1
00:00:02,800 --> 00:00:06,400
Speaker 1: This is Bloomberg Daybreak Asia for this Wednesday, January eighteenth

2
00:00:06,440 --> 00:00:09,920
Speaker 1: in Hong Kong, Tuesday, January sevent in New York, and

3
00:00:10,119 --> 00:00:12,360
Speaker 1: coming up this hour, the Bank of Japan may keep

4
00:00:12,400 --> 00:00:16,120
Speaker 1: policy unchanged, but traders are not ruling out of the moves.

5
00:00:16,200 --> 00:00:19,680
Speaker 1: China's top economic official says growth will rebound this year

6
00:00:19,880 --> 00:00:23,720
Speaker 1: and GOME sas revenue missing analysts estimates is expenses surge.

7
00:00:24,000 --> 00:00:26,119
Speaker 1: The U s as it's finding it difficult to re

8
00:00:26,360 --> 00:00:29,960
Speaker 1: enter military talks with China. Chancellor Schultz says Germany's efforts

9
00:00:29,960 --> 00:00:32,680
Speaker 1: to talk with China is an effort at globalization. Jeeves

10
00:00:32,720 --> 00:00:35,120
Speaker 1: Mayor on Bloomberg asks the world not to hesitate with

11
00:00:35,159 --> 00:00:38,239
Speaker 1: help and rebuilding. I'm at Baxter with Global News. No

12
00:00:38,360 --> 00:00:41,280
Speaker 1: Vak Djokovic dominates in his return to the Australian Open

13
00:00:41,640 --> 00:00:43,800
Speaker 1: on Dan schwartzpen I'll have that story and Moore coming

14
00:00:43,880 --> 00:00:49,800
Speaker 1: up in Bloomberg's boards. That's all straight ahead on Bloomberg

15
00:00:49,880 --> 00:00:55,320
Speaker 1: Daybreak Asia on Bloomberg eleven and three on New York, Bloomberg, Washington,

16
00:00:55,400 --> 00:00:58,840
Speaker 1: d C, Bloomberg one O six one, Boston, Bloomberg nine

17
00:00:58,880 --> 00:01:02,880
Speaker 1: sixties Princes Go Syrius ex Am one nineteen and around

18
00:01:02,880 --> 00:01:05,720
Speaker 1: the world on Bloomberg Radio dot com and via the

19
00:01:05,720 --> 00:01:14,440
Speaker 1: Bloomberg Business app. Good morning, and I'm Brian Curtiz. Here

20
00:01:14,440 --> 00:01:18,319
Speaker 1: are the stories were following today. Well, Goldman Sachs posted

21
00:01:18,400 --> 00:01:22,320
Speaker 1: a bigger than expected increase in expenses than analysts expected,

22
00:01:22,360 --> 00:01:24,959
Speaker 1: and we will get to that story in a few moments.

23
00:01:25,080 --> 00:01:27,160
Speaker 1: One of the big stories of the day China's Vice

24
00:01:27,160 --> 00:01:31,200
Speaker 1: Premier Leo hub saying the country's economy will likely rebound

25
00:01:31,240 --> 00:01:34,080
Speaker 1: to its pre pandemic growth trend this year. This was

26
00:01:34,120 --> 00:01:36,600
Speaker 1: in a speech to the World Economic Forum in Davos.

27
00:01:36,959 --> 00:01:39,480
Speaker 1: He said that life in China had been restored to

28
00:01:39,600 --> 00:01:42,600
Speaker 1: normal following the lifting of the restrictions, and that a

29
00:01:42,640 --> 00:01:46,720
Speaker 1: peak in infections has passed. Leo added that Beijing's focus

30
00:01:46,800 --> 00:01:49,720
Speaker 1: this year will be on boosting domestic demand and that

31
00:01:49,720 --> 00:01:53,040
Speaker 1: that will lead to a notable increase in imports. He

32
00:01:53,080 --> 00:01:56,320
Speaker 1: also addressed an international concern that Beijing is turning away

33
00:01:56,320 --> 00:02:03,560
Speaker 1: from globalization to focus on self sufficiency. China's fundamental national

34
00:02:03,640 --> 00:02:07,440
Speaker 1: reality dictates that opening up to the world is a must.

