WEBVTT - Banking Anxiety Grows, Apple Beats Estimates

0:00:03.240 --> 0:00:06.400
<v Speaker 1>This is Bloomberg Daybreak Asia for this Friday, May fifth

0:00:06.400 --> 0:00:09.520
<v Speaker 1>in Hong Kong, Thursday May fourth in New York and

0:00:09.640 --> 0:00:10.400
<v Speaker 1>coming up today.

0:00:10.560 --> 0:00:14.080
<v Speaker 2>A selloff in regional lenders leads to mounting anxiety over

0:00:14.120 --> 0:00:16.120
<v Speaker 2>stability of the US banking system.

0:00:16.239 --> 0:00:19.640
<v Speaker 1>Apple beats estimates on signs that iPhone demand may be

0:00:19.760 --> 0:00:22.040
<v Speaker 1>weathering an industry wide slump.

0:00:21.800 --> 0:00:25.000
<v Speaker 2>And Ali Baba's global online commerce unit is said to

0:00:25.000 --> 0:00:27.080
<v Speaker 2>be weighing a US IPO.

0:00:27.040 --> 0:00:31.520
<v Speaker 3>Taiwan warrants China regarding potential drone incursions. The US Intelligence

0:00:31.560 --> 0:00:34.720
<v Speaker 3>Director says China seeks to achieve goals at US expense,

0:00:35.000 --> 0:00:39.320
<v Speaker 3>China voicing displeasure regarding Switzerland upping diplomatic efforts with Taiwan.

0:00:39.720 --> 0:00:41.280
<v Speaker 3>I'm at Baxter with Global News.

0:00:44.120 --> 0:00:47.800
<v Speaker 4>That's all straight Ahead on Bloomberg Daybreak Asia, The business

0:00:47.840 --> 0:00:50.279
<v Speaker 4>news you need to start your day in just one

0:00:50.400 --> 0:00:55.320
<v Speaker 4>fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App,

0:00:55.360 --> 0:00:57.320
<v Speaker 4>and everywhere you get your podcasts.

0:01:00.120 --> 0:01:00.440
<v Speaker 5>Morning.

0:01:00.520 --> 0:01:03.120
<v Speaker 1>I'm Doug Prisner and I'm Brian Curtiz. Here are the

0:01:03.120 --> 0:01:07.240
<v Speaker 1>stories we're following today. A route in regional banks leading

0:01:07.280 --> 0:01:10.400
<v Speaker 1>to a down day for markets. Packwest shares down fifty

0:01:10.440 --> 0:01:13.280
<v Speaker 1>one percent after the bank said it's in talks with

0:01:13.360 --> 0:01:17.120
<v Speaker 1>potential investors and partners. Western Alliance shares stumbled as much

0:01:17.120 --> 0:01:20.360
<v Speaker 1>as sixty two percent and then bounced back, if we

0:01:20.400 --> 0:01:23.360
<v Speaker 1>want to call it that, to close down thirty eight percent,

0:01:23.800 --> 0:01:25.959
<v Speaker 1>as after the bank said that a report that it

0:01:26.040 --> 0:01:30.600
<v Speaker 1>was exploring options, including a sale is categorically false. Meantime,

0:01:30.640 --> 0:01:35.039
<v Speaker 1>First Horizon shares dropping thirty three percent. The bank said,

0:01:35.360 --> 0:01:39.000
<v Speaker 1>along with Toronto Dominion Bank, that it had agreed to

0:01:39.120 --> 0:01:44.760
<v Speaker 1>termine the merger packed they cited uncertainty over regulatory approvals. Now,

0:01:44.800 --> 0:01:48.120
<v Speaker 1>the sell off today adds to concerns about the financial sector,

0:01:48.560 --> 0:01:50.480
<v Speaker 1>as you know, it has been rattled in recent months

0:01:50.560 --> 0:01:54.720
<v Speaker 1>by the collapse of multiple banks. Bloomberg's Hermann Chan stressed

0:01:54.720 --> 0:01:57.040
<v Speaker 1>that the needs that a lot more needs to be

0:01:57.120 --> 0:01:59.400
<v Speaker 1>done to soothe investor nerves.

