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Speaker 1: This is Bloomberg Daybreak Asia for this Tuesday May thirtieth

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Speaker 1: in Hong Kong, Monday May twenty ninth in New York,

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Speaker 1: and coming up today, American equity futures rise on trader

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Speaker 1: optimism that the US will avert a catastrophic default. Nvidia

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Speaker 1: unveils a new batch of products looking to capitalize on

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Speaker 1: the AI frenzy, and Shallmi sources more production in India

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Speaker 1: despite heightened regulatory scrutiny.

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Speaker 2: China turns its back on a meeting with US Defense Secretary.

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Speaker 2: China says the risk and the couple are the same thing.

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Speaker 2: Biden says he's hopeful of House will pass death seating legislation. Wednesday,

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Speaker 2: I'm at Baxter with Global News.

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Speaker 3: Both ten seeds are asked in the first round of

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Speaker 3: the French Open, and Dan Schwartzman, I'll have that story

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Speaker 3: more coming up in Bloomberg Sports.

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Speaker 4: That's all straight ahead on Bloomberg Daybreak Asia, the business

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Speaker 4: news you need to start your day in just one

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Speaker 4: fifteen minute podcast, available on Apple, Spotify, the Bloomberg Business App,

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Speaker 4: and everywhere you get your podcasts.

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Speaker 1: Good morning, I'm Brian Curtis. Here are the stories we're

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Speaker 1: following today. Well, the deal on the US debt ceiling

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Speaker 1: may just be replacing one worry with another. Let's get

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Speaker 1: that story from Bloomberg's Denise Pellegreeny.

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Speaker 5: If Congress approves the Biden McCarthy deal to raise the

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Speaker 5: debt limit, investors will avoid the worst case scenario of

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Speaker 5: payments default and financial mayhem. But any cuts in federal

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Speaker 5: spending and the debt ceiling deal could also raise prospects

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Speaker 5: for a hard landing for the economy by adding tightening

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Speaker 5: fiscal spending to the Fed's monetary tightening. Two weeks ago,

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Speaker 5: economist said the chance of a US recession and the

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Speaker 5: next year was already at least sixty five percent, and

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Speaker 5: Michael Feroli, economists at j P. Borgan Chase, says fiscal

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Speaker 5: multipliers do tend to be higher in a recession, meaning

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Speaker 5: any cuts in fyscal spending could have a larger impact

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Speaker 5: on employment and GDP than usual. On the other hand,

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Speaker 5: this could also inspire the Fed to slow or even

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Speaker 5: stop the interest rate hikes for now. Denise Pelgriny, Bloomberg

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Speaker 5: Day Break.

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Speaker 1: Asia Wall Street. We'll see a number of tech companies

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Speaker 1: reporting quarterly earnings this week. Let's get a preview from

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Speaker 1: Bloomberg's Charlie Pillett.

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Speaker 3: Among those tech names Broadcom, Dell Technologies, Salesforce, VMware, and HP.

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Speaker 3: It comes amid what many are calling better than feared

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Speaker 3: quarterly earnings. Mordamahajan is senior investment strategist at Edward Jones.

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Speaker 6: Although earnings growth this past quarter did exceed expectations, we're

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Speaker 6: still looking at negative earnings growth and really now three

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Speaker 6: back to back negative earnings quarters, so valuation is expanding.

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Speaker 6: Breath has been narrow.

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Speaker 3: Also this week, more insight as to the strength of

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Speaker 3: the consumer, with reports from Lulu, Lemon Athletica, and Dollar

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Speaker 3: General in New York, Charlie Pellett, Bloomberg Daybreak Asia.

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Speaker 1: Meantime, Nvidia's CEO Jensen Huang has unveiled a new batch

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Speaker 1: of products and services tied to artificial intelligence. It comes

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Speaker 1: on the heels of last week's stunning sales forcast for

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Speaker 1: the current quarter, which was almost four billion dollars above

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Speaker 1: analyst estimates. Here's Wang speaking at the Computec's technology show

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Speaker 1: in Taipei.

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Speaker 7: We have now reached the tipping point of a new

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Speaker 7: computing era. So every two years we take Giant leaps

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Speaker 7: forward and I'm expecting the next lead to beat Giant

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Speaker 7: as well. This is the new computer industry.

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Speaker 1: Wang discussed a wide ranging lineup which includes a new

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Speaker 1: robotics system, gaming capabilities, advertising services, as well as networking technology,

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Speaker 1: and Vidia also took the wraps off an AI supercomputer platform.

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Speaker 1: The chip maker said that this will help companies create

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Speaker 1: successors to Chat GPT well. For the first time in

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Speaker 1: several years. Elon Musk is expected to visit China this week.