35
00:02:08,040 --> 00:02:10,919
Speaker 1: We must open up wider and make it work better.

36
00:02:11,480 --> 00:02:16,720
Speaker 1: We oppose unilateralism and protectionism. We also hope to strengthen

37
00:02:16,840 --> 00:02:21,840
Speaker 1: international cooperation jointly maintain the stable development of the world

38
00:02:21,840 --> 00:02:29,079
Speaker 1: economy and promote economic reglobalization. Separately, Leo, who is expected

39
00:02:29,120 --> 00:02:32,680
Speaker 1: to meet US Treasury Secretary Janet Yellen in Switzerland this week,

40
00:02:32,960 --> 00:02:36,160
Speaker 1: talked about confidence. The U. S. Treasury Department said that

41
00:02:36,240 --> 00:02:39,600
Speaker 1: the two will exchange views on macro economic developments and

42
00:02:39,760 --> 00:02:42,720
Speaker 1: some other economic issues. Look at the back of Japan

43
00:02:42,800 --> 00:02:46,160
Speaker 1: delivering a much awaited policy decision in a few hours.

44
00:02:46,280 --> 00:02:50,440
Speaker 1: Most economists expecting no major change, but there are chances

45
00:02:50,480 --> 00:02:52,680
Speaker 1: of a surprise. Let's have a look at all. This

46
00:02:53,040 --> 00:02:57,959
Speaker 1: is a blue David ingless. Yes. Most economists expect to hold,

47
00:02:58,320 --> 00:03:02,120
Speaker 1: but an unusually high number of observers say they cannot

48
00:03:02,200 --> 00:03:05,840
Speaker 1: rule out changes the yield curve control policies. Last month,

49
00:03:05,840 --> 00:03:08,320
Speaker 1: of Central Bank widened its target ban on the tenure

50
00:03:08,360 --> 00:03:11,519
Speaker 1: j GB to fifty basis points. Analysts say a further

51
00:03:11,800 --> 00:03:15,079
Speaker 1: expansion to seventy five or even higher as possible. Even

52
00:03:15,160 --> 00:03:18,800
Speaker 1: ditching the policy altogether could be considered. It depends on

53
00:03:18,800 --> 00:03:22,359
Speaker 1: how the BOG reads the economy, prices, and financial markets.

54
00:03:22,720 --> 00:03:25,360
Speaker 1: We'll get the decision later today, and traders are betting

55
00:03:25,400 --> 00:03:28,520
Speaker 1: on a possible swing of get this two percent in

56
00:03:28,600 --> 00:03:32,040
Speaker 1: dollar yen in Hong Kong. I'm David less Lumbrick Debrick Asia.

57
00:03:32,840 --> 00:03:36,320
Speaker 1: Goldman Sachs posted a bigger increase in expenses than analysts

58
00:03:36,320 --> 00:03:39,920
Speaker 1: had expected. It said that fourth quarter of compensation costs

59
00:03:39,920 --> 00:03:42,960
Speaker 1: of three point eight billion dollars, or sixteen percent, higher

60
00:03:42,960 --> 00:03:45,680
Speaker 1: than in the same period last year. It indicates that

61
00:03:45,720 --> 00:03:49,000
Speaker 1: the bank's leadership was too conservative with its set aside

62
00:03:49,040 --> 00:03:52,320
Speaker 1: for pay in the first nine months of two The

63
00:03:52,360 --> 00:03:55,360
Speaker 1: investment banking giant has also poured billions of dollars into

64
00:03:55,400 --> 00:03:59,080
Speaker 1: its retail effort. Separately, Goldman reported fourth quarter revenue that

65
00:03:59,160 --> 00:04:03,400
Speaker 1: fell short banialists estimates. Goldman Sacks CEO David Solomon says

66
00:04:03,520 --> 00:04:07,840
Speaker 1: that an industry wide slowdown has his clients worried. Deos

67
00:04:07,880 --> 00:04:09,960
Speaker 1: and boards tell me they are cautious, particularly for the

68
00:04:10,000 --> 00:04:12,920
Speaker 1: near term. They're rethinking business opportunities and would like to

69
00:04:12,960 --> 00:04:16,480
Speaker 1: see more stability before committing to longer term plans. Many

70
00:04:16,520 --> 00:04:19,800
Speaker 1: firms have started preparing for tougher times, focusing on factors

71
00:04:19,839 --> 00:04:24,359
Speaker 1: within their control, and the stock did trade down pretty

72
00:04:24,360 --> 00:04:28,039
Speaker 1: sharply during the session, down six point four percent and

73
00:04:28,160 --> 00:04:32,159
Speaker 1: looking at further losses there in some of the banking sector.

