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Speaker 1: Good morning.

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Speaker 2: I'm Doug Prisner and I'm Brian Curtiz. Here are the

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Speaker 2: stories we're following today. China's top leaders have signaled more

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Speaker 2: support for the real estate sector and our adding measures

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Speaker 2: to boost consumption. We get more from Bloomberg's Joan Wong.

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Speaker 3: The Communist Party promised to more of WAA call's counter

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Speaker 3: cyclical policy that suggests more economic support along with an

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Speaker 3: adjustment of restrictions in the property sector, but the meeting

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Speaker 3: did not include major fiscal or monetary loosening. Chinese leaders

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Speaker 3: pledged to boost consumption and resolve local government debt. Investors

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Speaker 3: have been waiting for more support after data showed China's

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Speaker 3: economic momentums lowing in the second quarter. Financial markets initially

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Speaker 3: showed limited enthusiasm for the measures, but later US listed

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Speaker 3: Chinese stocks rose more than four percent and Hong Kong

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Speaker 3: I'm joined Wang Bloomberg Day Brick Asia.

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Speaker 1: We go to Apple next. We are being told that

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Speaker 1: the company is asking its suppliers principally in Asia to

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Speaker 1: produce about eighty five million units of the iPhone fifteen

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Speaker 1: this year. That is pretty much in line with the

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Speaker 1: year before, and it comes despite a projected drop in

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Speaker 1: the overall market for smartphones. Here is Bloomberg's man deep sing.

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Speaker 4: Thank of what happened last week when TSMC took down

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Speaker 4: its guidance by ten percent and they called out weakness

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Speaker 4: on the smartphone and PC side. So clearly, I think

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Speaker 4: this comes down the nerves in terms of Apple really

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Speaker 4: seeing a big decline with their new launch.

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Speaker 1: Here's the thing. We're also hearing that Apple will probably

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Speaker 1: see higher revenue overall. Wonder why, Well, that's because the

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Speaker 1: company is considering raising prices of the iPhone Pro models.

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Speaker 2: Now.

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Speaker 1: Apple stock has surged nearly fifty percent so far this year,

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Speaker 1: and that has helped to push the market capitalization for

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Speaker 1: the company to three trillion dollars. We had the stock

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Speaker 1: today very little changed in late trading. Right now I

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Speaker 1: have it up about four tenths of one percent.

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Speaker 2: Ran and another stock that did well today was Tesla.

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Speaker 2: Tesla is looking abroad now to keep growth going that

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Speaker 2: story from bloom and Kates.

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Speaker 5: Tesla has disclosed more sales than ever outside the US

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Speaker 5: and China, the electric vehicle maker, and a regulatory filing

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Speaker 5: revealed that revenue from other international markets more than doubled

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Speaker 5: the close to eight billion dollars in the second quarter,

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Speaker 5: and while the US remains Tesla's biggest source of sales,

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Speaker 5: revenue has plateaued after approaching twelve billion dollars in the

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Speaker 5: final three months of twenty twenty two. Sales and Tesla's

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Speaker 5: home market have been lower for the past two quarters,

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Speaker 5: growing revenobia challenge in the third quarter because Tesla has

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Speaker 5: scheduled shutdown satisfactories. For updates in Washington and Kates Bloomberg,

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Speaker 5: day Break, Asia.

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Speaker 2: And Doug Tesla is up three and a half percent

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Speaker 2: in this latest session.

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Speaker 1: Well, a steep drop in stock trading revenue is weighing

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Speaker 1: heavily on one of the best known trading firms here

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Speaker 1: in the US. We have more from Bloomberg's Tom Buzby.

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Speaker 6: Citadel Securities reporting its first half trading revenue tumbling thirty

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Speaker 6: five percent from the same period a year ago, generating

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Speaker 6: two point seven three billion in revenue in the first

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Speaker 6: six months of twenty twenty three. That's compared to a

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Speaker 6: record four point two billion in the first half of

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Speaker 6: last year. Well, that windfall last year attributed to a

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Speaker 6: lot of volatility from a series of interest rate hikes

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Speaker 6: from the Federal Reserve fears of a US recession and

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Speaker 6: Russia's invasion of Ukraine. But this year, investor worries about

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Speaker 6: all those headline risks have declined, along with market volatility

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Speaker 6: and trading revenue.

