1
00:00:02,600 --> 00:00:06,080
Speaker 1: This is Bloomberg Daybreak Asia for this Thursday, June twenty

2
00:00:06,120 --> 00:00:09,520
Speaker 1: second in Hong Kong, Wednesday June twenty first in New

3
00:00:09,600 --> 00:00:11,240
Speaker 1: York and coming up today.

4
00:00:11,080 --> 00:00:14,200
Speaker 2: Fed Shair Jay Powell says higher rates will be needed,

5
00:00:14,240 --> 00:00:17,240
Speaker 2: but those rate hikes can move at a more moderate pace.

6
00:00:17,560 --> 00:00:21,759
Speaker 1: The FTC sues Amazon for allegedly making it more difficult

7
00:00:21,760 --> 00:00:24,520
Speaker 1: to cancel its prime membership service.

8
00:00:24,360 --> 00:00:27,800
Speaker 2: And SoftBank's Vision Fund is preparing to start another round

9
00:00:27,800 --> 00:00:29,560
Speaker 2: of layoffs as soon as this week.

10
00:00:29,800 --> 00:00:32,159
Speaker 3: The search continues in the North Atlantic for the missing

11
00:00:32,200 --> 00:00:36,120
Speaker 3: submersiful vehicle, a gas explosure, rich through Paris building as

12
00:00:36,120 --> 00:00:38,879
Speaker 3: in Biden angers China. With his latest comments on Dan

13
00:00:38,920 --> 00:00:40,280
Speaker 3: Schwartzman with Global News.

14
00:00:44,120 --> 00:00:47,800
Speaker 4: That's all straight ahead on Bloomberg Daybreak Asia, the business

15
00:00:47,840 --> 00:00:50,279
Speaker 4: news you need to start your day, and just one

16
00:00:50,400 --> 00:00:55,320
Speaker 4: fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App,

17
00:00:55,360 --> 00:00:57,360
Speaker 4: and everywhere you get your podcasts.

18
00:01:00,080 --> 00:01:03,120
Speaker 1: Good morning, I'm Doug Chrisner and I'm Brian Curtiz. Here

19
00:01:03,120 --> 00:01:06,319
Speaker 1: are the stories we're following today. Let's take a closer

20
00:01:06,360 --> 00:01:09,760
Speaker 1: look at fed share J Powell and his testimony before Congress.

21
00:01:10,000 --> 00:01:12,560
Speaker 1: He signaled that interest rates will need to rise to

22
00:01:12,600 --> 00:01:16,440
Speaker 1: reduce US growth and contain price pressures. Here's part of

23
00:01:16,480 --> 00:01:19,280
Speaker 1: his testimony before a House committee.

24
00:01:18,840 --> 00:01:21,679
Speaker 5: Earlier in the process, speed was very important. It's not

25
00:01:21,840 --> 00:01:25,120
Speaker 5: very important now. The sense of the summary of economic

26
00:01:25,160 --> 00:01:28,560
Speaker 5: projections and the decision really is just that, given how

27
00:01:28,600 --> 00:01:31,840
Speaker 5: far we've come, it may make sense to move rates higher,

28
00:01:31,880 --> 00:01:33,840
Speaker 5: but to do so at a more moderate pace.

29
00:01:34,720 --> 00:01:38,440
Speaker 1: Pal said about the timing, he said additional rate hikes

30
00:01:38,480 --> 00:01:42,119
Speaker 1: will be based on the incoming data, and he indicated

31
00:01:42,120 --> 00:01:44,840
Speaker 1: that there might be two more rate hikes this year.

32
00:01:45,200 --> 00:01:48,320
Speaker 1: Lawmakers also pressed Powell on what the Fed's response will

33
00:01:48,320 --> 00:01:51,240
Speaker 1: be to several recent bank failures. He said the FED

34
00:01:51,240 --> 00:01:54,240
Speaker 1: Board hadn't yet voted on changes to bank rules, but

35
00:01:54,320 --> 00:01:56,920
Speaker 1: he said that staff had been briefed on some tweaks

36
00:01:56,960 --> 00:01:58,400
Speaker 1: that are under consideration.

37
00:01:59,120 --> 00:02:01,800
Speaker 2: So over in the Senate today there was a nomination hearing.

38
00:02:01,840 --> 00:02:06,000
Speaker 2: We had FED Governors Philip Jefferson and Lisa Cook updating

39
00:02:06,320 --> 00:02:10,480
Speaker 2: the committee on bank regulations. They say that these regulations

40
00:02:10,480 --> 00:02:13,840
Speaker 2: should be tailored according to an institution's size. They also

41
00:02:13,919 --> 00:02:19,920
Speaker 2: raised concern about consolidation among lenders, particularly in the regional complex,

42
00:02:20,000 --> 00:02:24,480
Speaker 2: and they emphasize the importance of smaller institutions to low

43
00:02:24,600 --> 00:02:27,560
Speaker 2: and moderate income communities. Here is Governor Cook.

44
00:02:28,200 --> 00:02:31,840
Speaker 6: I agree with tailoring that they should not have to

45
00:02:31,840 --> 00:02:34,919
Speaker 6: be burdened by the same requirement that large banks are,

46
00:02:35,240 --> 00:02:38,840
Speaker 6: and that they should be able to thrive in these

47
00:02:39,240 --> 00:02:43,400
Speaker 6: communities without the burden of significant regulations.