74
00:04:32,200 --> 00:04:34,240
Speaker 1: But Morgan Stanley went to the other direction with some

75
00:04:34,320 --> 00:04:37,840
Speaker 1: big games. Well, here we are Doug Chrisner and Brian

76
00:04:37,880 --> 00:04:41,640
Speaker 1: Curtis and Rashad Salama. So Doug, it's very interesting to

77
00:04:41,680 --> 00:04:44,239
Speaker 1: look at the comments from Leo hu which we played

78
00:04:44,279 --> 00:04:47,919
Speaker 1: for the audience a few moments ago. Leo is leaving

79
00:04:48,000 --> 00:04:51,400
Speaker 1: the post in March when the new team comes in,

80
00:04:51,920 --> 00:04:54,320
Speaker 1: but he's pretty close to China's president Hijin Ping. I

81
00:04:54,320 --> 00:04:56,360
Speaker 1: think it's fair to say that in the figure to sense,

82
00:04:56,360 --> 00:04:59,960
Speaker 1: he's not going anywhere. But the question is can Shine

83
00:05:00,000 --> 00:05:02,599
Speaker 1: to really get back to pre pandemic levels, And there's

84
00:05:02,640 --> 00:05:06,440
Speaker 1: at least a couple of big challenges even with the

85
00:05:06,600 --> 00:05:08,760
Speaker 1: pent up demand that we know is there. One of

86
00:05:08,760 --> 00:05:11,680
Speaker 1: the big challenges is the global eco absolutely right about that,

87
00:05:11,720 --> 00:05:13,599
Speaker 1: and he seemed to blame a lot of the Western

88
00:05:13,640 --> 00:05:17,719
Speaker 1: banks right on their sharper interest rate increases. We're talking

89
00:05:17,720 --> 00:05:20,240
Speaker 1: a lot on this program about the probability of a

90
00:05:20,240 --> 00:05:23,240
Speaker 1: global recession that is very much going to factor into

91
00:05:23,279 --> 00:05:27,560
Speaker 1: the China recovery story. Kevin Rudd, the former Australian Prime

92
00:05:27,560 --> 00:05:31,000
Speaker 1: Minister who will now be Australia's ambassador to the US

93
00:05:31,360 --> 00:05:34,400
Speaker 1: was also speaking at Davos, and he said that China's

94
00:05:34,440 --> 00:05:37,920
Speaker 1: recovery is going to be export challenged. So I think

95
00:05:38,000 --> 00:05:40,400
Speaker 1: it's fair to say that if there is a strong,

96
00:05:40,480 --> 00:05:42,960
Speaker 1: a robust recovery in China, it's very much going to

97
00:05:43,080 --> 00:05:45,239
Speaker 1: depend on how well the rest of the world is

98
00:05:45,240 --> 00:05:48,359
Speaker 1: is faring. Yeah, the other big challenge, I think we

99
00:05:48,400 --> 00:05:51,200
Speaker 1: have to acknowledge his policy. I mean, will they stick

100
00:05:51,240 --> 00:05:54,000
Speaker 1: with this new direction? And I think some of the

101
00:05:54,040 --> 00:05:57,800
Speaker 1: comments they're from Leo Jo would would have reassured investors

102
00:05:57,880 --> 00:06:00,440
Speaker 1: because he said that, you know, we're not going back

103
00:06:00,480 --> 00:06:03,440
Speaker 1: to a planned economy, that's impossible. He also said that

104
00:06:03,600 --> 00:06:07,279
Speaker 1: common prosperity it's not to be taken in a literal sense.