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Speaker 7: Tom Busby Bloomberg Daybreak Asia.

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Speaker 2: UBS says it will pay about three hundred and eighty

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Speaker 2: seven million dollars in fines related to misconduct by Credit Suiez.

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Speaker 2: The fines are linked to the Swiss bank's dealings with

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Speaker 2: Archego's capital management. In a consent order with the FED,

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Speaker 2: UBS agreed to pay just under two hundred and seventy

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Speaker 2: million for unsafe and unsound counterparty credit risk management practices

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Speaker 2: at Credit Suez, and separately, the Bank of England's Prudential

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Speaker 2: Regulation Authority find Credit Swiez one hundred and twelve million dollars.

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Speaker 2: The UK regulator said the bank failed to learn from

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Speaker 2: past similar experience and had insufficiently addressed its concerns. UBS's

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Speaker 2: acquisition of Credit Suisse actually closed last month. Since then,

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Speaker 2: the firm said that legal liabilities related to Credit Suisse

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Speaker 2: could cost the company as much as four billion dollars

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Speaker 2: over the next year.

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Speaker 1: All Right day Break Asia. I'm Doug Krisner along with

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Speaker 1: Brian Curtison. We're going to look at some of the

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Speaker 1: things that we were talking about on our production call

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Speaker 1: earlier in the day. Brian, you and I were speaking

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Speaker 1: about this call from JP Morgan strategist Marko Kolanovitch, Right.

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Speaker 2: Yeah, so he's kind of staying with the position a

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Speaker 2: noted bear, along with Mike Wilson over at Morgan Stanley.

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Speaker 7: But Wilson throws in the towel.

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Speaker 2: So it's kind of one of these things that recently

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Speaker 2: it's been slow in happening, but some of the biggest

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Speaker 2: bears have kind of changed their tune a little bit,

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Speaker 2: but Marko Klanovitch is sticking with it.

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Speaker 1: Yeah, nineteen percent so far. This here for the S

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Speaker 1: and P five hundred. That's the gain we're looking at.

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Speaker 1: That's a tough pill to swallow if you've been on

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Speaker 1: the other side of the market. And I was looking

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Speaker 1: at a conversation that some of our colleagues had earlier

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Speaker 1: in the day with ed Yard Denny of Yar Denny Research.

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Speaker 1: He was saying there's a reasonable chance for a US

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Speaker 1: economic boom do a large part to improve productivity. He's

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Speaker 1: linking this to not only artificial intelligence, but things like

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Speaker 1: robotics and quantum computing, and he thinks it could turn

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Speaker 1: out to be something like the Roaring twenty twenties. I

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Speaker 1: thought that was interesting.

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Speaker 2: Yeah, he's been pretty positive, along with Tom Lee. And also,

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Speaker 2: you know you've got this China side stimulus that we've

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Speaker 2: talked a little bit about. The headlines out here are

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Speaker 2: lines like the polit Bureau, let's really state off the

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Speaker 2: leash after six long years on the shackle has come

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Speaker 2: off the property sector, and he's been well noted that

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Speaker 2: President she has said in the past that houses were

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Speaker 2: for living in, not speculating. The Polar Bureau made no

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Speaker 2: mention of that line in the rundown of all the

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Speaker 2: measures that they're planning from yesterday yesterday's meeting, So it

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Speaker 2: seems like they've changed their mind a little bit on

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Speaker 2: real estate. Does it work, does it change people's attitudes?

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Speaker 2: Will consumers start spending again? That's the part we don't know.

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Speaker 7: Well.

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Speaker 1: Economists over at Morgan Stanley we're saying that the readout

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Speaker 1: overall was a little more dubvish than expected, and these

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Speaker 1: economists went on to say this could be a defining moment,

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Speaker 1: very much akin to October twenty eighteen. We'll have to

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Speaker 1: wait and see.

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Speaker 2: Yeah, all right, time now for Global News, Israel's parliament

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Speaker 2: has indeed passed the law that weakens the judicial system.