48
00:02:43,680 --> 00:02:46,880
Speaker 2: That is a FED Governor Lisa Cook. Also, we have

49
00:02:46,919 --> 00:02:50,520
Speaker 2: a FED Vice Chair of Supervision, Michael Barr, currently conducting

50
00:02:50,520 --> 00:02:54,040
Speaker 2: a review of bank regulations, and he is expected to

51
00:02:54,080 --> 00:02:56,560
Speaker 2: propose a revamp of some of those rules later in

52
00:02:56,560 --> 00:02:56,880
Speaker 2: the year.

53
00:02:56,960 --> 00:03:01,440
Speaker 1: Brian Well, a federal agency is suing the world's biggest detailer,

54
00:03:01,480 --> 00:03:05,079
Speaker 1: accusing it of violating a decade's old consumer protection lawman

55
00:03:05,160 --> 00:03:09,600
Speaker 1: to safeguard online shoppers. Bloomberg's Tom Busby has the story.

56
00:03:10,000 --> 00:03:13,480
Speaker 7: The US Federal Trade Commission is now suing Amazon, alleging

57
00:03:13,520 --> 00:03:16,040
Speaker 7: at duped customers into signing up for its one hundred

58
00:03:16,080 --> 00:03:19,639
Speaker 7: and thirty nine dollars a year Prime membership service, then

59
00:03:19,720 --> 00:03:23,639
Speaker 7: purposely made it nearly impossible to cancel. The FDC says

60
00:03:23,680 --> 00:03:26,800
Speaker 7: Amazon manipulates users into enrolling in Prime in order to

61
00:03:26,800 --> 00:03:29,840
Speaker 7: get perks like fast free delivery on orders and free

62
00:03:29,880 --> 00:03:32,840
Speaker 7: video and music streaming, but for those looking to opt

63
00:03:32,919 --> 00:03:35,680
Speaker 7: out of prime. The process is difficult to navigate and

64
00:03:35,760 --> 00:03:39,680
Speaker 7: requires multiple steps, even likening it to the classic Greek

65
00:03:39,720 --> 00:03:43,120
Speaker 7: poem the Iliad tom busby Bloomberg Daybreak Asia.

66
00:03:43,600 --> 00:03:46,960
Speaker 1: The stock traded down about three quarters of one percent today.

67
00:03:47,240 --> 00:03:51,240
Speaker 1: An Amazon spokesperson said the FTC's claims are false on

68
00:03:51,360 --> 00:03:54,400
Speaker 1: the facts and the law, and the company said the

69
00:03:54,440 --> 00:03:57,800
Speaker 1: agency provided it no notice before filing this lawsuit.

70
00:03:58,000 --> 00:04:01,120
Speaker 2: We are hearing that Softbang's Vision Fund is preparing to

71
00:04:01,160 --> 00:04:03,760
Speaker 2: start another round of layoffs as soon as this week.

72
00:04:03,800 --> 00:04:07,560
Speaker 2: About thirteen percent of the Vision Fund staff will be affected.

73
00:04:07,560 --> 00:04:10,960
Speaker 2: We are told these cuts follow five straight quarters of

74
00:04:11,080 --> 00:04:14,680
Speaker 2: losses at the fund, somewhat a reflection of the tricky

75
00:04:14,800 --> 00:04:18,880
Speaker 2: environment it has been to invest in technology. The founder

76
00:04:18,920 --> 00:04:23,680
Speaker 2: of SoftBank is Masayoshi's son. He recently addressed shareholders and

77
00:04:23,800 --> 00:04:26,360
Speaker 2: acknowledged that he had made some mistakes in the past

78
00:04:26,520 --> 00:04:33,560
Speaker 2: through bad investments, But now son is pushing forward in as.

79
00:04:33,160 --> 00:04:36,080
Speaker 8: Now the time has come to shift to offense mode

80
00:04:36,080 --> 00:04:39,440
Speaker 8: in the investment decisions. There are a lot of uncertainties,

81
00:04:39,920 --> 00:04:42,479
Speaker 8: but now I can say that AI is about to

82
00:04:42,480 --> 00:04:45,720
Speaker 8: grow explosively, and we as a group are preparing for

83
00:04:45,760 --> 00:04:49,240
Speaker 8: such an error to come, I've been busy myself getting

84
00:04:49,279 --> 00:04:52,440
Speaker 8: ready for the future. Soft Bank founder Maseeyoshi Son through

85
00:04:52,480 --> 00:04:55,680
Speaker 8: a translator. SoftBank is throwing its weight behind the imminent

86
00:04:55,839 --> 00:04:59,480
Speaker 8: IPO of ARM Limited. This is the British chip designer

87
00:05:00,200 --> 00:05:02,279
Speaker 8: is expected to raise at least ten billion dollars in

88
00:05:02,279 --> 00:05:05,960
Speaker 8: one of the year's most anticipated debuts, and it's among

89
00:05:06,080 --> 00:05:10,159
Speaker 8: several major tech firms expected to benefit from the rollout

90
00:05:10,160 --> 00:05:12,680
Speaker 8: that we've been talking about in artificial intelligence.

91
00:05:12,720 --> 00:05:12,960
Speaker 9: Brian.

92
00:05:13,880 --> 00:05:16,440
Speaker 1: China is said to have begun a fresh round of

93
00:05:16,520 --> 00:05:20,400
Speaker 1: nationwide inspections to work out how much money local governments owe.

