1
00:00:02,720 --> 00:00:06,480
Speaker 1: This is Bloomberg Daybreak Asia for this Friday, April fourteenth

2
00:00:06,600 --> 00:00:10,240
Speaker 1: in Hong Kong, Thursday April thirteenth in New York, and

3
00:00:10,400 --> 00:00:14,000
Speaker 1: coming up today. US wholesale inflation fell in March by

4
00:00:14,040 --> 00:00:17,320
Speaker 1: the most since the start of the pandemic. Brazilian President

5
00:00:17,400 --> 00:00:20,280
Speaker 1: Lula da Silva is calling on bricks nations to come

6
00:00:20,360 --> 00:00:23,280
Speaker 1: up with an alternative to replace the dollar. The World

7
00:00:23,280 --> 00:00:26,760
Speaker 1: Bank is calling on Beijing to rework loans for countries

8
00:00:26,880 --> 00:00:30,040
Speaker 1: burdened with high levels of debt. Arrest in the US

9
00:00:30,120 --> 00:00:33,960
Speaker 1: intelligence leagues, a twenty one year old National Guard gamer.

10
00:00:34,560 --> 00:00:38,080
Speaker 1: North Korea's latest missile launch maybe a new kind of weapon.

11
00:00:38,479 --> 00:00:42,479
Speaker 1: Fort Lauderdale hit by one thousand year rainstorm. I'm at

12
00:00:42,479 --> 00:00:49,640
Speaker 1: Baxter with Global News. That's all straight ahead on Bloomberg

13
00:00:49,720 --> 00:00:52,760
Speaker 1: Daybreak Asia, the business news you need to start your

14
00:00:52,840 --> 00:00:57,200
Speaker 1: day in just one fifteen minute podcast available on Apple, Spotify,

15
00:00:57,400 --> 00:01:00,720
Speaker 1: the Bloomberg Business App, and everywhere you get your podcast.

16
00:01:03,840 --> 00:01:07,000
Speaker 1: Good morning, I'm a prisoner and I'm Brian Curtis. Here

17
00:01:07,040 --> 00:01:10,920
Speaker 1: are the stories we're following today. US wholesale inflation falling

18
00:01:10,920 --> 00:01:13,600
Speaker 1: in March by the most since the start of the pandemic,

19
00:01:13,920 --> 00:01:17,080
Speaker 1: The government's producer price index for final demand declined by

20
00:01:17,120 --> 00:01:19,920
Speaker 1: a half a percent from February. The move was driven

21
00:01:19,959 --> 00:01:23,800
Speaker 1: by a decline in gasoline costs. Here's Bloomberg's Michael McKee,

22
00:01:23,840 --> 00:01:27,320
Speaker 1: and we really seen prices come down at the factory yate,

23
00:01:27,480 --> 00:01:30,640
Speaker 1: as they would say, over the last month, and so

24
00:01:30,720 --> 00:01:32,600
Speaker 1: this has got to be good news for the FED.

25
00:01:33,000 --> 00:01:37,160
Speaker 1: Doesn't necessarily translate directly into CPI, but it does suggest

26
00:01:37,160 --> 00:01:39,800
Speaker 1: that inflations going in the right direction. And one of

27
00:01:39,840 --> 00:01:43,200
Speaker 1: the other stories we're featuring this morning, Brazilian President Lula

28
00:01:43,240 --> 00:01:46,200
Speaker 1: da Silva is calling on bricks nations to come up

29
00:01:46,200 --> 00:01:49,400
Speaker 1: with an alternative to replace the dollar in foreign trade.

30
00:01:49,760 --> 00:01:53,600
Speaker 1: The move signals Brazil's support for China's crusade against US

31
00:01:53,720 --> 00:01:57,240
Speaker 1: dominance on the global stage. Here's Lula speaking Thursday during

32
00:01:57,240 --> 00:02:01,920
Speaker 1: a visit to the Shanghai based New Development Bank. I

33
00:02:01,960 --> 00:02:07,440
Speaker 1: ask myself every night why every country is obliged to

34
00:02:07,480 --> 00:02:12,080
Speaker 1: do trade backed by the US dog. Why can't we

35
00:02:12,120 --> 00:02:17,680
Speaker 1: do our own trading, backed by our own currency. Why

36
00:02:17,760 --> 00:02:22,360
Speaker 1: is it that we are not committed to innovating. Lula's

37
00:02:22,360 --> 00:02:24,960
Speaker 1: comments come as he prepares to meet today with Chinese

38
00:02:24,960 --> 00:02:28,880
Speaker 1: President Hijinping. In Beijing. Last month, Brazil and China took

39
00:02:28,919 --> 00:02:31,720
Speaker 1: steps to make it easier to settle their foreign trade

40
00:02:31,720 --> 00:02:35,240
Speaker 1: operations in yuan or in the real The stated aim

41
00:02:35,320 --> 00:02:40,440
Speaker 1: was reducing costs by eliminating a third currency from the transactions. Well,

42
00:02:40,440 --> 00:02:42,600
Speaker 1: the spring meetings of the World Bank and the IMF

43
00:02:42,639 --> 00:02:45,720
Speaker 1: are underway in Washington, DC, and the focus is on

44
00:02:45,919 --> 00:02:49,239
Speaker 1: debt relief for poor countries. China, you may know, is

