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Speaker 1: Good morning. I'm Brian Curtiz and I'm Doug Krisner. Here

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Speaker 1: are the stories we're following today.

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Speaker 2: FED Governor Michelle Bowman saying that more rate hikes may

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Speaker 2: be needed to fully restore price stability. She said inflation

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Speaker 2: is significantly above the Fed's two percent target and the

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Speaker 2: job market is tight. Bowman also thinks that future moves

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Speaker 2: will depend on incoming data.

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Speaker 3: I'll be looking for evidence that inflation is on a

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Speaker 3: consistent and meaningful downward path as I consider whether further

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Speaker 3: increases in the federal funds rate will be needed and

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Speaker 3: how long the federal funds rate will be will need

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Speaker 3: to remain at a sufficiently restrictive level.

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Speaker 2: In the meantime, New York Fed President John Williams said

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Speaker 2: that he sees restrictive policy for some period of time,

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Speaker 2: but he also said that rate cuts may be warranted

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Speaker 2: next year if inflation slows.

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Speaker 1: After the bell, Palanteer Technologies raised its annual forecast for

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Speaker 1: adjusted profit in twenty twenty three, and the company also

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Speaker 1: authorized a billion dollar stock buybeck. We have the story

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Speaker 1: from Bloomberg's Charlie Pellett.

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Speaker 4: It is citing what it calls transformative traction. For its

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Speaker 4: artificial intelligence technology. CEO Alex Karp told Bloomberg quote, we

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Speaker 4: have a good chance at becoming the most important software

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Speaker 4: company in the world. He says demand is unprecedented for

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Speaker 4: Pallenteer's AI. The Denver based software company said it expects

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Speaker 4: to earn more than five hundred and seventy six million

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Speaker 4: dollars in adjusted income from operations on over two point

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Speaker 4: twenty one billion in revenue during twenty twenty three. In

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Speaker 4: New York, Charlie Pellett Bloomberg Daybreak Asia.

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Speaker 2: Tesla CFO Zachary Kirkcorn is stepping down from his duties

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Speaker 2: in his surprise shakeup at the company. He worked at

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Speaker 2: Tesla for thirteen years. The story from Bloomberg's Ed Ludlow.

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Speaker 5: He will stay on for the rest of the year

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Speaker 5: to help with the transition. Zach kirk Cohn has been

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Speaker 5: at the heart of everything that's been good for Tesla,

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Speaker 5: frankly in the last four years as CFO since being

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Speaker 5: named in twenty nineteen. He was a rookie then and

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Speaker 5: unknown quantity. But what he's done is is basically brought

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Speaker 5: regular profit to Tesla, done smart capital raises, and every

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Speaker 5: investor in analyst I've spoke into has been a big

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Speaker 5: fan of his.

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Speaker 2: In that time, Cookhorn was considered a top contender to

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Speaker 2: succeed Elon Muskaz CEO, and his departure renews uncertainties over

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Speaker 2: the leadership at TESLA. Chief Counting Officer Vajhav Tanasia will

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Speaker 2: now take on the CFO role in addition to his

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Speaker 2: current duties. That's List stock traded down about one percent

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Speaker 2: today on an otherwise up day for stocks on Wall Street.

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Speaker 6: Well.

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Speaker 1: The German government is expecting TSMC to approve the construction

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Speaker 1: of a big chip plant in Dresden as soon as today,

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Speaker 1: the story from Bloomberg's Juan Wong in Hong Kong.

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Speaker 7: The eleven billion dollar plants will specialize in making chips

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Speaker 7: for the automotive sector. The German government will provide more

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Speaker 7: than five billion dollars worth of subsidies for the plan.

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Speaker 7: Governments around the world are competing fiercely to attract chip

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Speaker 7: companies to their shores, and Germany has emerged as one

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Speaker 7: of the most aggressive on that front. Another semiconductor firm, Intel,

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Speaker 7: is said to receive about eleven billion dollars in subsidies

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Speaker 7: from the German government. For its own plant in the

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Speaker 7: country in Hong Kong Joint Wong Bloomberg day Bradaesia and.

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Speaker 2: New foreign investment in China has fallen to the lowest

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Speaker 2: level in some twenty five years. Bloomberg's Bonnie Al with

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Speaker 2: the story from Hong Kong.