105
00:06:07,400 --> 00:06:11,320
Speaker 1: It it doesn't mean in forcing strict equality. Uh. And

106
00:06:11,360 --> 00:06:14,760
Speaker 1: he said, I think most importantly that it needs entrepreneurial

107
00:06:15,120 --> 00:06:18,400
Speaker 1: effort and that could be a big thing too to

108
00:06:18,520 --> 00:06:21,760
Speaker 1: the companies, particularly in China and also to investors looking

109
00:06:21,760 --> 00:06:24,680
Speaker 1: at China. Well, that seems to dovetail with the relaxation

110
00:06:24,720 --> 00:06:27,039
Speaker 1: that we're seeing in a lot of the regulatory crackdown.

111
00:06:27,080 --> 00:06:30,200
Speaker 1: Put to your point, uh, in terms of the virus

112
00:06:30,240 --> 00:06:32,720
Speaker 1: and where China is in the process. Next week it's

113
00:06:32,760 --> 00:06:34,800
Speaker 1: the Lunar New Year, Brian. You know, well, I mean

114
00:06:34,920 --> 00:06:38,840
Speaker 1: a lot is going to depend on how well this goes. Yeah. Absolutely,

115
00:06:39,200 --> 00:06:42,400
Speaker 1: It'll be a stress test for sure, particularly with aviation

116
00:06:42,600 --> 00:06:49,600
Speaker 1: and travel. Now it's time for global news. Let's get

117
00:06:49,600 --> 00:06:52,640
Speaker 1: to add Baxter in San Francisco. Ed relations between China

118
00:06:52,680 --> 00:06:57,000
Speaker 1: and the United States appear to be getting colder. What's

119
00:06:57,040 --> 00:06:59,920
Speaker 1: the latest, Well, colder and colder, Brian. You have the

120
00:07:00,000 --> 00:07:02,760
Speaker 1: Pentagon says it's struggling now to get China to resume

121
00:07:02,839 --> 00:07:06,400
Speaker 1: military to military talks. China cut off talks in the

122
00:07:06,440 --> 00:07:09,680
Speaker 1: military and climate change after then speaker to Anti Pelosi

123
00:07:09,800 --> 00:07:13,560
Speaker 1: visited Taiwan. But this is also two months after President

124
00:07:13,640 --> 00:07:16,360
Speaker 1: she and Biden met an Indonesian promise to work together.

125
00:07:16,800 --> 00:07:20,920
Speaker 1: It is apparently not working out that way. German Chancellor

126
00:07:20,960 --> 00:07:25,160
Speaker 1: Ala Schulz says that Germany believes in globalization and tells

127
00:07:25,160 --> 00:07:28,559
Speaker 1: Bloomberg's John mickel Thwaite and an exclusive interview that China

128
00:07:29,000 --> 00:07:31,840
Speaker 1: is part of that. The right thing to do now

129
00:07:32,000 --> 00:07:36,040
Speaker 1: is that we all together and also the business sector

130
00:07:36,160 --> 00:07:41,400
Speaker 1: in all our countries are willing to um to have

131
00:07:41,640 --> 00:07:45,400
Speaker 1: not just one supplier to look for others for for

132
00:07:45,400 --> 00:07:48,160
Speaker 1: for going to too many regions in the world. In

133
00:07:48,240 --> 00:07:51,560
Speaker 1: the Berlin interview, Schultz also said it is developing hydrogen

134
00:07:51,640 --> 00:07:53,960
Speaker 1: gas is the gas of the future, and that a

135
00:07:54,040 --> 00:07:58,480
Speaker 1: trade war with the US will not happen. Schulz says

136
00:07:58,520 --> 00:08:01,040
Speaker 1: Germany will support Ukraine as long as there's an age.

137
00:08:01,080 --> 00:08:04,400
Speaker 1: Chancellor Schultz, in the exclusive interview with John says support

138
00:08:04,480 --> 00:08:07,400
Speaker 1: with an eye on avoiding a war that involves NATO.

139
00:08:07,560 --> 00:08:11,200
Speaker 1: We support the Ukraine as long as it is necessary,

140
00:08:11,240 --> 00:08:16,600
Speaker 1: with all the means we can use, but also always

141
00:08:16,640 --> 00:08:20,040
Speaker 1: avoiding that this war is escalating to a war not

142
00:08:20,280 --> 00:08:25,320
Speaker 1: between Russia, which is the imperialistic aggressive, and Ukraine, who

143
00:08:25,360 --> 00:08:28,960
Speaker 1: has all the reason for defending its own integrity now.