94
00:05:20,560 --> 00:05:23,200
Speaker 1: Bloomberg zivon Men has the story from Hong Kong.

95
00:05:23,680 --> 00:05:26,960
Speaker 10: Sources say local officials will be pressed to come clean

96
00:05:27,080 --> 00:05:30,279
Speaker 10: about their so called hidden debt. This comes as national

97
00:05:30,360 --> 00:05:33,719
Speaker 10: leaders try to get a fuller picture of liabilities across

98
00:05:33,760 --> 00:05:37,640
Speaker 10: all levels of government. Ministry of Finance data show governments

99
00:05:37,720 --> 00:05:41,200
Speaker 10: all cross China have five point one trillion dollars in

100
00:05:41,360 --> 00:05:44,760
Speaker 10: on book debt outstanding in April, but there's no official

101
00:05:44,800 --> 00:05:47,640
Speaker 10: total for how much off book or hidden debt there

102
00:05:47,640 --> 00:05:51,039
Speaker 10: may be and who owes it. Many local governments borrow

103
00:05:51,120 --> 00:05:54,039
Speaker 10: money by using local government financing vehicles.

104
00:05:54,400 --> 00:05:55,880
Speaker 8: These edities are off book.

105
00:05:56,320 --> 00:05:59,039
Speaker 10: This latest move could be assigned that authorities are preparing

106
00:05:59,080 --> 00:06:02,880
Speaker 10: to take concrete steps to tackle a key financial risk

107
00:06:03,480 --> 00:06:06,640
Speaker 10: in Hong Kong. I'm yvon Man Bloomberg day Break Asia.

108
00:06:06,680 --> 00:06:08,239
Speaker 9: And Doug this could be very big.

109
00:06:08,360 --> 00:06:11,680
Speaker 1: China has thirty three provinces, more than three hundred cities

110
00:06:11,720 --> 00:06:15,359
Speaker 1: and something like three thousand counties that borrow money and

111
00:06:15,440 --> 00:06:18,719
Speaker 1: run this through these local government financing vehicles. And there's

112
00:06:18,800 --> 00:06:20,599
Speaker 1: a ton of hidden debt there that's not on the

113
00:06:20,600 --> 00:06:23,560
Speaker 1: official balance sheets, as we heard there in that report.

114
00:06:23,600 --> 00:06:27,360
Speaker 1: So this is kind of an effort at a reckoning. However,

115
00:06:27,560 --> 00:06:29,919
Speaker 1: whether it actually gets made public.

116
00:06:29,800 --> 00:06:32,080
Speaker 9: Or not, we just don't know. That's not clear.

117
00:06:32,240 --> 00:06:35,640
Speaker 2: We were talking to our Bloomberg Economics team just yesterday

118
00:06:35,640 --> 00:06:37,919
Speaker 2: at Brian about the fact that these high debt levels

119
00:06:37,920 --> 00:06:40,000
Speaker 2: in China may be one reason that the government is

120
00:06:40,040 --> 00:06:44,760
Speaker 2: being very very cautious about adding robust stimulus. The economy

121
00:06:44,800 --> 00:06:46,960
Speaker 2: we know has been struggling, and I was talking earlier

122
00:06:47,000 --> 00:06:49,279
Speaker 2: about the fact that we have the currency weakening to

123
00:06:49,320 --> 00:06:52,040
Speaker 2: a level that we haven't seen right now seven point

124
00:06:52,080 --> 00:06:55,040
Speaker 2: two or so against the greenback. You and I were

125
00:06:55,040 --> 00:06:57,760
Speaker 2: talking earlier about the fact that there are many shops,

126
00:06:57,800 --> 00:07:00,680
Speaker 2: including Bank of America, saying that the yuan will continue

127
00:07:00,680 --> 00:07:02,799
Speaker 2: to weak, and I think b of A is looking

128
00:07:02,800 --> 00:07:04,880
Speaker 2: for seven point four against the dollar by the end

129
00:07:04,920 --> 00:07:05,560
Speaker 2: of September.

130
00:07:06,320 --> 00:07:10,840
Speaker 1: What's interesting and when I interview guests about China and

131
00:07:10,960 --> 00:07:14,080
Speaker 1: why we're not seeing as much stimulus as perhaps a

132
00:07:14,120 --> 00:07:17,360
Speaker 1: lot of economists and investors are calling for, I always

133
00:07:17,720 --> 00:07:20,440
Speaker 1: throw in sort of is this showing confidence by the

134
00:07:20,520 --> 00:07:24,880
Speaker 1: leadership along with you know, do they fully understand how

135
00:07:24,920 --> 00:07:28,080
Speaker 1: to do it? And are they worried about debt? And

136
00:07:28,320 --> 00:07:30,600
Speaker 1: yesterday we had a good example of this. A Chinese

137
00:07:30,680 --> 00:07:35,120
Speaker 1: Vice Premier Holi Fung told the Tamasek chairman that the

138
00:07:35,160 --> 00:07:39,280
Speaker 1: economy is improving, it's showing stable growth, manufacturing's looking up,

139
00:07:39,360 --> 00:07:42,640
Speaker 1: it's recovering in the services sector. So we have to

140
00:07:42,680 --> 00:07:46,000
Speaker 1: consider that they think that, especially when they came out

141
00:07:46,000 --> 00:07:48,400
Speaker 1: with the target of around five percent, that they think

142
00:07:48,440 --> 00:07:49,960
Speaker 1: the economy is achieving.