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Speaker 1: Bloomberg's Erka Herskowitz has more.

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Speaker 8: Elon Musk is expected to meet senior Chinese officials in

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Speaker 8: China this week, marking his first trip to the country

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Speaker 8: in three years. Reports Musk also intends to visit Tesla's

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Speaker 8: factory in Shanghai. It's unclear who Musk We'll meet with

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Speaker 8: or what they would talk about. Last week, China ramped

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Speaker 8: up efforts to develop a satellite powered internet network that

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Speaker 8: can compete with Musk's Starlink, which has quickly expanded around

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Speaker 8: the world and whose military applications have been on display

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Speaker 8: in Ukraine's defense against Russia. I'm America Herskowitz, Bloomberg Daybreak

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Speaker 8: Asia well, the.

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Speaker 1: Chinese tech company shall Me is deepening its push into India.

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Speaker 1: Bloomberg's Juan Wong with more from Hong Kong.

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Speaker 9: Shawmi has engaged India's homegrown firm Optimus Electronics to make

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Speaker 9: bluetooth neckband earphones. Is the first time an Indian supplier

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Speaker 9: will make an audio products for the Chinese tech giants.

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Speaker 9: Shallmi was hested into source in India initially because it

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Speaker 9: was easier to bring these products in from China. In

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Speaker 9: prior years, Shallmi had led India's smartphone market, but allegations

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Speaker 9: of money laundering and state scrutiny contributed to a decline

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Speaker 9: of about twenty percent. As a result, shall Me rush

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Speaker 9: to explore manufacturing alliances with local companies. It's now hoping

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Speaker 9: to regain the market share it lost in Hong Kong.

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Speaker 9: I'm joined Wong Bloomberg day brig Asia.

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Speaker 1: Shall Me traded down two tenths of one percent here

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Speaker 1: in Hong Kong yesterday in the latest trading action. We've

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Speaker 1: talked a lot about sagging Chinese equities on this program.

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Speaker 1: The Hangsang China Enterprises Index is now very close to

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Speaker 1: a bear market, down nineteen plus percent from its highs

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Speaker 1: earlier this year, and the Nastat Golden Dragon Index is

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Speaker 1: trailing Yes and P five hundred by more than seventeen

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Speaker 1: percentage points this quarter. Among the issues, and we'll get

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Speaker 1: to a lot of this on the program today with

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Speaker 1: our guests. Among the issues China's fumbling recovery, the recent

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Speaker 1: weakness that we've seen in the Chinese currency they're MMB,

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Speaker 1: as well as the regulatory overhang and geopolitical tensions with

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Speaker 1: the United States. Now it's time for global news. China

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Speaker 1: has turned down another request to meet with a top

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Speaker 1: level US official that Baxter has Global News from the

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Speaker 1: nine to sixty news room in San Francisco.

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Speaker 2: Ed, Yeah, that's exactly right, Brian. After several weeks of

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Speaker 2: no answer, Beijing has declined the formal request to meet

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Speaker 2: with Defence Secretary Lloyd Austin in Singapore this week. The

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Speaker 2: Pentagon has issued a statement saying the decision is very concerning.

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Speaker 2: Chinese academics are publicly rejecting the terminology of d risk

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Speaker 2: being used by the US and European allies to explain

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Speaker 2: new trade restrictions. Chinese state media quotes them as saying

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Speaker 2: they are the same thing. It says de risking is

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Speaker 2: just decoupling in disguise no day offer the debt ceiling

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Speaker 2: spending cut negotiations. President Joe Biden today out saying although

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Speaker 2: he's never confident about what Congress will do.

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Speaker 10: I've spoken a number of a member, I spoke to mcconna,

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Speaker 10: I spoke to.

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Speaker 11: A whole bunch of people, and it feels good.

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Speaker 9: We'll see when.

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Speaker 2: About So it should be Wednesday. Bloomberg's Amory hor Duren

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Speaker 2: says the problem remains the two edges of the parties.

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Speaker 12: And then on the progressive side, they feel like they

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Speaker 12: just gave too much. They're upset about any work requirements.

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Speaker 12: The work requirements though wasn't Medicaid, they're still upset that

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Speaker 12: there was work requirements now to access to a food

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Speaker 12: social safety net called SNAP.

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Speaker 2: And the right of the GOP.

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Speaker 12: Senator Mike Lee of Utah saying that if he's in

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Speaker 12: see the steep spending cuts which many.

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Speaker 5: Were left on the table, then.