45
00:02:49,280 --> 00:02:52,840
Speaker 1: the biggest bilateral creditor of those nations. Now. The World

46
00:02:52,840 --> 00:02:56,080
Speaker 1: Bank says Beijing needs to be open to reworking loans

47
00:02:56,120 --> 00:03:00,120
Speaker 1: for countries burdened by high levels of debt. The press

48
00:03:00,120 --> 00:03:02,920
Speaker 1: it into the World Bank is David Malpass. They're burdened

49
00:03:02,919 --> 00:03:05,880
Speaker 1: by high levels of debt. So the proof is in

50
00:03:05,919 --> 00:03:09,960
Speaker 1: the pudding. The details of is Zambia going to get

51
00:03:10,120 --> 00:03:13,520
Speaker 1: me an mu We'd like to see one this week.

52
00:03:13,880 --> 00:03:17,000
Speaker 1: China needs to be willing to sign off on the

53
00:03:17,080 --> 00:03:22,560
Speaker 1: structure of the restructuring. Malpass went on to say Beijing

54
00:03:22,600 --> 00:03:25,840
Speaker 1: has softened, it stands, and there's been some progress, but

55
00:03:26,160 --> 00:03:29,760
Speaker 1: more work needs to be done. Brian, Well, yeah, let's

56
00:03:29,760 --> 00:03:31,800
Speaker 1: take a closer look. Here At the Bank of Korea,

57
00:03:31,919 --> 00:03:34,640
Speaker 1: it said that banking turmoil in the US and Europe

58
00:03:34,680 --> 00:03:39,000
Speaker 1: has not directly affected South Korea. Bokay Governor Chang Yong

59
00:03:39,160 --> 00:03:42,800
Speaker 1: spoke to Bloomberg at the IMF Spring meetings in Washington.

60
00:03:43,320 --> 00:03:48,160
Speaker 1: It hasn't affected us very much directly because our exposure

61
00:03:48,200 --> 00:03:51,680
Speaker 1: to the Silicon Valley bank and it's quick limited. On

62
00:03:51,840 --> 00:03:55,400
Speaker 1: the other hand, we are concerned whether the constitution you

63
00:03:55,480 --> 00:03:58,240
Speaker 1: will be well contained, and so far it looks good.

64
00:03:59,480 --> 00:04:02,480
Speaker 1: We also said that South Korea is reassessing its policies

65
00:04:02,480 --> 00:04:06,200
Speaker 1: on digital banking and on deposit settlements given recent banking

66
00:04:06,240 --> 00:04:09,520
Speaker 1: turmoil in parts of the world. We go to Apple next.

67
00:04:09,560 --> 00:04:12,760
Speaker 1: The company has assembled more than seven billion dollars worth

68
00:04:12,800 --> 00:04:15,960
Speaker 1: of iPhones. It did so in India last year, tripling

69
00:04:16,040 --> 00:04:20,120
Speaker 1: production in that country. We have more from Blueberg's David Inglis.

70
00:04:20,440 --> 00:04:25,000
Speaker 1: India is now Apple's fastest growing smartphone production hub. It

71
00:04:25,080 --> 00:04:28,920
Speaker 1: further highlights the company's push out of China. Sources say

72
00:04:28,920 --> 00:04:32,160
Speaker 1: Apple now makes about seven percent of its iPhones in

73
00:04:32,160 --> 00:04:36,200
Speaker 1: India through partnerships with Foxcone and Pegatron. That's up from

74
00:04:36,240 --> 00:04:39,960
Speaker 1: one percent in twenty twenty one. Apple is reducing its

75
00:04:39,960 --> 00:04:43,839
Speaker 1: reliance on China as tension simmer between Washington and Beijing.

76
00:04:44,320 --> 00:04:47,160
Speaker 1: The migration of production from China to India could have

77
00:04:47,279 --> 00:04:51,680
Speaker 1: implications for how other brands adjust their supply chains in

78
00:04:51,760 --> 00:04:55,320
Speaker 1: Hong Kong. I'm David Inglis lubric Day Brick Asia. In

79
00:04:55,400 --> 00:04:58,320
Speaker 1: the meantime, the Nycaasian Review reports that Apple is in

80
00:04:58,360 --> 00:05:02,080
Speaker 1: talks with suppliers to make books in Thailand. It would

81
00:05:02,080 --> 00:05:04,839
Speaker 1: add to the company's mass production of the Apple Watch

82
00:05:05,160 --> 00:05:10,000
Speaker 1: in that country, and Apple traded up three point four percent. Well,

83
00:05:10,200 --> 00:05:12,600
Speaker 1: this is Bloomberg Day Break a Jean Brian Curtis with

84
00:05:12,720 --> 00:05:15,760
Speaker 1: Doug Christners. So, Doug, the SMP five hundred is up

85
00:05:15,800 --> 00:05:18,320
Speaker 1: near the top of this range of thirty eight hundred

86
00:05:18,560 --> 00:05:21,200
Speaker 1: forty two hundred that has been in for about ten

87
00:05:21,240 --> 00:05:24,040
Speaker 1: months or so. So it's it's pretty easy for the

88
00:05:24,080 --> 00:05:27,240
Speaker 1: bears here to say sell and load up on the