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Speaker 2: Ed Baxter is getting his head around that and has

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Speaker 2: all the rest of the Global News in the nine

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Speaker 2: sixty news room in San Francisco ed.

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Speaker 8: Yeah, exactly right byen Benjamin Nett, Yahoo's government passing it

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Speaker 8: with very small majority, very slim and a sharply divided country.

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Speaker 8: Net Yahoo through a translator saying it is necessary and

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Speaker 8: it was.

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Speaker 3: Time today we performed and need a democratic step in

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Speaker 3: order to bring back a ben between the branches.

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Speaker 8: But we didn't have for fifty Yes, but the protests

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Speaker 8: that have been going on now for months in anticipation

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Speaker 8: have escalated, and Bloomberg's Ethan Bronner says it leaves several questions.

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Speaker 9: The fear is that it will make the regulatory environment

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Speaker 9: much more politicized.

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Speaker 7: That it will also allow.

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Speaker 9: The political leaders to do things that the law would

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Speaker 9: normally stop them from doing, for example, to fire people

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Speaker 9: who oversee them or to hire cronies.

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Speaker 8: Now, military reservists in large numbers say they can no

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Speaker 8: longer serve and the protests that have been made up

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Speaker 8: of tech workers basically, and what Bonner calls the expert class.

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Speaker 9: You know, the interesting question is how does the country

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Speaker 9: go forward without an expert class on board. And I

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Speaker 9: think that's something that a whole bunch of countries are facing.

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Speaker 9: But in this country, which is in a tough neighborhood

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Speaker 9: and which has to defend itself, you know, the idea

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Speaker 9: that it's not actually going to be at risked so

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Speaker 9: much from outside, but more from inside.

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Speaker 8: The US White House has issued a statement saying it

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Speaker 8: wished that Nettnyahu had waited to make sure it was

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Speaker 8: the right thing to do, and those protests mentioned, well,

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Speaker 8: we're now getting reports that the masses of Israeli blocked

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Speaker 8: roads in Jerusalem. Police used water cannons to clear them out.

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Speaker 8: Massive protests in other cities as well. North Korea has

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Speaker 8: fired off another ballistic missile. South Korea is saying it

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Speaker 8: fell into the waters off the east coast. It comes

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Speaker 8: ahead of the seventieth anniversary of the signing of the

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Speaker 8: Korean Armistice on July twenty seventh, nineteen fifty three. It

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Speaker 8: also comes as North continues to protest the porting of

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Speaker 8: the US nuclear submarine in South Korea. Florida Governor Ron

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Speaker 8: Decantis plans to shake up his presidential campaign leadership this

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Speaker 8: sumid pressure from donors and supporters to salvage's presidential bid.

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Speaker 8: The major issue appears to be spending. Bloomberg's Nancy Cook

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Speaker 8: on Balance of Power says DeSantis is really getting backed

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Speaker 8: into a corner at this point.

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Speaker 10: There is an ongoing campaign reset, you know, there's sort

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Speaker 10: of a reset within the reset of him, with ongoing

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Speaker 10: campaign shakeups in the leadership ranks of his campaign. And

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Speaker 10: so I think for DeSantis, he's just trying to survive

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Speaker 10: the Republican primary.

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Speaker 8: Nancy says he's defending the new Florida education policy on

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Speaker 8: the teachings of slavery and seeming to intimate there was

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Speaker 8: an upside to slavery. Does not play well politically either.

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Speaker 8: But his immediate problem is the way the campaign is

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Speaker 8: spending money. And Typhoon Duk Surias stretched, strengthened and may

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Speaker 8: intensify into a super typhoon before possible landfall on the

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Speaker 8: northern Philippines. Its path would take it then to Taiwan.

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Speaker 8: Maximum wins at this point just over ninety six miles

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Speaker 8: per hour doc sorry to become the first typhoon to

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Speaker 8: hit Taiwan since twenty nineteen. Global News powered by more

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Speaker 8: than twenty seven hundred journalist and analyst in over one

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Speaker 8: hundred and twenty countries. This is Bloomberg.

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Speaker 2: I'm Brian Curtis in Hong Kong along with Vonnie Quinn.