143
00:07:50,160 --> 00:07:51,760
Speaker 9: Close to what they're expecting.

144
00:07:51,800 --> 00:07:54,320
Speaker 1: And so while they may provide stimulus, they just don't

145
00:07:54,360 --> 00:07:58,560
Speaker 1: see the urgency that so many journalists and investors, you know,

146
00:07:58,560 --> 00:07:59,560
Speaker 1: are curious about.

147
00:07:59,520 --> 00:08:04,760
Speaker 2: Rose cloud colored glasses maybe exactly. Philadelphia Semiconductor Index took

148
00:08:04,760 --> 00:08:06,800
Speaker 2: a hit today, and I thought it interesting too. I

149
00:08:06,840 --> 00:08:11,160
Speaker 2: was looking at the direction daily semiconductor bear three x ETF.

150
00:08:11,640 --> 00:08:14,760
Speaker 2: In the past week, this ETF saw about a billion

151
00:08:14,800 --> 00:08:17,440
Speaker 2: dollars worth of inflows. This is a way for you

152
00:08:17,560 --> 00:08:20,320
Speaker 2: to bet against what we've been seeing take place in

153
00:08:20,360 --> 00:08:23,720
Speaker 2: the chip industry. We know that there has been this revolution,

154
00:08:24,040 --> 00:08:27,640
Speaker 2: at least in conversation about what is happening in artificial intelligence.

155
00:08:27,680 --> 00:08:30,640
Speaker 2: Call it hype right now, though there seems to be

156
00:08:30,680 --> 00:08:32,520
Speaker 2: a reckoning here when it comes to a lot of

157
00:08:32,520 --> 00:08:35,520
Speaker 2: the chip stocks, at least for the fast past four days.

158
00:08:35,840 --> 00:08:38,960
Speaker 1: Well, yeah, it's a very short term trend. That money

159
00:08:39,200 --> 00:08:41,760
Speaker 1: perhaps coming out of tech. We saw that today we

160
00:08:41,800 --> 00:08:44,960
Speaker 1: had six sectors up and six sectors down in the

161
00:08:45,040 --> 00:08:47,559
Speaker 1: S and P five hundred and tech was obviously a

162
00:08:47,559 --> 00:08:50,600
Speaker 1: big part of it, in communication services as well. But

163
00:08:50,720 --> 00:08:53,360
Speaker 1: still if you look in videos up thirty eight percent

164
00:08:53,360 --> 00:08:56,319
Speaker 1: in the past month, the socks is up ten percent,

165
00:08:56,360 --> 00:08:58,640
Speaker 1: that's a lot less. Some of the money is coming

166
00:08:58,720 --> 00:09:02,000
Speaker 1: out of those and flowing into as we talked about before,

167
00:09:02,080 --> 00:09:04,960
Speaker 1: into like the transports up six percent in the last

168
00:09:04,960 --> 00:09:07,280
Speaker 1: month of Russell two thousand and four percent. Those are

169
00:09:07,320 --> 00:09:09,880
Speaker 1: not big enough gains to say, well, look at this

170
00:09:09,960 --> 00:09:12,679
Speaker 1: major trend, but it's a move and something to keep

171
00:09:12,720 --> 00:09:13,120
Speaker 1: an eye on.

172
00:09:13,440 --> 00:09:16,040
Speaker 2: I think that's a fair statement, particularly when the fact

173
00:09:16,040 --> 00:09:19,000
Speaker 2: that you're looking at interest rates edge just a bit higher.

174
00:09:19,080 --> 00:09:20,760
Speaker 9: All right, now it's time for global news.

175
00:09:22,520 --> 00:09:25,720
Speaker 1: The search moving into a more desperate phase here for

176
00:09:25,800 --> 00:09:29,240
Speaker 1: the missing submersible. Dan Schwartzman's on the story from the

177
00:09:29,240 --> 00:09:31,000
Speaker 1: Bloomberg newsroom in New York.

178
00:09:31,120 --> 00:09:32,160
Speaker 9: Damn yeah, Brian.

179
00:09:32,240 --> 00:09:34,480
Speaker 3: The US Coast Guard has dampened some hope that the

180
00:09:34,480 --> 00:09:37,800
Speaker 3: missing submersible vessel could be found before the onboard oxygen

181
00:09:37,880 --> 00:09:40,880
Speaker 3: is expected to run out. Underwater sounds we're detected by

182
00:09:40,920 --> 00:09:44,280
Speaker 3: a Canadian P three airplane using sonar, but remotely operated

183
00:09:44,360 --> 00:09:46,760
Speaker 3: vehicles have been unable to find any sign of the

184
00:09:46,840 --> 00:09:49,680
Speaker 3: vessel since being deployed to that area. The search area

185
00:09:49,679 --> 00:09:52,000
Speaker 3: has now been expanded to around twice the size of

186
00:09:52,000 --> 00:09:53,880
Speaker 3: the state of Connecticut, as well as two and a

187
00:09:53,920 --> 00:09:56,720
Speaker 3: half miles deep. Sean Leet, the co founder and director

188
00:09:56,720 --> 00:10:00,000
Speaker 3: of Horizon Maritime Services, which owns the Titans support VESTL

189
00:10:00,400 --> 00:10:03,120
Speaker 3: the Polar Prints, says they continue to be hopeful that

190
00:10:03,160 --> 00:10:04,280
Speaker 3: the crew can be saved.