89
00:05:27,640 --> 00:05:30,400
Speaker 1: short end of the treasury curve. And that does seem

90
00:05:30,440 --> 00:05:32,839
Speaker 1: to be consensus when you hear commentators. Most of the

91
00:05:33,040 --> 00:05:36,440
Speaker 1: commentators on our program have been pretty bearish. The problem

92
00:05:36,520 --> 00:05:39,520
Speaker 1: is Mark, it's not cooperating. And the issue is it's

93
00:05:39,560 --> 00:05:42,520
Speaker 1: not just big tech. We mentioned that big rally in Apple,

94
00:05:43,000 --> 00:05:47,920
Speaker 1: but it's also industrials, materials, even financials and so it

95
00:05:47,960 --> 00:05:49,919
Speaker 1: really puts a little bit of pressure on the bears,

96
00:05:50,480 --> 00:05:52,600
Speaker 1: but they're they're standing on the ground. They're saying, if

97
00:05:52,600 --> 00:05:55,159
Speaker 1: we break above forty two hundred, it even makes the

98
00:05:55,200 --> 00:05:59,440
Speaker 1: coming fall likely to be greater. Yeah, and particularly when

99
00:05:59,480 --> 00:06:02,720
Speaker 1: you consider the fact that earning season is maybe more

100
00:06:02,760 --> 00:06:05,200
Speaker 1: critical now than it has been in quite some time.

101
00:06:05,320 --> 00:06:07,839
Speaker 1: Will begin tomorrow with a lot of the big banks

102
00:06:07,880 --> 00:06:11,760
Speaker 1: reporting JP, Morgan, Chase, City Group, and Wells Fargo. There's

103
00:06:11,800 --> 00:06:14,960
Speaker 1: going to be very close attention paid for executive commentary,

104
00:06:15,080 --> 00:06:18,760
Speaker 1: Keep your eyes and ears open on the subject of

105
00:06:18,800 --> 00:06:21,479
Speaker 1: forward guidance. And as long as we're talking the banks, Brian,

106
00:06:21,920 --> 00:06:24,200
Speaker 1: we got to data here in the US after the

107
00:06:24,200 --> 00:06:27,760
Speaker 1: closing bell that US banks reduced to their borrowing from

108
00:06:27,880 --> 00:06:30,719
Speaker 1: two of the Fed's backstop lending facilities for a fourth

109
00:06:30,760 --> 00:06:34,040
Speaker 1: straight week. So the numbers essentially indicate that there has

110
00:06:34,080 --> 00:06:37,640
Speaker 1: been a further easing of liquidity restraints following a lot

111
00:06:37,640 --> 00:06:39,440
Speaker 1: of the stress that we saw in the banking system

112
00:06:39,560 --> 00:06:43,440
Speaker 1: last month. I think if you compare the weekly figures,

113
00:06:43,520 --> 00:06:46,800
Speaker 1: about nine point two billion dollars last week compared to

114
00:06:46,839 --> 00:06:50,800
Speaker 1: the previous week, So it seems like there's some healing underway. Yes,

115
00:06:50,920 --> 00:06:53,320
Speaker 1: some healing, but you have to think. You know, people

116
00:06:53,320 --> 00:06:56,600
Speaker 1: in the market are talking about kind of peak interest rates,

117
00:06:56,640 --> 00:06:58,920
Speaker 1: but the issue of the banks is that that means

118
00:06:58,920 --> 00:07:02,640
Speaker 1: we're also probably at nims and that's a problem when

119
00:07:02,680 --> 00:07:05,880
Speaker 1: you have a lot of pressure on deposits and you

120
00:07:05,920 --> 00:07:07,960
Speaker 1: see the rally in big tech. I think this is

121
00:07:08,040 --> 00:07:10,960
Speaker 1: kind of flippant, but would you rather put your money

122
00:07:11,000 --> 00:07:14,240
Speaker 1: in the Bank of Visalia or in Apple? And what

123
00:07:14,320 --> 00:07:16,640
Speaker 1: people are doing is I don't even know if there

124
00:07:16,680 --> 00:07:18,880
Speaker 1: is a Bank of Visalia. It's just a sort of

125
00:07:19,520 --> 00:07:21,920
Speaker 1: a way of making this story seem real. But you know,

126
00:07:22,000 --> 00:07:25,840
Speaker 1: people are buying big tech because they perceive it as safe. Well. No, well,

127
00:07:26,040 --> 00:07:29,400
Speaker 1: many of those companies have very strong cash positions on

128
00:07:29,440 --> 00:07:32,120
Speaker 1: their balance sheet. They're holding less debt. Yes, you could

129
00:07:32,120 --> 00:07:34,120
Speaker 1: make the case that the stocks may be trading at

130
00:07:34,200 --> 00:07:39,760
Speaker 1: a rich multiple, but fundamentally sound companies. Yeah, absolutely, all right,

131
00:07:39,800 --> 00:07:44,760
Speaker 1: It is time now for global news. The US intelligence

132
00:07:44,760 --> 00:07:48,040
Speaker 1: community says it has made an arrest in the intelligence

133
00:07:48,240 --> 00:07:51,880
Speaker 1: leak case. D Baxter is all over the story at