0:02:00.120 --> 0:02:02.000
<v Speaker 6>Get this point, there needs to be a more holistic

0:02:02.040 --> 0:02:07.080
<v Speaker 6>solution from Washington, from regulators, because no matter what the

0:02:07.120 --> 0:02:09.880
<v Speaker 6>regionals are saying, from a fundamental view, and it's not

0:02:10.040 --> 0:02:13.480
<v Speaker 6>arresting the declines in the market pressure. So there needs

0:02:13.480 --> 0:02:17.800
<v Speaker 6>to be a more of a government response and deposit guarantee,

0:02:17.800 --> 0:02:20.480
<v Speaker 6>maybe a blanket guarantee over a short period of time

0:02:20.520 --> 0:02:22.360
<v Speaker 6>to calm market fears would be helpful.

0:02:22.480 --> 0:02:27.079
<v Speaker 1>All twenty one shares in the KBW Bank index we're

0:02:27.120 --> 0:02:32.000
<v Speaker 1>down for the day. Larger US lenders also declined, and

0:02:32.200 --> 0:02:35.079
<v Speaker 1>Goldman Sachs shares fell about two percent as the bank's

0:02:35.160 --> 0:02:38.680
<v Speaker 1>role in Silicon Valley banks attempt to raise funds is

0:02:38.760 --> 0:02:40.840
<v Speaker 1>now under review in a US probe.

0:02:41.280 --> 0:02:43.240
<v Speaker 2>And the same time, we are hearing today that the

0:02:43.320 --> 0:02:47.360
<v Speaker 2>FDIC is planning to release a highly anticipated proposal to

0:02:47.520 --> 0:02:51.280
<v Speaker 2>replenish its deposit Insurance fund that could happen as soon

0:02:51.320 --> 0:02:53.280
<v Speaker 2>as next week. And we have the story from Bloomberg's

0:02:53.320 --> 0:02:54.079
<v Speaker 2>Charlie Pellett.

0:02:54.400 --> 0:02:58.040
<v Speaker 5>The fund was partly depleted by the failures of Silicon

0:02:58.160 --> 0:03:02.040
<v Speaker 5>Valley Bank and Signature Bank. Sources say smaller lenders with

0:03:02.200 --> 0:03:05.040
<v Speaker 5>less than ten billion dollars in assets would not have

0:03:05.080 --> 0:03:08.280
<v Speaker 5>to pay. FDIC data showed there were more than four

0:03:08.400 --> 0:03:12.040
<v Speaker 5>thousand institutions under that threshold at the end of last year.

0:03:12.480 --> 0:03:15.040
<v Speaker 5>A political debate who has been raging over who should

0:03:15.080 --> 0:03:17.640
<v Speaker 5>be on the hook for refilling the fund after it

0:03:17.720 --> 0:03:21.080
<v Speaker 5>was depleted by billions of dollars When the government took

0:03:21.080 --> 0:03:25.800
<v Speaker 5>the extraordinary step of making all SVB and Signature depositors,

0:03:26.040 --> 0:03:30.920
<v Speaker 5>even uninsured ones whole in New York. Charlie Pellett Bloomberg

0:03:31.000 --> 0:03:31.760
<v Speaker 5>Daybreak Asia.

0:03:32.320 --> 0:03:35.840
<v Speaker 1>Apple reported second quarter sales amounting to ninety four point

0:03:35.840 --> 0:03:38.040
<v Speaker 1>eight billion dollars. That was better than the ninety two

0:03:38.080 --> 0:03:41.920
<v Speaker 1>point six billion analysts had predicted. The results suggest that

0:03:41.960 --> 0:03:44.680
<v Speaker 1>Apple is bouncing back from a slump that plagued both

0:03:44.680 --> 0:03:48.400
<v Speaker 1>the computer and smartphone industries. We got reaction from Dan

0:03:48.480 --> 0:03:50.400
<v Speaker 1>Morgan at Cinovistrust.

0:03:50.600 --> 0:03:52.480
<v Speaker 7>Well, obviously the big numbers that stand out to me,

0:03:52.600 --> 0:03:55.440
<v Speaker 7>and there's this huge beat in iPhone revenue because coming

0:03:55.480 --> 0:03:58.360
<v Speaker 7>in this quarter I had forty eight point ninety seven

0:03:58.400 --> 0:04:00.200
<v Speaker 7>that came in a fifty one point three and that

0:04:00.240 --> 0:04:02.800
<v Speaker 7>forty eight point nine seven would have represented a negative

0:04:02.800 --> 0:04:05.680
<v Speaker 7>growth rate of about three point two percent. This is

0:04:05.680 --> 0:04:08.160
<v Speaker 7>going to put them, I think, probably flatter, even slightly

0:04:08.280 --> 0:04:10.280
<v Speaker 7>up on iPhone revenue. I was looking for about fifty

0:04:10.280 --> 0:04:13.119
<v Speaker 7>five million units, so that's a huge number for them.