144
00:08:29,000 --> 00:08:31,240
Speaker 1: Shul says the only way the war will end is

145
00:08:31,240 --> 00:08:34,160
Speaker 1: for Russia to polite troops, which will have to happen

146
00:08:34,160 --> 00:08:36,640
Speaker 1: at some point, he says, and the mayor of Kiev,

147
00:08:36,720 --> 00:08:39,800
Speaker 1: which has been undergoing more attacks in the past couple

148
00:08:39,800 --> 00:08:43,560
Speaker 1: of days. But Alliklisko in Davos with Lumberg's David Weston

149
00:08:43,640 --> 00:08:47,199
Speaker 1: says the fight to keep infrastructure is very intense. In

150
00:08:47,400 --> 00:08:50,240
Speaker 1: this period of time. We have a lot of challenges.

151
00:08:50,760 --> 00:08:54,520
Speaker 1: We have to carry about the services electricity, water, hating,

152
00:08:55,000 --> 00:08:59,679
Speaker 1: we have to give the public transportation, medical care and education.

153
00:09:00,120 --> 00:09:03,160
Speaker 1: And that's why it's not easy time. It's a lot

154
00:09:03,200 --> 00:09:06,600
Speaker 1: of challenges. And brother Vladimir says the major problem Ukraine

155
00:09:06,640 --> 00:09:12,400
Speaker 1: has with the West hesitation. Hesitation costs destruction of our

156
00:09:13,640 --> 00:09:17,280
Speaker 1: of our infrastructure and also losing our best man, woman, children,

157
00:09:17,400 --> 00:09:22,559
Speaker 1: our future generation as well, and this hesitation is painful about.

158
00:09:22,600 --> 00:09:25,760
Speaker 1: Both brothers reiterated time and again how much they appreciate

159
00:09:25,800 --> 00:09:28,720
Speaker 1: the help coming from the world, saying without it, Ukraine

160
00:09:28,760 --> 00:09:31,680
Speaker 1: will not survive. And former U S Secretary of State

161
00:09:31,720 --> 00:09:34,800
Speaker 1: Henry Kissinger is a reverse course on Ukraine and says

162
00:09:34,840 --> 00:09:39,720
Speaker 1: now he believed Ukraine joining NATO could be an appropriate outcome.

163
00:09:40,280 --> 00:09:43,920
Speaker 1: In San Francisco, I'm at Baxter. This is Bloomberg, right, Brian,

164
00:09:44,760 --> 00:09:47,199
Speaker 1: thanks very much. Let's get to our guest, Cheryl Smith,

165
00:09:47,280 --> 00:09:52,320
Speaker 1: economist and portfolio manager at Trillion Asset Management. Cheryl, we

166
00:09:52,360 --> 00:09:55,079
Speaker 1: had about three percent growth in China in the past year,

167
00:09:55,120 --> 00:09:59,520
Speaker 1: the calendar year. Leo Hu, the economic chief, talking about

168
00:09:59,559 --> 00:10:02,480
Speaker 1: almost double that this year. We had a guest on

169
00:10:02,480 --> 00:10:04,600
Speaker 1: our show yesterday who is one of the most prominent

170
00:10:05,240 --> 00:10:09,240
Speaker 1: strategists in China, how Hong saying that China would be

171
00:10:09,320 --> 00:10:11,920
Speaker 1: lucky to get three percent this year. Your thoughts on that,

172
00:10:13,880 --> 00:10:18,440
Speaker 1: I think your prior guest tour or your commentator who

173
00:10:18,480 --> 00:10:21,680
Speaker 1: was talking about the dependence that China has on growth

174
00:10:21,679 --> 00:10:24,640
Speaker 1: in the rest of the world. There's a really interesting point.