134
00:07:51,920 --> 00:07:55,280
Speaker 1: the nine sixty newsroom in San Francisco. Ed. Yeah, Brian,

135
00:07:55,320 --> 00:07:57,560
Speaker 1: thank you, boy. Had a lot of moving pieces. US

136
00:07:57,640 --> 00:08:02,160
Speaker 1: agents arresting Erman Check to Share in Massachusetts. He is

137
00:08:02,200 --> 00:08:06,080
Speaker 1: in the Air Force National Guard, is twenty one years old,

138
00:08:06,600 --> 00:08:09,280
Speaker 1: is a gamer who they say was posting to a

139
00:08:09,360 --> 00:08:13,280
Speaker 1: gamer's chat. Attorney General Merritt Garland t Shara as an

140
00:08:13,280 --> 00:08:17,200
Speaker 1: employee of the United States Air Force National Guard. FBI

141
00:08:17,280 --> 00:08:20,000
Speaker 1: agents took to Shara and to custody earlier this afternoon

142
00:08:20,360 --> 00:08:24,560
Speaker 1: without incident. A Pentagon spokesman and Brigadier General Patrick Ryder says,

143
00:08:24,600 --> 00:08:27,880
Speaker 1: this is being taken very seriously. We do have stringent

144
00:08:28,000 --> 00:08:33,800
Speaker 1: guidelines in place for safeguarding classified and sensitive information. This

145
00:08:34,040 --> 00:08:39,160
Speaker 1: was a deliberate criminal act violation of those guidelines. General

146
00:08:39,200 --> 00:08:42,000
Speaker 1: Ryder says multiple agencies continue to work on how much

147
00:08:42,040 --> 00:08:45,520
Speaker 1: information is out there and how to recover it now.

148
00:08:45,520 --> 00:08:48,400
Speaker 1: The Washington Post was able to find someone described as

149
00:08:48,400 --> 00:08:51,640
Speaker 1: a tech shar a friend who was often up on

150
00:08:51,720 --> 00:08:53,480
Speaker 1: the text room with him or the chat room. It

151
00:08:53,480 --> 00:08:56,520
Speaker 1: would appear as if he sort of grew angry with

152
00:08:56,600 --> 00:08:58,120
Speaker 1: the fact that only one or two people were paying

153
00:08:58,160 --> 00:09:00,240
Speaker 1: attention to these documents that he was pouring his hard

154
00:09:00,240 --> 00:09:04,800
Speaker 1: out into, and as a sign of just anger, he

155
00:09:04,880 --> 00:09:07,760
Speaker 1: just decided to post the full documents. So a lot

156
00:09:07,800 --> 00:09:10,680
Speaker 1: of questions a Pentagon will have to answer. Now, who

157
00:09:10,679 --> 00:09:14,360
Speaker 1: has clearance credentials doesn't have to look deeper into character.

158
00:09:14,760 --> 00:09:17,439
Speaker 1: How could a junior member of the team twenty one

159
00:09:17,520 --> 00:09:20,160
Speaker 1: years old have that kind of access to that kind

160
00:09:20,200 --> 00:09:24,319
Speaker 1: of information? How can secrets wind up on video gamers

161
00:09:24,440 --> 00:09:28,600
Speaker 1: chat box? Bloomberg's Sarah Fordern one of the big questions

162
00:09:28,679 --> 00:09:31,720
Speaker 1: is to what extent is there a Russian connection here?

163
00:09:31,760 --> 00:09:34,040
Speaker 1: And they are not ruling out that there may have

164
00:09:34,080 --> 00:09:37,720
Speaker 1: been involvement of the Russian intelligence. They're looking at whether

165
00:09:38,520 --> 00:09:41,480
Speaker 1: the information was hacked, or whether the information was subsequently

166
00:09:41,480 --> 00:09:44,440
Speaker 1: altered after it was shared around on the social media sites,

167
00:09:45,400 --> 00:09:48,640
Speaker 1: and whether to share even had a connection yeah, or

168
00:09:48,640 --> 00:09:50,800
Speaker 1: whether he could just be a lonely twenty one year

169
00:09:50,800 --> 00:09:54,040
Speaker 1: old kid who wanted to show off his importance on

170
00:09:54,160 --> 00:09:58,679
Speaker 1: social media gamers platform. Yesterday's North Korea missile launch may

171
00:09:58,720 --> 00:10:00,800
Speaker 1: have been a new type of web in. South Korea's

172
00:10:00,840 --> 00:10:04,840
Speaker 1: military believes new type of ballistic missile, possibly solid fuel,

173
00:10:04,960 --> 00:10:08,080
Speaker 1: able to travel longer distances. The South says a missile

174
00:10:08,160 --> 00:10:10,480
Speaker 1: was launched in a high angle near the North Korean

175
00:10:10,480 --> 00:10:13,600
Speaker 1: capital of Pyongyang, fell into the waters in the ec

176
00:10:13,920 --> 00:10:18,600
Speaker 1: after traveling about six hundred twenty miles Australia has been

177
00:10:18,640 --> 00:10:21,200
Speaker 1: Western Australia has been hit by the strongest cyclone in

178
00:10:21,240 --> 00:10:24,960
Speaker 1: more than ten years. Key iron Or Export had had

179
00:10:25,000 --> 00:10:27,360
Speaker 1: the port had to be closed and a gold mine

180
00:10:27,520 --> 00:10:30,160
Speaker 1: two hundred forty eight miles inland had to be closed.