0:04:13.360 --> 0:04:16.320
<v Speaker 1>From a supply perspective, the second quarter was an opportunity

0:04:16.360 --> 0:04:20.279
<v Speaker 1>for the iPhone fourteen to rebound. The device had suffered

0:04:20.320 --> 0:04:23.640
<v Speaker 1>from constraints during the prior quarter because of COVID policies

0:04:23.680 --> 0:04:27.640
<v Speaker 1>in China. Separately, Apple announced plans for ninety billion dollars

0:04:27.680 --> 0:04:31.200
<v Speaker 1>in stock repurchases, which was the same as last year's plan,

0:04:31.560 --> 0:04:34.279
<v Speaker 1>and the company raised its quarterly dividend four percent to

0:04:34.400 --> 0:04:38.000
<v Speaker 1>twenty four cents a share. Apple shares had traded up

0:04:38.000 --> 0:04:41.120
<v Speaker 1>around three percent in after hours trading. At the moment,

0:04:41.560 --> 0:04:43.280
<v Speaker 1>they have advanced about two percent.

0:04:43.720 --> 0:04:43.880
<v Speaker 4>Well.

0:04:43.960 --> 0:04:47.800
<v Speaker 2>Lift is forecasting disappointing revenue for the current quarter. According

0:04:47.800 --> 0:04:50.719
<v Speaker 2>to the company, top line will be between a billion

0:04:51.240 --> 0:04:54.400
<v Speaker 2>to one point zero two billion dollars. That is less

0:04:54.400 --> 0:04:57.120
<v Speaker 2>than what the street was looking for. Analysts were estimating

0:04:57.240 --> 0:05:01.920
<v Speaker 2>one point zero eight billion. Lift also reported fewer than

0:05:01.960 --> 0:05:05.440
<v Speaker 2>expected active riders on its platform. It's an indication Lift

0:05:05.480 --> 0:05:10.400
<v Speaker 2>is failing to stay competitive with Uber despite lowering rider fares.

0:05:10.520 --> 0:05:12.200
<v Speaker 2>Here's Bloomberg's Man Deep sing.

0:05:12.640 --> 0:05:16.240
<v Speaker 8>What Uber has done well is they've created tiered pricing

0:05:16.839 --> 0:05:19.960
<v Speaker 8>for you know, really attracting all kinds of users. So

0:05:20.000 --> 0:05:22.599
<v Speaker 8>if you're if you care about price, you can find

0:05:22.600 --> 0:05:25.760
<v Speaker 8>that kind of right on Uber. If you want that convenience,

0:05:25.800 --> 0:05:29.520
<v Speaker 8>you can find an expensive ride and shorter eta. Lift

0:05:29.680 --> 0:05:32.800
<v Speaker 8>just is struggling to keep that driver's supply on the platform,

0:05:32.880 --> 0:05:35.839
<v Speaker 8>and that's why the ETAs are going up. So you know,

0:05:35.920 --> 0:05:38.400
<v Speaker 8>the user experience won't be as good because people don't

0:05:38.400 --> 0:05:38.880
<v Speaker 8>want to wait.

0:05:39.200 --> 0:05:41.520
<v Speaker 2>That is Bloomberg's man Deep saying. By the way, today's

0:05:41.560 --> 0:05:45.679
<v Speaker 2>results regarding Lift come as the company's new CEO, David Rischer,

0:05:45.800 --> 0:05:49.520
<v Speaker 2>is attempting to turn Lift into a properly profitable company.

0:05:49.800 --> 0:05:53.000
<v Speaker 2>He's already begun to shake things up, recently cutting twenty

0:05:53.040 --> 0:05:56.719
<v Speaker 2>six percent of Lift's workforce. Risher has also said he's

0:05:56.720 --> 0:06:00.279
<v Speaker 2>committed to being competitive on prices. He's planning to wrecked

0:06:00.320 --> 0:06:04.080
<v Speaker 2>some of the cost savings to subsidizing lower fares and

0:06:04.160 --> 0:06:07.120
<v Speaker 2>boosting driver earnings. Lift shares right now in the late

0:06:07.200 --> 0:06:09.680
<v Speaker 2>US session down by more than fifteen percent.