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Speaker 12: He would make the process very difficult. So what you

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Speaker 12: have here is a very tight timeline to make sure

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Speaker 12: that the bill gets across both the House and the

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Speaker 12: Senate and to Biden's desk before June fifth.

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Speaker 2: Yeah, so both Biden and McCarthy are banking on moderate

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Speaker 2: wings of both parties to come together in the middle

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Speaker 2: and pass it. Hong Kong's High Court has rejected medium

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Speaker 2: Ogul Jimmy Lai's motion to dismiss his national security case.

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Speaker 2: He saught the dismissal line ground that he would not

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Speaker 2: be granted a fair trial because the justices have been

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Speaker 2: picked by Chief Executive John Lee. This paves the way

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Speaker 2: for his trial to take place On September twenty fifth,

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Speaker 2: Russia has hit an air base in western Ukraine, damaging

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Speaker 2: five aircraft and the runway. Meanwhile, US Senator Lindsey Graham

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Speaker 2: is wanted now in Russia. He has shown up on

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Speaker 2: the Interior Ministry's database of wanted persons. In an edited

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Speaker 2: version of a conversation that he had with Ukrainian President

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Speaker 2: of Volatimer Zelenski in Kiev, Graham has shown saying Russians

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Speaker 2: are dying. Best money we ever spent well Now. Ukraine

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Speaker 2: has issued two separate clips saying they were taken out

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Speaker 2: of context. This is one of them.

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Speaker 8: We know that from first days we have.

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Speaker 3: Total support is about thirty eight billion, and the.

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Speaker 1: Big support very imported.

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Speaker 4: The best money we've ever spent.

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Speaker 2: Russia is asking Graham to publicly acknowledge his words were

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Speaker 2: taken out of contexts Japan's Prime Minister Fumio Kishita says

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Speaker 2: he will fire his son, who is working as a secretary,

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Speaker 2: after a scandal over party held in his office residence

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Speaker 2: in late twenty twenty two continues to boil over and

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Speaker 2: Memorial Day in the US, a day to remember those

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Speaker 2: who gave their lives a fight for freedom and democracy.

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Speaker 2: President Biden at Arlington Memorial Cemetery, or.

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Speaker 10: We must never forget the price that was paid to

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Speaker 10: protect our democracy. Well, was never forget the lives these flags, flowers,

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Speaker 10: and marble markers.

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Speaker 2: Represent in San Francisco. I'm Ed Baxter, and this is Bloomberg.

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Speaker 1: I'm Brain Curtis in Hong Kong. This is Bloomberg Daybreak Asia.

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Speaker 1: Let's get to our guest. It's Komal Sree Kumar, President

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Speaker 1: at Sri Kumar Global Strategies. Sree, thanks very much for

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Speaker 1: taking out the time on a holiday to be with us,

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Speaker 1: So we do appreciate that. Well, we didn't see a

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Speaker 1: lot of angst really in the markets before the debt

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Speaker 1: ceiling deal was done. Does it make sense to you

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Speaker 1: that we won't see a lot of angst while we're

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Speaker 1: waiting for the vote in Congress, and also that we

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Speaker 1: probably won't see a big relief rally either, in that

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Speaker 1: people kind of assumed that eventually this would get done.

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Speaker 11: First of all, thank you for inviting me back, Brian,

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Speaker 11: A pleasure to be with you. And I wrote a

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Speaker 11: piece on Saturday morning, New York time, before the deal

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Speaker 11: was even talked about as close to final saying that

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Speaker 11: it would not have any major impact on the market.

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Speaker 11: So in terms of the questions that you asked, I

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Speaker 11: would say no impact on the market if the debt

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Speaker 11: default had actually gone through, No big impact as a

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Speaker 11: result of the deal going through by the next two days,

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Speaker 11: and we are basically going to Ceylon as before. And

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Speaker 11: what's the reason for that? The reason why a debt

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Speaker 11: deal failure may even have been in some ways better

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Speaker 11: than having this debt deal go through is that the

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Speaker 11: impact that would make US bond yields come down and

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Speaker 11: the dollar to strengthen. And for the same reason that

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Speaker 11: in August of twenty eleven, I said that if US

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Speaker 11: got downgraded by S and P, which it was, yields

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Speaker 11: would actually go down, and that's exactly what happened, because

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Speaker 11: anything like a debt deal crashing means that the U

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Speaker 11: it's not the US risk, but the global risk has increased.

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Speaker 11: And where do you go when the global risk increases.

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Speaker 11: It's not the renmen bu on, it is not the Euro.

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Speaker 11: You have to come to the dollar.