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Speaker 8: A key gauge of foreign direct investment to China slummed

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Speaker 8: eighty seven percent in the second quarter from last year.

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Speaker 8: The data was released by China's State Administration and Foreign Exchange.

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Speaker 8: It shows inbound and outbound FDI as well as net

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Speaker 8: foreign investment are all down. Foreign companies are losing confidence

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Speaker 8: due to China's waning economic recovery and testing geopolitical tensions.

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Speaker 8: Top officials have tried to strike a more favorable tone

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Speaker 8: for foreign companies in recent months, but it remains to

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Speaker 8: be seen how effective this will be in turning the

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Speaker 8: tide in Hong Kong. I'm Bonnie Al Bloomberg Day Break

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Speaker 8: Asia DOUG.

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Speaker 2: These numbers were pretty shocking on net foreign investment because

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Speaker 2: if you look at it, not only was net foreign

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Speaker 2: direct investment down, inbound FDI was down, and if you

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Speaker 2: didn't have outbound FDI down as much as it was,

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Speaker 2: then it would look even worse and still the lowest

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Speaker 2: in twenty five years. So I think if you put

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Speaker 2: that together with the other story that we did out

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Speaker 2: of Hong Kong today about DSMC setting up this plant

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Speaker 2: in Dresden, the reshoring moves definitely on companies minds.

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Speaker 1: Yeah, you're absolutely right about that, Brian. And in that

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Speaker 1: story on the Bloomberg reporters quote the China economist over

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Speaker 1: at Sakchen, Michelle m who is a guest on our

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Speaker 1: program frequently, and she was calling this trend kind of alarming,

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Speaker 1: which then takes us to the trade data that we're

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Speaker 1: expecting later today. Bloomberg Economics is expecting exports to shrink

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Speaker 1: at a faster pace. A lot of the weakness globally

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Speaker 1: is probably the big reason why, and weak consumption domestically

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Speaker 1: probably also caused imports to continue to contract. So there

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Speaker 1: is a deflationary story now in China.

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Speaker 2: Yeah, that data will be interesting today, and then also

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Speaker 2: looking at the at the prices data that will be

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Speaker 2: getting tomorrow. I wanted to mention as well. You talked

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Speaker 2: about yields there, the two year and the ten year yield.

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Speaker 2: We've got less inversion of the yield curve, sometimes referred

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Speaker 2: to as steepening. I guess at the moment of sixty

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Speaker 2: eight bases points between twos and tens, and you know,

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Speaker 2: it's been moving in that direction. It's not necessarily a

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Speaker 2: good sign for stocks, however, I think most people are

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Speaker 2: embracing it.

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Speaker 1: Before we went to Airbrin, Marko Kolanovich over at JP

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Speaker 1: Morgan was indicating that his expectation now sixty five percent

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Speaker 1: probability that we'll have a recession in the US. So

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Speaker 1: he is backing away from this notion of soft landing.

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Speaker 2: Yeah, but you know, most of those bears have been capitulating.

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Speaker 2: He's still, you know, sticking to his guns. So it'll

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Speaker 2: be interesting to watch that one as we move forward.

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Speaker 2: All Right, now it's time for Global news. The central

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Speaker 2: part of the US Eastern Seaboard is getting some very

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Speaker 2: very heavy weather. At backs to with Global News from

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Speaker 2: the San Francisco nine to sixty newsroom, ed.

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Speaker 9: Yeah, you're very very is very very right, Brian. The Washington,

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Speaker 9: DC area is very under a severe stormwatch four. This

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Speaker 9: is on a scale of five, four out of five.

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Speaker 9: For the first time in about a decade, meteorologists say

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Speaker 9: severe thunderstorms and elements are in place for a damaging

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Speaker 9: tornado as well. Federal offices have been closed now for

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Speaker 9: the afternoon. Power outages are likely. The Tornado watches in

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Speaker 9: effect until at least nine, so another almost three hours.

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Speaker 9: FAA says it will likely have to pause departures out

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Speaker 9: of East Coast airports because of the weather. It says

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Speaker 9: it's re routing aircraft around them as best it can currently,

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Speaker 9: so you look at schedules if you're going to travel

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Speaker 9: out of the East Coast. Federal judge presiding over the

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Speaker 9: prosecution of Donald Trump and the election interference indictment should

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Speaker 9: at this point be going through arguments as to whether

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Speaker 9: mister Trump's team should be given all evidence to use

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Speaker 9: against him and whether to limit Trump's ability to post

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Speaker 9: things that could be interpreted as trial interference, potentially threats

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Speaker 9: to witnesses or disclosure of evidence. But the question is

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Speaker 9: whether Trump will dial their rhetoric back even if that

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Speaker 9: order comes down. And Bloomberg's Laura Davidson on Balance of

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Speaker 9: Power says, he has a couple of very big weeks

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Speaker 9: coming up politically.