0:06:09.920 --> 0:06:14.080
<v Speaker 1>Ali Baba's international online shopping unit is exploring a US

0:06:14.080 --> 0:06:17.320
<v Speaker 1>initial public offering. We hear more from Bloomberg's Joanne Wong

0:06:17.480 --> 0:06:18.200
<v Speaker 1>in Hong Kong.

0:06:18.440 --> 0:06:20.960
<v Speaker 9>We're told the ibo might be launched as soon as

0:06:21.120 --> 0:06:24.200
<v Speaker 9>next year. The company's weighing options to spur growth for

0:06:24.279 --> 0:06:28.040
<v Speaker 9>the business, and that includes major e commerce brands Lazada

0:06:28.080 --> 0:06:31.400
<v Speaker 9>and Ali Express. Earlier in March, Ali Baba unveiled plans

0:06:31.440 --> 0:06:34.480
<v Speaker 9>to break up his empire into units such as e commerce,

0:06:34.640 --> 0:06:37.360
<v Speaker 9>logistics and the cloud and Is said it'll have each

0:06:37.400 --> 0:06:41.760
<v Speaker 9>business potentially explore fundraising and an IPO and an appropriate time.

0:06:42.080 --> 0:06:44.960
<v Speaker 9>If the USIPO plan goes ahead, it will be competing

0:06:45.000 --> 0:06:49.000
<v Speaker 9>with rivals such as Amazon in markets outside China. Analysts

0:06:49.080 --> 0:06:53.520
<v Speaker 9>valuation for Alibaba's international business units vary between twenty nine

0:06:53.520 --> 0:06:56.720
<v Speaker 9>and thirty nine billion dollars in Hong Kong, Joan Wong

0:06:56.760 --> 0:06:58.000
<v Speaker 9>Blueberg day Break Asia.

0:06:58.600 --> 0:07:00.800
<v Speaker 1>We had a little bounce in alib Bobba shares up

0:07:00.839 --> 0:07:03.919
<v Speaker 1>one and a quarter percent in US trading with the ADRs,

0:07:03.920 --> 0:07:06.400
<v Speaker 1>and we also saw an advance yesterday in Hong Kong,

0:07:06.880 --> 0:07:08.960
<v Speaker 1>up four tenths of a percent, but that stock has

0:07:08.960 --> 0:07:13.560
<v Speaker 1>straded down about twenty percent over the past month. Well,

0:07:13.600 --> 0:07:17.600
<v Speaker 1>I'm Brian Curtis, along with Doug Kristner. Doug Apple's numbers

0:07:17.640 --> 0:07:22.240
<v Speaker 1>really didn't do too much to change the sort of

0:07:22.280 --> 0:07:25.240
<v Speaker 1>level of heat or coolness in the markets, and I

0:07:25.280 --> 0:07:28.000
<v Speaker 1>wanted to strip out the China numbers because it didn't

0:07:28.000 --> 0:07:30.920
<v Speaker 1>appear in our story. It's because it wasn't that newsworthy

0:07:31.120 --> 0:07:33.560
<v Speaker 1>sales were down a little but sort of in line

0:07:33.600 --> 0:07:36.520
<v Speaker 1>with the rest of the revenues, down two point eight percent,

0:07:36.920 --> 0:07:39.880
<v Speaker 1>but the next quarter could be quite interesting in that

0:07:40.640 --> 0:07:43.200
<v Speaker 1>we know that the reopening is playing into this year

0:07:43.240 --> 0:07:45.720
<v Speaker 1>and last year in the second quarter we had the lockdowns,

0:07:45.880 --> 0:07:49.120
<v Speaker 1>particularly in the Shanghai area, so that could be could

0:07:49.120 --> 0:07:54.600
<v Speaker 1>be good for Apple. Japan was down, but not that much. Interestingly,

0:07:54.640 --> 0:07:57.600
<v Speaker 1>the rest of the Asia Pacific was up fifteen percent,

0:07:57.760 --> 0:07:59.080
<v Speaker 1>and that's quite surprising, and.