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Speaker 2: Our guest is Tracy mcmillion, head of Asset Allocation Strategy

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Speaker 2: at Wells Fargo Investment Institute. Grazie. Thank you for joining us.

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Speaker 2: So we see more bears kind of rationalizing their view.

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Speaker 2: We mentioned Morgan Stanley and others have have joined in,

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Speaker 2: and that's even though their core view is that recession

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Speaker 2: and a pullback in earnings could still be coming.

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Speaker 7: Does that align with your house view?

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Speaker 11: So our ofview has been that we are we are

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Speaker 11: in a fed tightening cycle. Global central banks in general

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Speaker 11: are tightening. We are seeing global growth start to slow down.

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Speaker 11: We are seeing some indications that there is some flowing

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Speaker 11: of growth in the US as well. But there's also

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Speaker 11: this this mountain of cash that the average consumer has

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Speaker 11: on their balance sheets. Corporate balance sheets are pretty strong,

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Speaker 11: and there is there's also fairly high consumer confidence that

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Speaker 11: at the moment but we are fighting against tightening monetary policy,

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Speaker 11: and eventually we do think that that tighter policy is

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Speaker 11: going to have effects lagged at lagged effects, if you will,

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Speaker 11: and that we'd rather just be cautious at this point.

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Speaker 11: That does not mean selling out of equities, but it

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Speaker 11: does mean repositioning the portfolios to be a bit more

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Speaker 11: cautious here.

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Speaker 12: Tracy, what are we looking for because so far, data

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Speaker 12: that come in, earnings that come in, they don't seem

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Speaker 12: to be knocking the market off at skis.

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Speaker 11: No, You're you're right, Fanni. The Yeah, so far, we've

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Speaker 11: had a very good year in equities, with double digit

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Speaker 11: returns across a lot of equities asset classes. But we

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Speaker 11: do think we're starting to face some headwinds here. We are,

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Speaker 11: you know, expecting another rate hikes this week, potentially additional

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Speaker 11: rate hikes after that, especially if core inflation stays around

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Speaker 11: US five percent level, you know, it doesn't come off

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Speaker 11: in the in the next couple of months, we think

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Speaker 11: that the said will continue to hike. The jobs market

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Speaker 11: has been really strong, but it is starting to show

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Speaker 11: a few cracks. We think that could cause consumers to

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Speaker 11: pull back on the margins. And we're entering a seasonally

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Speaker 11: week period, so you know, again just we think a

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Speaker 11: little caution is probably.

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Speaker 7: In order here, Tracy.

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Speaker 2: The S and P five hundred is trading five percent

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Speaker 2: above it's fifty day moving average, So you could get

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Speaker 2: a pullback of that five percent, perhaps sometime soon, and

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Speaker 2: it would still be consistent with maintaining an upward trend.

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Speaker 2: If we did pull back five percent, would you guys

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Speaker 2: change your spots? Would you get long or do you

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Speaker 2: do you think that you would? You would stay with

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Speaker 2: your view to be cautious.

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Speaker 11: Yeah, we would say that that's still within the trading

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Speaker 11: range that we've seen really since last October. We've been

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Speaker 11: in this very very broad.

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Speaker 7: No, Tracy, that's that's that's not true.

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Speaker 2: I mean, the the range was really thirty eight hundred

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Speaker 2: to forty two hundred, and we.

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Speaker 7: Busted well above that.

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Speaker 2: Now it's at forty five fifty four, So that's above

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Speaker 2: a range that was in place since you know, long

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Speaker 2: ways back. It's you know, you can still argue the

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Speaker 2: bare case, but it's it's really not in a in

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Speaker 2: that same range that we were in.

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Speaker 11: You're you're absolutely right, it's not in the same range

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Speaker 11: that we were in, but we do feel like this

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Speaker 11: is probably just a counter trend rally. Still, we still

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Speaker 11: are not we're not above the highs that we reached previously,

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Speaker 11: and so, you know, we do think that it's very

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Speaker 11: likely that we could see a pullback in the five

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Speaker 11: percent range that you indicated, but we we would not

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Speaker 11: necessarily be buying into a five percent pullback. We want

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Speaker 11: to see a little something more significant than that.