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Speaker 10: There's the Iowa State Fair and very public in front

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Speaker 10: of voters. There's the debate coming up still and clear

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Speaker 10: whether he'll be on the stage with his fellow Republican

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Speaker 10: primary challengers on that. But he is really kind of

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Speaker 10: journeying up this messaging tornado that's all moving and sweeping

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Speaker 10: and in some cases just wiping out the competition who

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Speaker 10: is either too scared to take him on or doesn't

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Speaker 10: have enough attention to really fight back against Trump.

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Speaker 9: Now, what the arguments that we're submitted to the court

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Speaker 9: say is that, well, they basically lean into went Trump

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Speaker 9: has been saying publicly that any restrictions step on his

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Speaker 9: First Amendment and freedom of speech writes, as well as

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Speaker 9: a weaponized Justice Department. They also propose a change of

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Speaker 9: venue to West Virginia, as well a federal presiding judge

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Speaker 9: looking at a request from the judge in the Florida

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Speaker 9: Classified Documents case to look at whether the special prosecutor

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Speaker 9: use grand juries in both Florida and Washington to build

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Speaker 9: a case China's saying Foreign Minister Wang Ye reiterated an

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Speaker 9: appeal for peace talks and political solutions for the Ukraine

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Speaker 9: War in his conversation with Russia's Foreign Minister Sergi Lavrov.

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Speaker 9: This follows Ukraine's pitching its ten point peace formula to

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Speaker 9: more than forty countries. China is asking for a cease fire.

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Speaker 9: US has passed certain types of assistance to the government

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Speaker 9: of Nijias. The military coup in the country continues, State

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Speaker 9: Department spokesman Matthew Miller.

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Speaker 6: They are development assistants, security assistance, law enforcement assistants, and

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Speaker 6: other programs that aid the government in these air now.

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Speaker 9: Miller says there's some American citizens and nicher that he

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Speaker 9: says the US will help get them on flights out

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Speaker 9: for other foreign governments if they want to leave. Global

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Speaker 9: News powered by more than twenty seven hundred journalists and

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Speaker 9: analysts in over one hundred and twenty countries in San Francisco,

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Speaker 9: I'm Ed Baxter and this is Bloomberg.

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Speaker 2: This is Bloomberg Daybreak Asia. I'm Brian Curtis here in

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Speaker 2: Hong Kong, and Rashad Salamat is with us. He's in London.

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Speaker 2: Christina Hooper joins US chief Global market strategist at Invesco

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Speaker 2: on with this from Greenwich. So, Christina, we've had this

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Speaker 2: debate between soft landing and hard landing, and it seems

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Speaker 2: like the market has shifted to soft landing as the

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Speaker 2: more likely outcome. I wonder now is that debate still

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Speaker 2: valid or is the debate now shifting to soft landing

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Speaker 2: versus reacceleration in the economy.

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Speaker 6: Well, I have to state up front, Brian, that I've

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Speaker 6: been in the same camp all along, which is bumpy landing.

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Speaker 6: I don't see how we land this plane without some dam.

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Speaker 6: It's just given how aggressive this rate hip cycle has been,

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Speaker 6: and also given the lagged effects of monetary policy. So

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Speaker 6: I think the debate should be about what kind of

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Speaker 6: landing we are going to see, because I think we

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Speaker 6: are going to see some damage. We certainly can't rule

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Speaker 6: that out.

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Speaker 11: Stan, though surely you know the lagged effects. We should

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Speaker 11: be seeing more effect from it. The medicine, et cetera

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Speaker 11: should be working in a tangible way, and it is

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Speaker 11: in substences. But certainly you know this gives more grist

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Speaker 11: to the mill for the FED to do more.