175
00:10:24,960 --> 00:10:27,520
Speaker 1: We've always thought about the growth in China dragging the

176
00:10:27,559 --> 00:10:31,000
Speaker 1: rest of the world along with it, but the post

177
00:10:31,000 --> 00:10:34,640
Speaker 1: COVID situation has kind of flipped that. And with many

178
00:10:34,679 --> 00:10:38,680
Speaker 1: of the developed countries looking at potential recession in this

179
00:10:38,800 --> 00:10:42,960
Speaker 1: next year, or at the very least a distinct slow down,

180
00:10:43,320 --> 00:10:48,520
Speaker 1: I think China will have more difficulty starting things back up. Also,

181
00:10:49,120 --> 00:10:52,760
Speaker 1: China has the problem of an aging population, the same

182
00:10:52,800 --> 00:10:55,160
Speaker 1: thing that Japan has been dealing with for years, the

183
00:10:55,200 --> 00:10:58,040
Speaker 1: same thing that many developed countries in Europe have been

184
00:10:58,080 --> 00:11:01,840
Speaker 1: dealing with, and that really makes it categorically more difficult

185
00:11:01,880 --> 00:11:04,280
Speaker 1: to grow at those rapid rates such as a six

186
00:11:04,320 --> 00:11:08,840
Speaker 1: percent growth rate. And you know, we had that population number,

187
00:11:08,880 --> 00:11:11,680
Speaker 1: of course, reinforced by that big surprise in the data

188
00:11:11,800 --> 00:11:16,800
Speaker 1: yesterday showing that actually in China's population actually shrank, and

189
00:11:16,800 --> 00:11:19,479
Speaker 1: that's the first time that's happened in sixty years or thereabouts.

190
00:11:19,520 --> 00:11:22,760
Speaker 1: And how does that change the game materially from an

191
00:11:22,800 --> 00:11:25,480
Speaker 1: investment point of view, because it means that the structure

192
00:11:25,480 --> 00:11:28,400
Speaker 1: of the economy is evolving, it's getting older and of

193
00:11:28,440 --> 00:11:33,120
Speaker 1: course getting smaller as well. Demographically. Yes, it changes the

194
00:11:33,160 --> 00:11:38,240
Speaker 1: relative balance between consumption and investment, and it also changes

195
00:11:38,360 --> 00:11:44,640
Speaker 1: the balance that of workers to the um older population

196
00:11:44,760 --> 00:11:48,680
Speaker 1: that needs support social support. So China doesn't have the

197
00:11:48,720 --> 00:11:52,320
Speaker 1: same social support structures like social security, Medicare, and so

198
00:11:52,400 --> 00:11:54,120
Speaker 1: forth at the United States has. It's more of a

199
00:11:54,160 --> 00:11:58,040
Speaker 1: generational support. But each um. You know, if you have

200
00:11:58,120 --> 00:12:01,240
Speaker 1: a one child policy through three generations, you have one

201
00:12:01,280 --> 00:12:07,800
Speaker 1: grandchild supporting eight grandparents for parents, or one family to

202
00:12:08,200 --> 00:12:11,439
Speaker 1: you to two people married supporting four and eight. That's

203
00:12:11,480 --> 00:12:14,280
Speaker 1: a lot of people to be supporting. And with that

204
00:12:14,400 --> 00:12:17,960
Speaker 1: being the case, you just don't have as much um

205
00:12:17,960 --> 00:12:23,240
Speaker 1: devoted much available to devote to consumption or new growth

206
00:12:23,600 --> 00:12:25,920
Speaker 1: or anything like that. It really makes it a very

207
00:12:25,920 --> 00:12:30,719
Speaker 1: difficult calculation of how to grow. That said, last year

208
00:12:30,800 --> 00:12:33,880
Speaker 1: was a very very unusual year and people are not

209
00:12:33,920 --> 00:12:37,400
Speaker 1: moving around, not doing things, very scared about losing their jobs.

210
00:12:37,400 --> 00:12:39,960
Speaker 1: As the economy was shut down, we probably have to

211
00:12:40,040 --> 00:12:42,800
Speaker 1: wait another year or two to see whether that's a

212
00:12:42,800 --> 00:12:47,120
Speaker 1: trend uh that continues at least in the negative fashion.

213
00:12:47,440 --> 00:12:49,560
Speaker 1: But I think that point that we talked about earlier

214
00:12:49,600 --> 00:12:53,000
Speaker 1: with if the US and if Europe are in recession

215
00:12:53,080 --> 00:12:57,079
Speaker 1: this year, then is growth higher levels of growth doomed

216
00:12:57,200 --> 00:12:59,520
Speaker 1: in China. So it begs the question do you think

217
00:12:59,559 --> 00:13:02,520
Speaker 1: the US goes into recession this year and Europe as well?