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Speaker 1: It's a bit perverse that funds would flow into US

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Speaker 1: treasuries when you know a default means that the government

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Speaker 1: can't pay the bills. But anyway, we know all of

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Speaker 1: those conditions. I think you described it quite well. Let's

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Speaker 1: talk a little bit about if what this leads to

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Speaker 1: is the Treasury Department issuing a lot more debt, where

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Speaker 1: do you see yields moving in that scenario.

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Speaker 11: Yes, the US Treasury is going to issue more paper,

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Speaker 11: and eventually by that I mean eighteen months from now,

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Speaker 11: let's say end of twenty twenty four, you may be

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Speaker 11: looking at much higher bond yields. But if you look

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Speaker 11: at now through the end of this year, I look

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Speaker 11: for the tenure treasure yield to actually go down. And

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Speaker 11: I'll tell you why. You have a combination of the

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Speaker 11: Fed pivoting. Powell gave some indication of doing that eventually,

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Speaker 11: I think they'll throw in the towel, even when inflation

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Speaker 11: rate has been higher than targeted. You may recall Brian

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Speaker 11: that in our conversations together, I have said that repeatedly,

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Speaker 11: that the FED is going to pivot before the job

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Speaker 11: is done. And the reason is we have already had

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Speaker 11: one credit event in the form of a regional banking

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Speaker 11: cry that may repeat itself. More banks may go down,

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Speaker 11: or alternately, you may have a new credit event, and

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Speaker 11: that my favorite candidate is commercial real estate and just

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Speaker 11: rearing its head up just now and over the next

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Speaker 11: six to twelve months, becoming the problem number one for

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Speaker 11: the Biden administration, and that also is going to make

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Speaker 11: US treasury yields to go down. But then when you

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Speaker 11: look at two years plus, it's going to be a

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Speaker 11: different story.

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Speaker 1: As I mentioned, it's a little curious three because you know,

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Speaker 1: a lot of this is textbook, but this is not

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Speaker 1: really a textbook time in the sense that you know,

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Speaker 1: we've seen companies hold onto workers because they struggled so

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Speaker 1: hard to get them back after the pandemic, and that

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Speaker 1: was a real change in behavior when people were working

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Speaker 1: from home and didn't want to go back to the office.

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Speaker 1: So companies, you know rightly, are aware that they can't

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Speaker 1: get the same sort of talent that they have always needed,

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Speaker 1: and so they're reticent to lay people off. If they

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Speaker 1: don't lay people off, will the economy really stumble the economy?

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Speaker 11: Let's go back to the initial part of your question, Brian,

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Speaker 11: and why is it that it's been so difficult to

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Speaker 11: get employees. Look at the amount of stimulus that was

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Speaker 11: provided by the treasury, both the Trump Treasury and the

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Speaker 11: Biden treasury nine hundred billion dollars by Trump one point

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Speaker 11: nine trillion added to it by the Biden administration. To

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Speaker 11: add them both together, you get approximately four trillion dollars.

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Speaker 11: And you are talking about a twenty four trillion dollar

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Speaker 11: economy into which you are going to just put in

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Speaker 11: four trillion additional dollars. Then the Fed jumps in and

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Speaker 11: all through twenty twenty one maintains that inflation is transitory

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Speaker 11: and doubles the balance sheet from twenty to twenty twenty two.

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Speaker 11: You cannot get workers to come work for you because

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Speaker 11: they all got too much cash. The Federal Reserve study

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Speaker 11: showed that in the second half of twenty twenty two,

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Speaker 11: about one point seven trillion dollars worth of excess savings

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Speaker 11: were still in the system. So if I'm getting paid,

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Speaker 11: or if I have received enough benefits, I'm not going

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Speaker 11: to go back to work, or I'm going to ask

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Speaker 11: for a much higher wage before i will return to work.

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Speaker 11: So this was an unforced error. This is again part

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Speaker 11: of the policy response that we had to Covida was

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Speaker 11: not COVID which did it, but the policy that responded

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Speaker 11: to it.

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Speaker 1: Brian, Okay, just briefly, will you be really surprised if

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Speaker 1: the FED raises interest rates further?

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Speaker 11: I will be very surprised. Indeed, I won't be surprised

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Speaker 11: if they raise just one more on June thirteenth, fourteenth,

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Speaker 11: But if you're talking about a concerted period of increase,

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Speaker 11: that would come as a surprise to me.

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Speaker 1: This is Bloomberg Daybreak Asia, your morning brief on the

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Speaker 1: stories making news from Hong Kong to Singapore and Wall Street.

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Speaker 1: You can also listen live each day on Bloomberg eleven

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Speaker 1: I'm Brian Curtis. Look for us on your podcast feed

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