0:07:59.080 --> 0:08:01.120
<v Speaker 2>Cook saying on the comment, Fferends called with analysts that

0:08:01.160 --> 0:08:04.720
<v Speaker 2>India is an incredibly exciting market for the company to

0:08:04.760 --> 0:08:08.560
<v Speaker 2>focus on. Let's not forget that Apple did authorize an

0:08:08.560 --> 0:08:11.680
<v Speaker 2>additional stock buyback program of up to ninety billion. That's

0:08:11.720 --> 0:08:15.520
<v Speaker 2>pretty significant. I think analysts have already kind of adjusted

0:08:15.560 --> 0:08:18.920
<v Speaker 2>expectations for this company a great deal. If you remember

0:08:19.600 --> 0:08:21.440
<v Speaker 2>the stock so far this year, I think is what

0:08:21.560 --> 0:08:26.280
<v Speaker 2>up twenty eight percent. It's outperformed the overall market quite significantly.

0:08:26.680 --> 0:08:30.440
<v Speaker 1>Yeah, is PE is twenty eight the forward PE twenty six,

0:08:30.560 --> 0:08:35.240
<v Speaker 1>not chan, and that's high compared to where it often trades. However,

0:08:35.960 --> 0:08:41.000
<v Speaker 1>it's really the same as Procter and Gamble, Coke, McDonald's

0:08:41.800 --> 0:08:44.800
<v Speaker 1>and those are you know, those are considered staples. Is

0:08:44.840 --> 0:08:47.640
<v Speaker 1>Apple a staple? I think many people would say yes,

0:08:47.679 --> 0:08:50.040
<v Speaker 1>it sort of is, and it grows faster than those

0:08:50.040 --> 0:08:51.120
<v Speaker 1>companies I just mentioned.

0:08:51.160 --> 0:08:53.880
<v Speaker 2>Yeah, I'd like to get your reaction to this idea

0:08:53.920 --> 0:08:55.920
<v Speaker 2>that maybe we'll get a rate cut as soon as

0:08:55.960 --> 0:08:58.240
<v Speaker 2>the July FED meeting. At the swaps market right now,

0:08:58.240 --> 0:09:00.960
<v Speaker 2>pricing in odds well over fifty percent based on what

0:09:01.000 --> 0:09:03.280
<v Speaker 2>we heard yesterday from the FED chairman, that doesn't seem

0:09:03.320 --> 0:09:05.760
<v Speaker 2>to be a possibility. Maybe the market's not buying the

0:09:05.800 --> 0:09:07.240
<v Speaker 2>Fed's story right now.

0:09:07.720 --> 0:09:10.320
<v Speaker 1>I almost think it's the Fed and Jay Powell not

0:09:10.400 --> 0:09:12.960
<v Speaker 1>buying the market story because the market is calling for

0:09:13.040 --> 0:09:16.440
<v Speaker 1>these three cuts towards the end of the year, and

0:09:16.800 --> 0:09:20.000
<v Speaker 1>essentially they're almost talking about different things. As I mentioned

0:09:20.040 --> 0:09:23.000
<v Speaker 1>in our conference call, it seems like the FED is

0:09:23.120 --> 0:09:26.200
<v Speaker 1>really thinking about this in terms of inflation, and it

0:09:26.280 --> 0:09:30.240
<v Speaker 1>thinks that the market's cuts mean that inflation will come down,

0:09:30.679 --> 0:09:33.640
<v Speaker 1>and the Fed does not believe that's what's going to happen.

0:09:34.000 --> 0:09:36.640
<v Speaker 1>But it's actually the market thinking that there's trouble out

0:09:36.679 --> 0:09:40.240
<v Speaker 1>there and it could be recessionary conditions. But you didn't hear.

0:09:40.720 --> 0:09:42.840
<v Speaker 1>You didn't hear Jay Powell talking about that. What he

0:09:42.880 --> 0:09:47.120
<v Speaker 1>talked about was that the job numbers are solid and

0:09:47.160 --> 0:09:50.440
<v Speaker 1>there are no immediate signs that recession is in the picture,

0:09:50.760 --> 0:09:54.560
<v Speaker 1>certainly by by July, so it creates an interesting battle.