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Speaker 12: Tracy, we had some male colpos to well, a mail

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Speaker 12: cop but from Mike Wilson. Let's say, who does he

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Speaker 12: missed out on last year?

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Speaker 2: Is Raleigh?

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Speaker 12: I mean, how are you supposed to look at it

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Speaker 12: if you're a strategist, I mean, if you're still expecting

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Speaker 12: the market to go down but it's had a twenty

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Speaker 12: or in the case of the NASDAK of thirty five

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Speaker 12: percent run up, have you missed something or are you

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Speaker 12: just early?

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Speaker 11: Yeah? So, you know, as I was as I was saying,

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Speaker 11: we aren't necessarily telling investors to move out of equities.

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Speaker 11: We're telling them to position within the equity space, position

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Speaker 11: more cautiously within that space. And what we mean by

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Speaker 11: that is that we would be moving money from things

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Speaker 11: like small caps and emerging markets into large caps, and

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Speaker 11: that's actually where most of the return has been so

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Speaker 11: far as this year. And so a tactical shift like that,

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Speaker 11: we think is something that has has benefited investors. And

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Speaker 11: seeing you know, with the fixed income space there too,

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Speaker 11: you know, we would be more cautious looking at investment

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Speaker 11: grade over high yield. You know that that trade has

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Speaker 11: not worked out as well as the large gap trade has,

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Speaker 11: but we still think that, you know that the yield

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Speaker 11: spreads are probably a little bit tight just considering where

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Speaker 11: we might be in this cycle.

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Speaker 2: Chracy as a daily news show, we want to talk

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Speaker 2: about some of the other developments happening in the past

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Speaker 2: twenty four hours.

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Speaker 7: China's a big part of that.

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Speaker 2: The Pullet Bureau meeting, they put out a reading of

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Speaker 2: some changes in policy and it looks like real estate

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Speaker 2: we'll get a lot of attention. Does China hold the

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Speaker 2: potential here to to improve global growth numbers if it

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Speaker 2: finally does get moving.

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Speaker 11: Oh definitely yes, kind of a major player in global growth.

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Speaker 11: So if we were to see, you know, some improvement

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Speaker 11: from the Chinese market, we we definitely think that that

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Speaker 11: could improve the global growth outlook. And you know, China

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Speaker 11: is really a support for that entire Asian region, and

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Speaker 11: so not only would we start to see some improvement

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Speaker 11: from China, but probably from other areas in Asia as well. Unfortunately,

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Speaker 11: we think that the stimulus that we that we saw

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Speaker 11: today is not as aggressive as it might need to

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Speaker 11: be in order to h jump start what turned out

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Speaker 11: to be a fairly disappointing recovery. So, you know, potentially

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Speaker 11: areas like Korea or Southeast Asia, Korea with their auto

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Speaker 11: Southeast Asia with tourism, that might be areas where we

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Speaker 11: might see some additional strength, even if we don't see

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Speaker 11: it coming from China.

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Speaker 12: Yeah, you're underweight em equities, but as you say, there

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Speaker 12: may be pockets around Asia where you could see some

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Speaker 12: interesting trades. What about you know, alternatives or as as

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Speaker 12: in sort of something like maybe a commodity or even bitcoin.

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Speaker 12: I mean, is there room or is there a need

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Speaker 12: for that in a portfolio.

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Speaker 11: So we do think there is a need for real assets,

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Speaker 11: and we consider commodities real outsets, real tangible assets, real estate, commodities.

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Speaker 11: We are we are unfavorable real estate at the moment,

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Speaker 11: but we do like commodities. We do think that the

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Speaker 11: that the globe is in a situation where supplies are

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Speaker 11: still constrained, and we know we're seeing some of that

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Speaker 11: in recent pricing in things like oil. We think that,

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Speaker 11: you know, food supplies to Titan this year until we

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Speaker 11: could see food prices also increase. So commodities is an

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Speaker 11: important element of the portfolio, especially in times when inflation

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Speaker 11: is an issue.

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Speaker 7: Yeah, all right, Tracy, thanks so much for joining us.

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Speaker 2: Tracy McMillian, head of Global Asset Allocation Strategy at Wells

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Speaker 2: Fargo Investment Institute. This is Bloomberg Daybreak Asia, your morning

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