191
00:10:04,400 --> 00:10:08,360
Speaker 11: The equipment that's been mobilized for this is the finest

192
00:10:08,400 --> 00:10:10,920
Speaker 11: in the world, the most capable in the world.

193
00:10:11,640 --> 00:10:12,960
Speaker 8: We have to hold out hope.

194
00:10:13,280 --> 00:10:16,959
Speaker 11: I think, as you're aware, there's still life support available

195
00:10:17,000 --> 00:10:19,920
Speaker 11: on a subersible and we'll continue to hold old hope

196
00:10:19,960 --> 00:10:20,800
Speaker 11: until the very end.

197
00:10:21,400 --> 00:10:24,520
Speaker 3: Sixteen people are reported as injured, with seven listed in

198
00:10:24,559 --> 00:10:28,040
Speaker 3: critical condition, after a gas explosion destroyed the facade of

199
00:10:28,040 --> 00:10:30,960
Speaker 3: a building in Paris Is Fifth Aaron Dismont. The explosion

200
00:10:30,960 --> 00:10:33,200
Speaker 3: occurred near the famed Vaal de Grass church in the

201
00:10:33,200 --> 00:10:37,120
Speaker 3: city's left bank, with fires spreading to nearby buildings. President

202
00:10:37,200 --> 00:10:40,040
Speaker 3: Biden has angered China, just days after Secretary of State

203
00:10:40,040 --> 00:10:43,480
Speaker 3: Anthony Blincoln's visit to soothe relations with the country. Biden

204
00:10:43,559 --> 00:10:48,200
Speaker 3: speaking at a fundraiser, calling Chinese President Chijin being a dictator,

205
00:10:48,400 --> 00:10:50,920
Speaker 3: while also questioning the health of the Chinese economy, as

206
00:10:50,960 --> 00:10:53,200
Speaker 3: well as pondering whether she was in control of his

207
00:10:53,240 --> 00:10:56,520
Speaker 3: country a military due to she apparently not knowing about

208
00:10:56,520 --> 00:10:59,520
Speaker 3: the spy balloon that flew over the US. China has

209
00:10:59,559 --> 00:11:04,000
Speaker 3: called the presence comments a quote provocation. Principal Deputy spokesperson

210
00:11:04,000 --> 00:11:08,120
Speaker 3: at the State Department Vedant Patel, defended President Bind's remarks.

211
00:11:08,360 --> 00:11:12,400
Speaker 12: This recent trip undertaken by the Secretary is a responsible

212
00:11:12,440 --> 00:11:17,560
Speaker 12: way to manage tensions, clear up misperceptions, avoid miscalculations, and

213
00:11:17,679 --> 00:11:21,440
Speaker 12: all of this is in our interest to do that.

214
00:11:21,440 --> 00:11:23,320
Speaker 12: That does not mean, of course, we will not be

215
00:11:23,400 --> 00:11:26,280
Speaker 12: blunt and forthright about our differences.

216
00:11:26,840 --> 00:11:29,480
Speaker 3: A California man has been sentenced to more than twelve

217
00:11:29,520 --> 00:11:31,920
Speaker 3: years in prison for using a stun gun on a

218
00:11:31,920 --> 00:11:34,760
Speaker 3: police officer during the January sixth ride at the Capitol.

219
00:11:35,080 --> 00:11:38,200
Speaker 3: Daniel Rodriguez pleaded guilty back in February to assault as

220
00:11:38,240 --> 00:11:41,439
Speaker 3: well as to conspiracy, obstruction of an official proceeding, as

221
00:11:41,440 --> 00:11:44,040
Speaker 3: well as obstruction of justice. The forty year old was

222
00:11:44,080 --> 00:11:46,240
Speaker 3: also ordered to pay almost one hundred thousand dollars in

223
00:11:46,280 --> 00:11:50,320
Speaker 3: restitution to the Metropolitan Police Department. A new report says

224
00:11:50,360 --> 00:11:52,720
Speaker 3: that it's likely that a strong al Nino over the

225
00:11:52,760 --> 00:11:55,520
Speaker 3: next year will lead to the most severe hayes experienced

226
00:11:55,760 --> 00:11:58,840
Speaker 3: in Singapore, Malaysia, and Indonesia in at least five years.

227
00:11:59,080 --> 00:12:02,080
Speaker 3: The Singapore Instant of International Affairs has issued the highest

228
00:12:02,120 --> 00:12:04,720
Speaker 3: color coded level of risk in the past five years

229
00:12:04,840 --> 00:12:07,440
Speaker 3: of a major al Nino occurring, while the US National

230
00:12:07,440 --> 00:12:10,959
Speaker 3: Ocean and Atmospheric Administration predicts there is an eighty four

231
00:12:10,960 --> 00:12:13,480
Speaker 3: percent chance of a strong event this year, and al

232
00:12:13,559 --> 00:12:16,320
Speaker 3: Ninho is a weather event that can cause disruption of

233
00:12:16,360 --> 00:12:19,040
Speaker 3: normal weather patterns. Global News twenty four hours a day,

234
00:12:19,000 --> 00:12:21,480
Speaker 3: power by more than twenty seven hundred journalists and analysts

235
00:12:21,480 --> 00:12:24,280
Speaker 3: in more than one hundred and twenty countries. I'm Dan Schwartzman.

236
00:12:24,360 --> 00:12:25,120
Speaker 3: This is Bloomberg.