181
00:10:30,600 --> 00:10:33,679
Speaker 1: Fort Lauderdale, Florida, trying to recover from what authorities say

182
00:10:33,760 --> 00:10:37,040
Speaker 1: is a thousand year flood more than twenty inches of

183
00:10:37,120 --> 00:10:40,360
Speaker 1: rain in a twelve hour period. Mayor Daane Tanala is

184
00:10:40,400 --> 00:10:43,719
Speaker 1: saying that not only a residence, but emergency services have

185
00:10:43,840 --> 00:10:48,400
Speaker 1: just been overwhelmed. Nine hundred calls for service in our

186
00:10:48,400 --> 00:10:51,560
Speaker 1: fire department and three hundred of which were assisted by

187
00:10:51,600 --> 00:10:54,760
Speaker 1: the bard Shaff's office. The mayor says for Fort Lauderdale,

188
00:10:55,200 --> 00:10:58,160
Speaker 1: it's just about sea level and that it continued to

189
00:10:58,240 --> 00:11:02,080
Speaker 1: be a trend now the way the is changing. Global

190
00:11:02,120 --> 00:11:04,480
Speaker 1: news powered by more than twenty seven hundred journalists and

191
00:11:04,559 --> 00:11:07,959
Speaker 1: analyst and over one hundred and twenty countries. In San Francisco,

192
00:11:08,000 --> 00:11:11,760
Speaker 1: I'm at Baxter and this is Bloomberg and Bryan Curtesy

193
00:11:11,800 --> 00:11:15,240
Speaker 1: in Hong Kong, along with Rashad Salamat in Singapore, and

194
00:11:15,320 --> 00:11:19,280
Speaker 1: our guest is Katherine Kaminski, chief research strategist and portfolio

195
00:11:19,360 --> 00:11:24,840
Speaker 1: manager at Alpha Simplex. Katherine, simple question for you. Will

196
00:11:24,880 --> 00:11:29,720
Speaker 1: the earnings here be the catalyst to sell? It's possible.

197
00:11:29,800 --> 00:11:31,960
Speaker 1: I mean, I think the challenge we're seeing right now

198
00:11:32,040 --> 00:11:34,960
Speaker 1: is that we're looking at two scenarios. Either the scenario

199
00:11:35,160 --> 00:11:38,600
Speaker 1: that the said goes on pause and that central banker

200
00:11:38,640 --> 00:11:41,920
Speaker 1: step back and that looks good for equities, or we're

201
00:11:41,960 --> 00:11:46,160
Speaker 1: looking at a scenario where inflation is going to sort

202
00:11:46,200 --> 00:11:49,280
Speaker 1: of be enough to cause people to actually have to react.

203
00:11:50,120 --> 00:11:52,199
Speaker 1: When you're talking about earnings, that could just give us

204
00:11:52,200 --> 00:11:55,600
Speaker 1: the data that shows that we're seeing the destruction or

205
00:11:55,600 --> 00:12:00,440
Speaker 1: the challenge on growth that all of this tightening may

206
00:12:00,520 --> 00:12:07,840
Speaker 1: have impacted. Catherine, what about ultimately, when you've got credit

207
00:12:08,080 --> 00:12:10,559
Speaker 1: where it is right now, how much of a damtment

208
00:12:10,720 --> 00:12:13,840
Speaker 1: is that going to be on growth itself rather than

209
00:12:13,920 --> 00:12:17,840
Speaker 1: the overall impact has on the retail investor and also

210
00:12:17,880 --> 00:12:21,000
Speaker 1: of course the average person. Well, I mean, if you

211
00:12:21,040 --> 00:12:23,640
Speaker 1: think about it, what I think is the most frightening

212
00:12:23,720 --> 00:12:26,000
Speaker 1: right now is that people are not really thinking about

213
00:12:26,040 --> 00:12:28,680
Speaker 1: what's going to happen to long term cash flows and

214
00:12:28,760 --> 00:12:32,079
Speaker 1: how much credit they're going to need. I think people

215
00:12:32,120 --> 00:12:35,040
Speaker 1: are kind of in this continually in this state where

216
00:12:35,040 --> 00:12:36,960
Speaker 1: they think that things are going to go back to normal,

217
00:12:37,000 --> 00:12:41,320
Speaker 1: they're focused on cuts, they're focused on things kind of

218
00:12:41,320 --> 00:12:44,560
Speaker 1: a soft landing, and they're not really focused on the

219
00:12:44,600 --> 00:12:48,640
Speaker 1: potential risks of the impact on cash flows that inflation

220
00:12:48,760 --> 00:12:52,600
Speaker 1: has going forward. I think you made a very good

221
00:12:52,600 --> 00:12:54,640
Speaker 1: point at the beginning, but I still want to challenge it.

222
00:12:55,200 --> 00:12:58,840
Speaker 1: You know, we're talking about if the FED is willing

223
00:12:58,880 --> 00:13:02,000
Speaker 1: to tolerate higher levels of inflation, that could be good

224
00:13:02,000 --> 00:13:05,880
Speaker 1: for equities, but if they stay on inflation that could

225
00:13:05,920 --> 00:13:07,880
Speaker 1: be an issue. The way I would challenge it is

226
00:13:08,160 --> 00:13:11,760
Speaker 1: a pause doesn't signal that they're tolerating high levels of inflation.

