8: I just note that sentiment Wall Street has the most

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Speaker 8: bearish second half outlook this century, so that the consensus

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Speaker 8: for where the S and P is going to end

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Speaker 8: the year is at its lowest level relative to where

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Speaker 8: it entered the second half of the year since the

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Speaker 8: turn of this century, since nineteen ninety nine. So there's

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Speaker 8: a lot of stale bears out there, and that's the

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Speaker 8: thing that makes us say we want to buy the dip.

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Speaker 8: Any dip is going to be limited because there's a

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Speaker 8: lot of people that need to get involved and are

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Speaker 8: still way behind the eight ball in terms of performance.

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Speaker 8: Jawis an ugly year for a lot of people.

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Speaker 3: I'm sorry to interrupt. We saw a lot of moves

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Speaker 3: in currencies today, the dollar, if you look at the

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Speaker 3: Bloomberg Dollar Spot Index very near a fifty two week low.

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Speaker 3: This would only support the idea that if you're a

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Speaker 3: multinational firm, the outlook is pretty good with a weaker greenback.

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Speaker 8: Yeah, though the history shows that companies trade relative to

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Speaker 8: their home market, not really two foreign markets. They've done

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Speaker 8: a lot of work on that over the past years.

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Speaker 8: But you know, so our point is that we think

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Speaker 8: the FED is on hold. So the FED on hold

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Speaker 8: equals a week dollar. A week dollar equals a positive

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Speaker 8: outlook for the rest of the world equity markets and

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Speaker 8: for commodities. So when we look to the second half

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Speaker 8: of the year, we're we're most excited is in em

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Speaker 8: both debt and equity, and in the commodity space. We

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Speaker 8: think the physical market. The first half of the year

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Speaker 8: has been all about digital AI. The second half of

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Speaker 8: the year we think is going to be a lot

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Speaker 8: about physical.

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Speaker 1: Yeah, yeah, just really briefly because they're almost out of time. Jay,

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Speaker 1: In terms of investing, what's your top dog at the moment,

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Speaker 1: And don't say Joey Chestnut.

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Speaker 8: Yeah, you saw my reference in my beach. Yes, top

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Speaker 8: dog I guess would be em equity. We think emerging

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Speaker 8: Marcus Mcroigan. We think energy and copper look really good.

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Speaker 8: So the we like the commodities, We like emerging markets.

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Speaker 8: We like Brazil, we like we think China is going

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Speaker 8: to do better in the second half. We like Mexico.

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Speaker 8: On the reshoring theme, there's a lot of opportunities out there.

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Speaker 8: We like emerging market debt. Local currency debt was the

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Speaker 8: best performing fixed income instrument in the first half of

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Speaker 8: the year. We think it will continue to perform well

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Speaker 8: in the second half.

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