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Speaker 6: Well, it doesn't give the Fed an argument for the

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Speaker 6: FED to do more if there's recognition that generally it

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Speaker 6: takes some significant time for those effects to show up

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Speaker 6: in the real economy after policy has implemented. While it

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Speaker 6: seems like it's been a very long time because it's

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Speaker 6: been so aggressive. We only saw a rate hikes start

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Speaker 6: in March of last year, and usually the rule of

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Speaker 6: thumbs twelve to eighteen months before it shows up in economy,

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Speaker 6: so arguably we haven't seen a lot of the effects yet.

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Speaker 6: That's why we need to be ultra cautious.

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Speaker 2: Another debate was should we stick with the seven biggest

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Speaker 2: and strongest companies in the S and P five hundred

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Speaker 2: or rebalance a little bit rotate into some of the

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Speaker 2: cyclical companies. Now we've seen that, I don't think that

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Speaker 2: debate is really a valid so much. Now we've seen

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Speaker 2: a lot of money flow into industrials and small and

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Speaker 2: medium sized companies in that But does that continue?

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Speaker 6: I think it does. I mean, certainly we're likely to

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Speaker 6: see some level of digestion in coming months. It makes sense.

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Speaker 6: We've had a strong rally and we also have some headwinds.

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Speaker 6: We have uncertainty about when the FED is going to

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Speaker 6: start cutting rates, and I think the market might be

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Speaker 6: a bit too optimistic about that, So getting that repriced

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Speaker 6: in I think could cause some hiccups as well. But

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Speaker 6: in general, I think we are going to get to

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Speaker 6: a point later this year where markets start to discount

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Speaker 6: in economic recovery, and that's when we're likely to see

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Speaker 6: smaller caps cyclicals perform better. And that's going to be,

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Speaker 6: you know, a wonderful time. We just have to get

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Speaker 6: through probably some some choppy few months.

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Speaker 2: So Christina, I'm sorry, rich, but I just want to

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Speaker 2: follow that up. I mean, you know, with your with

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Speaker 2: your theory of bumpy bumpy landing, do you feel concerned

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Speaker 2: or worried that you might fall behind here?

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Speaker 6: Ah? Well, you know, what I think we're going to

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Speaker 6: see is a bumpy landing, but a relatively brief landing,

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Speaker 6: and markets tend to look out six, nine, twelve months,

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Speaker 6: so I don't think it's going to be a particularly

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Speaker 6: long period, and I don't think that we're going to

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Speaker 6: see an enormous amount of damage. The most important thing

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Speaker 6: we have going for this economy is the strength of

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Speaker 6: the US consumer. To do is look at this earning season.

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Speaker 6: Some of the best positive surprises have come from consumer

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Speaker 6: discretionary for a reason, because the consumer is so strong,

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Speaker 6: and that has a lot to do with the labor market.

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Speaker 6: So I think that that is going to provide a

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Speaker 6: nice cushion to help soften this landing.

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Speaker 11: So I mean where do you look then? I mean,

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Speaker 11: if you have a few doubts about what's going to

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Speaker 11: happen with the US markets, and you know, we've seen

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Speaker 11: the correlation that US bonds have gone down to equities

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Speaker 11: of late anyway, so do you look elsewhere? And if

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Speaker 11: you are of the volition that we have a week

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Speaker 11: of dollars in the future, do you look in the

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Speaker 11: strong dollar and look abroad?

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Speaker 6: Yes, you do want to look abroad. This is a

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Speaker 6: very attractive time, especially for asia EM equities. I certainly

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Speaker 6: think China equity can get a nice boost from some

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Speaker 6: policy stimulus. I could be more short term in nature,

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Speaker 6: but I also think there's a really compelling story for

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Speaker 6: other asia EM equity markets going forward. We have demographics

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Speaker 6: that are very much in their favor. I'd love to

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Speaker 6: be a wedding planner in India because there are so

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Speaker 6: many weddings happening and you just have this growing middle

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Speaker 6: class that is able to spend more and so it's

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Speaker 6: a very positive story. But it's a longer term story.

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Speaker 2: I'm thinking you may have got that Matchmaker show in

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Speaker 2: India that was a good one on it click, so

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Speaker 2: listen just briefly then it seems like what you're saying

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Speaker 2: here is diversification. Diversification.

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Speaker 6: Diversification, absolutely, that is critical because we could very well

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Speaker 6: see some rapid shifts in what's in favor and what's

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Speaker 6: not in favor as markets discount what's going to happen.

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Speaker 6: But for the long run, diversification is critical.

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