218
00:13:03,920 --> 00:13:07,040
Speaker 1: Our call is definitely that we will be going into recession.

219
00:13:07,800 --> 00:13:11,480
Speaker 1: We do not see a soft landing as really possible

220
00:13:11,520 --> 00:13:14,800
Speaker 1: given the degree of monetary tightening that's already happened in

221
00:13:14,840 --> 00:13:18,160
Speaker 1: the United States and even more so sort of synchronized

222
00:13:18,200 --> 00:13:22,160
Speaker 1: monetary tightening across the world with most of the major

223
00:13:22,200 --> 00:13:29,000
Speaker 1: developed countries having done so that takes eighteen months to

224
00:13:29,120 --> 00:13:31,640
Speaker 1: hit the economy. So we just started that tightening in

225
00:13:31,679 --> 00:13:35,920
Speaker 1: the United States in March. So everybody is saying, well,

226
00:13:35,960 --> 00:13:37,800
Speaker 1: it's got to be a soft landing because we haven't

227
00:13:37,880 --> 00:13:41,839
Speaker 1: had employment, right, unemployment rise yet. Well, it's not time

228
00:13:41,960 --> 00:13:44,440
Speaker 1: yet for unemployment to rise. What the stage we're in

229
00:13:44,520 --> 00:13:49,079
Speaker 1: now is going to be disappointing corporate profits. Those disappointing

230
00:13:49,080 --> 00:13:53,400
Speaker 1: corporate profits, Um, whether it's Goldman Sachs or the first

231
00:13:53,400 --> 00:13:56,600
Speaker 1: bank starting to do it. You're going to see companies

232
00:13:56,640 --> 00:13:59,520
Speaker 1: having a more and more difficult time making their earnings.

233
00:13:59,760 --> 00:14:05,119
Speaker 1: We had economics blame the FED for it's not blaming

234
00:14:05,240 --> 00:14:08,840
Speaker 1: the FED. It is a logical consequence of FED action.

235
00:14:09,080 --> 00:14:13,480
Speaker 1: But the FED action is undertaken because you had everybody

236
00:14:13,480 --> 00:14:16,760
Speaker 1: in the world screaming about inflation going on for too long.

237
00:14:17,160 --> 00:14:20,720
Speaker 1: So the FED was backed into a political corner, if

238
00:14:20,760 --> 00:14:22,800
Speaker 1: you will, to the point where you know, they had

239
00:14:22,840 --> 00:14:25,800
Speaker 1: to say, well, we already have employment at a high level,

240
00:14:26,000 --> 00:14:29,400
Speaker 1: so we have to address that other dual component of

241
00:14:29,400 --> 00:14:32,400
Speaker 1: our mandate, the inflation, and we are going to have

242
00:14:32,480 --> 00:14:34,840
Speaker 1: to raise interest rates. Other central banks around the world

243
00:14:34,880 --> 00:14:38,680
Speaker 1: is saying the same thing because the COVID supply chain

244
00:14:38,800 --> 00:14:43,400
Speaker 1: induced inflation worldwide was a worldwide problem, so everybody is

245
00:14:43,440 --> 00:14:47,920
Speaker 1: applying the same policy solution. The difficulty in macroeconomics is

246
00:14:48,000 --> 00:14:52,320
Speaker 1: that it's not like plumbing. You don't turn on the

247
00:14:52,320 --> 00:14:54,840
Speaker 1: faucet and things start flowing, and you turn off the

248
00:14:54,840 --> 00:14:58,680
Speaker 1: flawcet and things. Do you do preventive maintenance? Though, don't

249
00:14:58,680 --> 00:15:02,600
Speaker 1: you know you do prevented maintenance. Didn't do the preventative maintenance.