227
00:13:11,800 --> 00:13:14,360
Speaker 1: It may indicate that they think that the long and

228
00:13:14,440 --> 00:13:18,760
Speaker 1: variable lag will eventually do the job. That's true. I mean,

229
00:13:18,800 --> 00:13:21,040
Speaker 1: I definitely agree with you, and I think the timeline

230
00:13:21,120 --> 00:13:23,840
Speaker 1: is going to matter. So even a pause in the

231
00:13:23,880 --> 00:13:26,880
Speaker 1: sense that they're not tightening more, if there it's going

232
00:13:26,920 --> 00:13:30,760
Speaker 1: to depend, right, because if inflation continues to be sticky longer,

233
00:13:31,400 --> 00:13:35,520
Speaker 1: then even pausing may not be enough. I think that's

234
00:13:35,520 --> 00:13:37,640
Speaker 1: the challenge is really sort of this is a very

235
00:13:37,679 --> 00:13:42,320
Speaker 1: delicate balance between a blunt tool like monetary policy and

236
00:13:42,400 --> 00:13:45,920
Speaker 1: trying to actually deal with the incredible amount of inflation

237
00:13:45,960 --> 00:13:47,800
Speaker 1: that we've experienced in the last year or so, and

238
00:13:47,880 --> 00:13:50,640
Speaker 1: how that's actually going to reduce and is it going

239
00:13:50,679 --> 00:13:54,640
Speaker 1: to reduce fast enough even if they pause? Yeah, okay,

240
00:13:54,800 --> 00:13:58,400
Speaker 1: But is there also do you think a cognizance that

241
00:13:58,880 --> 00:14:02,280
Speaker 1: inflation is something which perhaps might have read it had

242
00:14:02,360 --> 00:14:06,320
Speaker 1: anyway given that you've got huge structural changes we're talking

243
00:14:06,320 --> 00:14:12,439
Speaker 1: about deglobalization, decombanization, also huge huge demographic changes in the pipeline,

244
00:14:12,559 --> 00:14:15,080
Speaker 1: that actually this is becoming a structural issue rather than

245
00:14:15,160 --> 00:14:18,720
Speaker 1: one which is temporary, certainly, And I think that's where

246
00:14:18,800 --> 00:14:21,320
Speaker 1: it's going to be challenging for investors who think that

247
00:14:21,360 --> 00:14:24,640
Speaker 1: there hasn't been a structural change. And if there is

248
00:14:24,680 --> 00:14:28,680
Speaker 1: actually a structural change, that inflation is more persistent, then

249
00:14:28,760 --> 00:14:31,040
Speaker 1: we're going to have to see things happen at the

250
00:14:31,480 --> 00:14:34,240
Speaker 1: long end of the bond market. I think that's what's

251
00:14:34,240 --> 00:14:36,040
Speaker 1: been the most that's going to be the biggest thing

252
00:14:36,040 --> 00:14:38,800
Speaker 1: to watch in the next couple of months. What does

253
00:14:38,840 --> 00:14:40,960
Speaker 1: that need for long term cash flows? Because if you're

254
00:14:41,040 --> 00:14:44,120
Speaker 1: right that there's a structural change, who wants to buy

255
00:14:44,600 --> 00:14:48,280
Speaker 1: a ten year note at three three point four. You're

256
00:14:48,320 --> 00:14:50,440
Speaker 1: going to be in a very different environment than most

257
00:14:50,480 --> 00:14:54,720
Speaker 1: investors are used to the last ten fifteen years at least,

258
00:14:55,240 --> 00:14:58,400
Speaker 1: So you see a bear market for sure at the

259
00:14:58,440 --> 00:15:01,880
Speaker 1: long end of the curve. Well, i'd say that argue

260
00:15:02,040 --> 00:15:04,200
Speaker 1: in some sense what we've seen is that when looking

261
00:15:04,240 --> 00:15:06,120
Speaker 1: for the bottom of the bondom market, I would say

262
00:15:06,120 --> 00:15:09,200
Speaker 1: what happened recently kind of showed a little bit of

263
00:15:09,680 --> 00:15:12,320
Speaker 1: indications we might have seen the bottom of the short

264
00:15:12,440 --> 00:15:14,960
Speaker 1: end of the bondom market. But until we can actually

265
00:15:15,000 --> 00:15:17,400
Speaker 1: see a stable yield curve and we see that there's

266
00:15:17,400 --> 00:15:20,360
Speaker 1: a premium to hold a debt over longer time horizons,

267
00:15:20,880 --> 00:15:24,440
Speaker 1: we won't know sort of where bond markets are going

268
00:15:24,480 --> 00:15:26,400
Speaker 1: to move away forward. And that is what I think

269
00:15:26,480 --> 00:15:29,360
Speaker 1: is what we need to see in the next couple

270
00:15:29,360 --> 00:15:32,520
Speaker 1: of months. You're running counter to that IMF position from

271
00:15:32,560 --> 00:15:35,640
Speaker 1: a couple of days ago about how race will eventually