237
00:12:25,800 --> 00:12:28,680
Speaker 1: I'm Brian Curtis in Hong Kong, along with Rashad Salamat,

238
00:12:28,679 --> 00:12:33,040
Speaker 1: and our guest is Bill Smeed, CIO at Smeed Capital Management.

239
00:12:33,400 --> 00:12:35,160
Speaker 1: I almost can't think of a better guest to have

240
00:12:35,240 --> 00:12:35,760
Speaker 1: on today.

241
00:12:35,800 --> 00:12:36,040
Speaker 4: Bill.

242
00:12:36,080 --> 00:12:37,920
Speaker 1: I was really excited to talk to you because I

243
00:12:37,960 --> 00:12:41,160
Speaker 1: know your house is a value house and you've probably

244
00:12:41,200 --> 00:12:44,320
Speaker 1: been just waiting for a time like this where you

245
00:12:44,400 --> 00:12:48,800
Speaker 1: start to see a little movement in transports and industrials

246
00:12:48,800 --> 00:12:51,400
Speaker 1: and energy. Today was a good day for energy, but

247
00:12:51,559 --> 00:12:53,840
Speaker 1: energy has really lacked mean even financials are up in

248
00:12:53,840 --> 00:12:57,120
Speaker 1: the past month, but energy isn't today though a move

249
00:12:57,160 --> 00:12:59,520
Speaker 1: at least in that direction. Can you tell us whether

250
00:12:59,600 --> 00:13:01,600
Speaker 1: or not this is strong enough to talk about now

251
00:13:01,640 --> 00:13:04,280
Speaker 1: as a trend or it's just a very short term move.

252
00:13:04,559 --> 00:13:08,000
Speaker 13: Well, that's an excellent question. The first thing you have

253
00:13:08,080 --> 00:13:12,000
Speaker 13: to understand is we're coming off back to back years

254
00:13:12,000 --> 00:13:16,720
Speaker 13: in twenty one and twenty two where oil and gas

255
00:13:16,760 --> 00:13:19,560
Speaker 13: in the United States were singularly the best place to be.

256
00:13:20,160 --> 00:13:22,920
Speaker 13: So when you have two really strong back to back

257
00:13:23,000 --> 00:13:27,760
Speaker 13: years and then a political situation where it was in

258
00:13:27,800 --> 00:13:33,880
Speaker 13: the interest of the political realm to bring oil prices

259
00:13:33,920 --> 00:13:37,480
Speaker 13: down and we dumped a bunch of strategic reserve back

260
00:13:37,480 --> 00:13:41,280
Speaker 13: into the marketplace to moderate prices, that you get the correction.

261
00:13:41,360 --> 00:13:43,319
Speaker 13: And by the way, if you go back and look

262
00:13:43,360 --> 00:13:47,440
Speaker 13: at the two prior major cycles in oil and gas

263
00:13:47,520 --> 00:13:50,439
Speaker 13: and in commodities, which would be seventy one to eighty

264
00:13:50,480 --> 00:13:53,880
Speaker 13: one and which would be nineteen ninety nine to about

265
00:13:53,920 --> 00:13:57,840
Speaker 13: twenty eleven or twenty fourteen, you'll find that there was

266
00:13:57,880 --> 00:14:01,040
Speaker 13: a huge initial burst and then there was corrective process

267
00:14:01,080 --> 00:14:03,640
Speaker 13: that followed for a year or two. And we think

268
00:14:03,640 --> 00:14:07,040
Speaker 13: we're in that corrective process. But we're very positive about

269
00:14:07,040 --> 00:14:08,440
Speaker 13: the next five to ten years.

270
00:14:08,559 --> 00:14:10,680
Speaker 14: Bill, I want to look more medium term, short to

271
00:14:10,720 --> 00:14:13,760
Speaker 14: medium term here and have a look at so far

272
00:14:13,880 --> 00:14:15,520
Speaker 14: on the S and P. If we have a look

273
00:14:15,559 --> 00:14:18,679
Speaker 14: at industry groups, the ones which have done worst are

274
00:14:19,520 --> 00:14:22,440
Speaker 14: housewares and the bends have done west, the best include

275
00:14:22,480 --> 00:14:26,840
Speaker 14: semiconductors and autopobile manufacturers, and also amongst those Internet related

276
00:14:26,880 --> 00:14:29,480
Speaker 14: stocks as well, regional banks amongst the worst here as well.

277
00:14:29,760 --> 00:14:31,040
Speaker 9: Does that flip around?

278
00:14:31,360 --> 00:14:33,960
Speaker 14: Do you see the second half seeing a return and

279
00:14:34,040 --> 00:14:35,880
Speaker 14: some of the worst performers or more of the same

280
00:14:36,040 --> 00:14:36,440
Speaker 14: going on?

281
00:14:37,200 --> 00:14:42,960
Speaker 13: Well, great, irony. Our big stars in our own portfolio

282
00:14:43,160 --> 00:14:49,720
Speaker 13: is we own the largest homebuilders and they've been spectacular performers,

283
00:14:50,440 --> 00:14:55,040
Speaker 13: which defies all logic. Right, the FEDS tightened credit more

284
00:14:55,080 --> 00:14:59,880
Speaker 13: in a year. We believe that what's happened with the

285
00:15:00,040 --> 00:15:06,000
Speaker 13: technology stocks from a historical perspective, for an intermediate range standpoint,

286
00:15:06,600 --> 00:15:09,520
Speaker 13: is a bear market rally, even though the S and

287
00:15:09,560 --> 00:15:12,600
Speaker 13: P five hundred indexes went up more than twenty percent

288
00:15:12,640 --> 00:15:14,920
Speaker 13: from its low point. I just looked the other day

289
00:15:16,320 --> 00:15:20,520
Speaker 13: at RCA was the giant glam tech stock of nineteen

290
00:15:20,560 --> 00:15:24,000
Speaker 13: twenty nine. Right, It was the largest producer of radios.