250
00:15:03,640 --> 00:15:07,000
Speaker 1: I would say that um, at the time when the

251
00:15:07,000 --> 00:15:09,840
Speaker 1: FED UM. I mean that you're asking whether the FED

252
00:15:09,880 --> 00:15:12,880
Speaker 1: should have started raising rates much earlier. I don't think. Well,

253
00:15:14,560 --> 00:15:17,960
Speaker 1: many people asked, yes, okay, many people are asking, you know,

254
00:15:18,000 --> 00:15:20,920
Speaker 1: should the FED have started raising rates earlier. I don't

255
00:15:20,920 --> 00:15:23,520
Speaker 1: think that that was actually a possibility, because we were

256
00:15:23,560 --> 00:15:27,880
Speaker 1: still at you know, at fairly high levels of unemployment

257
00:15:28,000 --> 00:15:30,000
Speaker 1: at the time when you would have had to have

258
00:15:30,200 --> 00:15:35,920
Speaker 1: started raising rates to have choked off the inflation that

259
00:15:36,000 --> 00:15:40,840
Speaker 1: later happened. It's a very thorny issue, and I think

260
00:15:41,160 --> 00:15:43,320
Speaker 1: it's really I would not blame the FED. I would

261
00:15:43,320 --> 00:15:48,600
Speaker 1: say that the issue was in a h a structure

262
00:15:48,720 --> 00:15:53,200
Speaker 1: of world production that required so much output in one

263
00:15:53,760 --> 00:15:56,680
Speaker 1: country and input in another country, and depended on being

264
00:15:56,680 --> 00:16:00,640
Speaker 1: able to ship it across borders easily costlessly, and we

265
00:16:00,760 --> 00:16:02,760
Speaker 1: found that that wasn't the case when you had something

266
00:16:02,800 --> 00:16:06,440
Speaker 1: like COVID show very quickly. I mean the bond market

267
00:16:06,720 --> 00:16:12,120
Speaker 1: is actually a buy. Yeah. I think the bond market

268
00:16:12,200 --> 00:16:15,800
Speaker 1: is overly optimistic. I think that we'll still see further

269
00:16:16,080 --> 00:16:18,800
Speaker 1: tightening on the shorter end, and the bond market isn't

270
00:16:18,800 --> 00:16:21,160
Speaker 1: fully accounting for how long the set is going to

271
00:16:21,200 --> 00:16:23,320
Speaker 1: be raising rates, and I think that the bond mark

272
00:16:23,560 --> 00:16:26,200
Speaker 1: is anticipating that the rates are going to be cut

273
00:16:26,280 --> 00:16:28,560
Speaker 1: sooner than I think they actually will be. I think

274
00:16:28,560 --> 00:16:32,240
Speaker 1: we're still at these high short term rates through the

275
00:16:32,280 --> 00:16:36,840
Speaker 1: rest of three. This is Bloomberg Daybreak Asia, your morning

276
00:16:36,880 --> 00:16:39,320
Speaker 1: brief on the story is making news from Hong Kong

277
00:16:39,440 --> 00:16:42,200
Speaker 1: to Singapore and Wall Street. Look for us on your

278
00:16:42,240 --> 00:16:45,720
Speaker 1: podcast feed every day, on Apple's Spotify and anywhere else

279
00:16:45,800 --> 00:16:48,680
Speaker 1: you get your podcast. You can also listen live each

280
00:16:48,760 --> 00:16:51,760
Speaker 1: day on Bloomberg eleven three oh in New York, Bloomberg

281
00:16:52,560 --> 00:16:55,920
Speaker 1: in Washington, Bloomberg one oh six one in Boston, and

282
00:16:55,960 --> 00:16:59,800
Speaker 1: Bloomberg nine sixty in San Francisco, half Flagship New York.

283
00:16:59,840 --> 00:17:03,160
Speaker 1: Ssaytion is available on your Amazon Alexa devices. Just say

284
00:17:03,240 --> 00:17:07,919
Speaker 1: Alexa lay Bloomberg eleven thirty plus. Listen coast to coast

285
00:17:07,960 --> 00:17:11,680
Speaker 1: on the Bloomberg Business app, Sirius XM Channel one nineteen,

286
00:17:12,080 --> 00:17:15,440
Speaker 1: the I Heart Radio app, and on Bloomberg dot Com.

287
00:17:15,480 --> 00:17:18,480
Speaker 1: I'm Brian Curtis and I'm rachand Slam. Join us again

288
00:17:18,520 --> 00:17:21,040
Speaker 1: tomorrow for all the news you need to start your

289
00:17:21,119 --> 00:17:23,640
Speaker 1: day right here on Bloomberg Day raccastion