272
00:15:35,640 --> 00:15:40,320
Speaker 1: go lower. You think that they're wrong. I don't think

273
00:15:40,320 --> 00:15:42,920
Speaker 1: they're wrong. I think that there's different time horizons, and

274
00:15:42,960 --> 00:15:46,080
Speaker 1: I think they may have a very different, much more

275
00:15:46,200 --> 00:15:48,480
Speaker 1: long term view than what I'm thinking about, and that

276
00:15:48,920 --> 00:15:52,720
Speaker 1: over the next year or the next two years, it

277
00:15:52,800 --> 00:15:56,920
Speaker 1: might be necessary for longer term debt to take into

278
00:15:56,920 --> 00:16:00,000
Speaker 1: account how high insulation has been and that it might

279
00:16:00,120 --> 00:16:03,600
Speaker 1: be stickier for longer I'd say they're probably thinking five

280
00:16:03,720 --> 00:16:06,040
Speaker 1: ten years. I'm thinking a little bit shorter than that.

281
00:16:07,040 --> 00:16:11,200
Speaker 1: Tell me how the dollar figures in your thinking. So

282
00:16:11,240 --> 00:16:13,720
Speaker 1: the dollar has been really interesting to the last year

283
00:16:13,800 --> 00:16:17,560
Speaker 1: because it was extremely strong due to the relative positioning

284
00:16:17,560 --> 00:16:20,000
Speaker 1: of the US. It has come off quite a bit.

285
00:16:20,120 --> 00:16:23,120
Speaker 1: We've seen correlations changing. This has to do with the

286
00:16:23,120 --> 00:16:25,480
Speaker 1: fact that the US is looking a little bit less

287
00:16:25,640 --> 00:16:28,800
Speaker 1: strong and relative term, and just like some of the

288
00:16:28,840 --> 00:16:31,520
Speaker 1: news that said, there is some question longer term of

289
00:16:31,600 --> 00:16:35,000
Speaker 1: the potential of it being less of a sort of

290
00:16:35,440 --> 00:16:39,000
Speaker 1: a core currency, and that means that you know, you're

291
00:16:39,000 --> 00:16:40,720
Speaker 1: going to see a little more pressure on the dollar

292
00:16:40,840 --> 00:16:45,120
Speaker 1: as those narratives continue to rear up. Yeah, it's something

293
00:16:45,160 --> 00:16:47,120
Speaker 1: I wanted to talk with Doug about a few moments

294
00:16:47,120 --> 00:16:51,000
Speaker 1: ago because we were talking about Lula da Silva in China.

295
00:16:51,080 --> 00:16:54,160
Speaker 1: And the thing is, this alternative to the dollar idea

296
00:16:54,240 --> 00:16:57,160
Speaker 1: has been floated many times in the past, but it

297
00:16:57,280 --> 00:17:02,040
Speaker 1: generally falls short. Is it more real now because China

298
00:17:02,120 --> 00:17:04,119
Speaker 1: and its allies want to stand up to the West

299
00:17:04,160 --> 00:17:08,240
Speaker 1: more and particularly the US possibly, I mean, and I

300
00:17:08,280 --> 00:17:11,960
Speaker 1: also think just the deglobalization narrative and just the changes

301
00:17:12,040 --> 00:17:15,680
Speaker 1: we've seen in terms of alliances in the last two

302
00:17:15,760 --> 00:17:17,920
Speaker 1: years or at least a year and a half is

303
00:17:18,000 --> 00:17:20,920
Speaker 1: kind of shown a shift, a shift in the way

304
00:17:20,960 --> 00:17:24,760
Speaker 1: things are traded, and a shift in supply and demand relationships.

305
00:17:24,800 --> 00:17:27,400
Speaker 1: And that's something that is going to change the dynamics

306
00:17:27,400 --> 00:17:31,880
Speaker 1: of the dollar as a reserve currency. It won't happen overnight,

307
00:17:31,920 --> 00:17:34,680
Speaker 1: but it definitely is some real indications that you could

308
00:17:34,720 --> 00:17:39,120
Speaker 1: see some pressure on the dollar long term. So if

309
00:17:39,119 --> 00:17:42,280
Speaker 1: you see dollar weakness in let's say the medium term,

310
00:17:42,400 --> 00:17:45,120
Speaker 1: how does that affect the know the where you put

311
00:17:45,119 --> 00:17:49,760
Speaker 1: your money. Well, I'd say weak dollar has some interesting implications.

312
00:17:49,760 --> 00:17:53,480
Speaker 1: It definitely looks makes the US look attractive in some ways.

313
00:17:53,480 --> 00:17:57,200
Speaker 1: That also seeing commodities have moved quite a bit as well,

314
00:17:57,240 --> 00:17:59,600
Speaker 1: and that's sort of given the fact that most commodities

315
00:17:59,640 --> 00:18:03,359
Speaker 1: are price in dollars. You're definitely seeing that having an

316
00:18:03,359 --> 00:18:06,320
Speaker 1: impact on commodity prices. I think what we're also watching

317
00:18:06,440 --> 00:18:10,560
Speaker 1: is energy prices have moved significantly recently. Even though the

318
00:18:10,640 --> 00:18:15,560
Speaker 1: CPI was looking better and inflation metters measures are looking better.