291
00:15:24,040 --> 00:15:27,560
Speaker 13: It was the largest one of the two largest broadcasting networks,

292
00:15:27,880 --> 00:15:30,560
Speaker 13: and then it also was one of the largest producers

293
00:15:30,600 --> 00:15:35,640
Speaker 13: of programming. So in effect it was it was Apple, Nvidia,

294
00:15:35,800 --> 00:15:39,920
Speaker 13: and Netflix all wrapped up into one stock. And in

295
00:15:40,080 --> 00:15:44,640
Speaker 13: twenty nine through thirty it went down about eighty five

296
00:15:44,680 --> 00:15:49,120
Speaker 13: percent in price and then went up fifty percent in

297
00:15:49,200 --> 00:15:54,040
Speaker 13: price in the bear market rally. And so we believe

298
00:15:54,240 --> 00:15:58,200
Speaker 13: the excitement around AI is what in sports you call

299
00:15:58,240 --> 00:16:02,280
Speaker 13: a hail Mary. In other words, you've had this incredible game.

300
00:16:02,440 --> 00:16:05,120
Speaker 13: I mean, think about it from a historical perspective for

301
00:16:05,160 --> 00:16:08,000
Speaker 13: the last ten years. If you bought the stocks that

302
00:16:08,080 --> 00:16:10,840
Speaker 13: went up the most the prior year, you probably did

303
00:16:10,840 --> 00:16:13,880
Speaker 13: better than everybody else. And it's the first time I've

304
00:16:13,920 --> 00:16:16,840
Speaker 13: looked back through one hundred and twenty years worth of

305
00:16:16,880 --> 00:16:20,560
Speaker 13: stock market history. Is the first time in US stock

306
00:16:20,600 --> 00:16:22,680
Speaker 13: market history that the best thing you could do was

307
00:16:22,680 --> 00:16:24,200
Speaker 13: buy the things that went up the most of the

308
00:16:24,320 --> 00:16:27,600
Speaker 13: year before. So all of a sudden, you get this

309
00:16:28,160 --> 00:16:30,920
Speaker 13: fed tightening and a bear market in twenty twenty two.

310
00:16:31,320 --> 00:16:33,320
Speaker 13: And then all the tech people got together and said,

311
00:16:33,440 --> 00:16:35,680
Speaker 13: we got to do something here. We had this wonderful

312
00:16:35,720 --> 00:16:38,360
Speaker 13: game going on for ten years where we have all

313
00:16:38,400 --> 00:16:40,320
Speaker 13: the momentum in the world. We got to come up

314
00:16:40,320 --> 00:16:43,040
Speaker 13: with something new to get people excited about. And they

315
00:16:43,400 --> 00:16:45,400
Speaker 13: go back to pass it's the last play of the game,

316
00:16:45,440 --> 00:16:48,640
Speaker 13: and they go AI and they throw it down the field.

317
00:16:49,320 --> 00:16:52,720
Speaker 1: Well, yeah, I mean, chat GPT was kind of a fresh, new,

318
00:16:53,080 --> 00:16:55,160
Speaker 1: more consumer friendly development.

319
00:16:55,200 --> 00:16:57,040
Speaker 9: So I know you're not interested in that, so let's

320
00:16:57,040 --> 00:16:57,760
Speaker 9: set that aside.

321
00:16:58,480 --> 00:17:00,240
Speaker 1: Still in your business, you have to make a lot

322
00:17:00,240 --> 00:17:02,840
Speaker 1: of controversial calls. And for instance, when you look at

323
00:17:02,880 --> 00:17:06,119
Speaker 1: deep value, you're talking about some companies like Simon Properties

324
00:17:06,400 --> 00:17:09,679
Speaker 1: and others. Are you not concerned about commercial real estate

325
00:17:09,840 --> 00:17:14,080
Speaker 1: and maybe the lagged defect of these higher interest rates

326
00:17:14,080 --> 00:17:16,639
Speaker 1: and what that might do for even residential.

327
00:17:16,400 --> 00:17:19,760
Speaker 13: Well, when you come to commercial real estate, there's probably

328
00:17:20,280 --> 00:17:23,520
Speaker 13: eight or ten different sectors of commercial real estate. So

329
00:17:23,560 --> 00:17:28,240
Speaker 13: the irony is Simon Properties, which is a large class

330
00:17:28,280 --> 00:17:32,240
Speaker 13: a mall owner and the owner of the brand premium outlets.

331
00:17:33,600 --> 00:17:38,800
Speaker 13: They are a beneficiary when Nordstrom closes, they're downtown San

332
00:17:38,840 --> 00:17:44,520
Speaker 13: Francisco stores. That's taking shoppers from downtown to the suburbs.

333
00:17:45,320 --> 00:17:49,520
Speaker 13: And that's exactly what's going on everywhere other than in Manhattan.

334
00:17:49,640 --> 00:17:53,399
Speaker 13: Right in Manhattan, everything goes is coming more back to normal.