319
00:18:15,960 --> 00:18:18,159
Speaker 1: You might with a week or dollars start to see

320
00:18:18,200 --> 00:18:20,800
Speaker 1: a little bit more of things that are, you know,

321
00:18:20,880 --> 00:18:23,920
Speaker 1: sort of a tailwind for us getting into a better

322
00:18:23,960 --> 00:18:27,400
Speaker 1: place with inflation as well. You know, the dollar has

323
00:18:27,440 --> 00:18:30,359
Speaker 1: trended lower for about the past nine months. It's down

324
00:18:30,440 --> 00:18:33,480
Speaker 1: from one hundred and fourteen on the Dollar Index. So

325
00:18:33,600 --> 00:18:36,160
Speaker 1: we generally quote the Bloomberg Doallar Spot index, but it's

326
00:18:36,160 --> 00:18:39,480
Speaker 1: basically the same. Where do you think for the dollar index,

327
00:18:39,600 --> 00:18:41,720
Speaker 1: since that's the one that many people use, What is

328
00:18:41,760 --> 00:18:45,000
Speaker 1: fair value for the dollar? I mean, I think that's

329
00:18:45,000 --> 00:18:47,760
Speaker 1: a good question. It has moved quite a bit already,

330
00:18:47,840 --> 00:18:50,720
Speaker 1: but you have to remember it extended also quite a

331
00:18:50,720 --> 00:18:54,200
Speaker 1: bit as well. The one thing that we have noticed

332
00:18:54,320 --> 00:18:57,919
Speaker 1: is that the statistical relationships between the dollar until the

333
00:18:57,960 --> 00:19:01,399
Speaker 1: other asset classes have changed. Last year, you saw a

334
00:19:01,440 --> 00:19:05,760
Speaker 1: really strong correlation between yields and the dollar, and so

335
00:19:05,800 --> 00:19:09,679
Speaker 1: as you see that dynamic of rising race fade and

336
00:19:09,800 --> 00:19:13,080
Speaker 1: the relative position of the US fade a little bit,

337
00:19:13,160 --> 00:19:17,159
Speaker 1: you're currently seeing clear pressure on the US dollar. But

338
00:19:17,200 --> 00:19:20,679
Speaker 1: that also has ramifications for commodities, like I discussed earlier,

339
00:19:20,720 --> 00:19:22,879
Speaker 1: So I'd say if you're looking at the dollar, you

340
00:19:22,920 --> 00:19:25,680
Speaker 1: have to think about it might actually come back because

341
00:19:25,680 --> 00:19:28,720
Speaker 1: it's gone far. Yeah, it's a good point. I'm just

342
00:19:28,760 --> 00:19:31,679
Speaker 1: looking at the massive rise from the middle of twenty

343
00:19:31,720 --> 00:19:35,119
Speaker 1: twenty one from about ninety on the Dollar index up

344
00:19:35,160 --> 00:19:37,840
Speaker 1: to one fifteen. It's given back about half, so we're

345
00:19:37,880 --> 00:19:41,400
Speaker 1: really at about fifty percent trending here, just around one

346
00:19:41,480 --> 00:19:44,080
Speaker 1: hundred or so. Catherine, thanks so much for joining us.

347
00:19:44,440 --> 00:19:49,560
Speaker 1: Katherine Kaminski, chief research strategist and portfolio manager at Alpha Simplex.

348
00:19:49,800 --> 00:19:54,240
Speaker 1: On the markets, this is Bloomberg Daybreak Asia, your morning

349
00:19:54,240 --> 00:19:56,879
Speaker 1: brief on the stories making news from Hong Kong to

350
00:19:57,000 --> 00:19:59,840
Speaker 1: Singapore and Wall Street. Look for us on your podcast

351
00:20:00,040 --> 00:20:03,720
Speaker 1: eat every day on Apple, Spotify, and anywhere else you

352
00:20:03,800 --> 00:20:06,320
Speaker 1: get your podcasts. You can also listen live each day

353
00:20:06,359 --> 00:20:09,480
Speaker 1: on Bloomberg eleven three zero in New York, Bloomberg ninety

354
00:20:09,560 --> 00:20:12,960
Speaker 1: nine one in Washington, Bloomberg one oh sixty one in Boston,

355
00:20:13,200 --> 00:20:16,600
Speaker 1: and Bloomberg nine sixty in San Francisco. Our flagship New

356
00:20:16,680 --> 00:20:20,240
Speaker 1: York station is also available on your Amazon Alexa devices.

357
00:20:20,640 --> 00:20:24,760
Speaker 1: Just say Alexa play Bloomberg eleven thirty plus listen coast

358
00:20:24,800 --> 00:20:28,320
Speaker 1: to coast on the Bloomberg Business app. Sirius XM Channel

359
00:20:28,320 --> 00:20:32,800
Speaker 1: one nineteen the iHeartRadio app, and on Bloomberg dot Com.

360
00:20:32,840 --> 00:20:36,000
Speaker 1: I'm Brian Curtis and I'm Doug Prisoner. Join us again

361
00:20:36,000 --> 00:20:38,600
Speaker 1: tomorrow for all the news unique to start your day

362
00:20:38,800 --> 00:20:43,400
Speaker 1: right here on Bloomberg day Break Asia