335
00:17:53,440 --> 00:17:59,320
Speaker 13: But in gutted downtowns like Minneapolis and Chicago and Seattle

336
00:17:59,400 --> 00:18:04,000
Speaker 13: and Portland in San Francisco, those shoppers are no longer

337
00:18:04,040 --> 00:18:07,399
Speaker 13: going to downtown because the workers aren't going to downtown,

338
00:18:08,160 --> 00:18:11,040
Speaker 13: and so the shops and the restaurants in those downtown

339
00:18:11,080 --> 00:18:16,440
Speaker 13: areas are dying. So the occupancy and rents at Simon

340
00:18:16,640 --> 00:18:21,639
Speaker 13: and Maceridge are as good or better than pre pandemic.

341
00:18:22,359 --> 00:18:25,480
Speaker 13: And what you're hearing from nord Strums they're going to

342
00:18:25,520 --> 00:18:30,119
Speaker 13: open up forty racks stores. You hear Warby Parker or

343
00:18:30,160 --> 00:18:34,760
Speaker 13: the electric vehicle people, they're all apples opening more stores.

344
00:18:35,040 --> 00:18:38,240
Speaker 13: Those are going into our mall. So there's a huge

345
00:18:38,280 --> 00:18:42,240
Speaker 13: difference between being the place that people want to go

346
00:18:42,440 --> 00:18:47,120
Speaker 13: now that they're done with COVID and trying to own

347
00:18:47,280 --> 00:18:52,480
Speaker 13: office buildings in downtown Seattle. That's where all the problems are.

348
00:18:52,640 --> 00:18:54,840
Speaker 13: There are any buildings that they're just going to take

349
00:18:54,880 --> 00:18:57,679
Speaker 13: the keys and give them back to whoever the lender is.

350
00:18:57,920 --> 00:18:59,960
Speaker 1: Okay, I got thirty seconds, so you have to be six.

351
00:19:00,640 --> 00:19:03,240
Speaker 1: You also like selected banks, Well.

352
00:19:03,080 --> 00:19:05,760
Speaker 13: Yeah, we've owned a JP Morgan and Bank America since

353
00:19:05,800 --> 00:19:10,240
Speaker 13: twenty twelve, and whenever they get this cheap, you know,

354
00:19:10,359 --> 00:19:13,520
Speaker 13: it's it's hard not to be positive. There's ninety two

355
00:19:13,520 --> 00:19:17,040
Speaker 13: million millennials that are kicked into gear now and they're

356
00:19:17,080 --> 00:19:20,919
Speaker 13: going to become liability customers after being good deposit and

357
00:19:21,119 --> 00:19:22,320
Speaker 13: mobile banking customers.

358
00:19:22,600 --> 00:19:23,800
Speaker 9: Bill always like to have you on.

359
00:19:23,840 --> 00:19:25,119
Speaker 1: You always sound like you have a little bit of

360
00:19:25,160 --> 00:19:27,359
Speaker 1: a chip on your shoulder, and it gives you that edge,

361
00:19:27,400 --> 00:19:29,920
Speaker 1: which is good for radio. So it's always a pleasure.

362
00:19:29,920 --> 00:19:31,280
Speaker 1: You got to get back to Hong Kong. We'll see

363
00:19:31,320 --> 00:19:35,080
Speaker 1: you here again sometime soon, we hope. Bill Speed, Cio

364
00:19:35,160 --> 00:19:39,960
Speaker 1: at Smeed Capital Management. This is Bloomberg Daybreak Asia, your

365
00:19:39,960 --> 00:19:42,400
Speaker 1: morning brief on the story is making news from Hong

366
00:19:42,480 --> 00:19:44,440
Speaker 1: Kong to Singapore and Wall Street.

367
00:19:44,480 --> 00:19:48,480
Speaker 2: Look for us on your podcast feed every day, on Apple, Spotify,

368
00:19:48,720 --> 00:19:50,720
Speaker 2: and anywhere else you get your podcasts.

369
00:19:50,720 --> 00:19:53,320
Speaker 1: You can also listen live each day on Bloomberg eleven

370
00:19:53,359 --> 00:19:55,760
Speaker 1: three to zero in New York, Bloomberg ninety nine to

371
00:19:55,760 --> 00:19:58,960
Speaker 1: one in Washington, Bloomberg one oh six to one in Boston,

372
00:19:59,240 --> 00:20:01,720
Speaker 1: and Bloomberg nine sixty in San Francisco.

373
00:20:01,800 --> 00:20:04,640
Speaker 2: Our flagship New York station is also available on your

374
00:20:04,720 --> 00:20:09,919
Speaker 2: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty plus.

375
00:20:10,080 --> 00:20:13,480
Speaker 1: Listen coast to coast on the Bloomberg Business app, Sirius

376
00:20:13,640 --> 00:20:17,879
Speaker 1: XM Channel one nineteen, the iHeartRadio app, and on Bloomberg

377
00:20:17,920 --> 00:20:18,640
Speaker 1: dot Com.

378
00:20:18,880 --> 00:20:19,880
Speaker 9: I'm Brian Curtis

379
00:20:20,320 --> 00:20:22,760
Speaker 2: And I'm Doug Chrisner join us again tomorrow for all

380
00:20:22,800 --> 00:20:25,280
Speaker 2: the news you need to start your day right here

381
00:20:25,359 --> 00:20:28,800
Speaker 2: on Bloomberg Daybreak Asia