0:09:54.679 --> 0:09:56.720
<v Speaker 2>Yeah, let's get to Global News next. Here on Dave

0:09:56.760 --> 0:10:00.240
<v Speaker 2>Break Asia, Taiwan's defense minister is saying the country will

0:10:00.240 --> 0:10:04.800
<v Speaker 2>treat china drone incursions as a first strike attempt. Let's

0:10:04.800 --> 0:10:07.200
<v Speaker 2>get to ed Baxter in the Bloomberg newsroum at San Francisco.

0:10:07.320 --> 0:10:09.800
<v Speaker 3>Edty, Yeah, that's right, Doug saying the ministry does not

0:10:09.960 --> 0:10:12.319
<v Speaker 3>wish for war to break out on the Taiwan Strait,

0:10:12.400 --> 0:10:16.760
<v Speaker 3>but Chu Ku Cheng, repeating previous declarations made about aircraft

0:10:16.880 --> 0:10:20.600
<v Speaker 3>violating the twelve mile line now applying to drones. This

0:10:20.679 --> 0:10:24.280
<v Speaker 3>while China's sent increasing numbers into the broader air defense

0:10:24.320 --> 0:10:27.360
<v Speaker 3>identification zoned a state out of the more narrow region

0:10:27.720 --> 0:10:32.080
<v Speaker 3>so far. Meanwhile, the US Director of National Intelligence, Abril

0:10:32.080 --> 0:10:35.240
<v Speaker 3>Hagines is telling the Senate Armed Services Committee today that

0:10:35.280 --> 0:10:39.800
<v Speaker 3>the CCP is increasingly convinced it can only fulfill Shesha

0:10:39.800 --> 0:10:43.319
<v Speaker 3>Impeing's vision at the expense of the United States and.

0:10:43.320 --> 0:10:47.600
<v Speaker 10>Through tools of coercion, using demonstrations of strength as well

0:10:47.640 --> 0:10:51.760
<v Speaker 10>as economic and political coercion to compel governments to acquiesce

0:10:52.080 --> 0:10:55.400
<v Speaker 10>to the CCP's preferences, including the land, sea and air

0:10:55.480 --> 0:10:59.280
<v Speaker 10>claims in the region and its assertions of sovereignty over Taiwan.

0:11:00.080 --> 0:11:03.080
<v Speaker 3>She says China sees the US as a threat that

0:11:03.200 --> 0:11:06.320
<v Speaker 3>must be undercut in many ways. Haines also says China

0:11:06.360 --> 0:11:10.840
<v Speaker 3>would seek to exploit a debt default, propaganda and intelligence gathering.

0:11:11.200 --> 0:11:13.920
<v Speaker 3>China's embassy in Switzerland ISS voice what it called strong

0:11:14.000 --> 0:11:16.840
<v Speaker 3>discontent over a move in the Swiss parliament's lower house

0:11:17.160 --> 0:11:21.760
<v Speaker 3>aimed to intensify its relations with Taiwani's lawmakers. Now the

0:11:21.760 --> 0:11:25.679
<v Speaker 3>embassy says it is grossly interfered with China's internal affairs.

0:11:26.200 --> 0:11:30.160
<v Speaker 3>Ukraine's President Vladimir Zelenski has visited the International Criminal Court

0:11:30.200 --> 0:11:34.360
<v Speaker 3>at the Hague, acknowledging the recent arrest warrant for Vladimir Putin.

0:11:34.480 --> 0:11:41.440
<v Speaker 1>Of course, we all want to see different Vladimir here in.

0:11:41.360 --> 0:11:45.080
<v Speaker 3>The Hague, and the US State Department spokesman Vidant Patel

0:11:45.400 --> 0:11:47.800
<v Speaker 3>says Russia's running more and more attacks.

0:11:48.000 --> 0:11:53.480
<v Speaker 11>Since May one, Russia has launched more than one hundred

0:11:53.480 --> 0:11:57.480
<v Speaker 11>and forty five airstrikes across Ukraine. That means Russia has

0:11:57.559 --> 0:12:02.120
<v Speaker 11>launched more than one missile, one drone, or bomb every hour,

0:12:02.360 --> 0:12:06.000
<v Speaker 11>twenty four hours a day for four straight days.

0:12:05.720 --> 0:12:08.600
<v Speaker 3>And the State Department also saying it believes purported drone

0:12:08.600 --> 0:12:11.760
<v Speaker 3>attack on the Kremlin is a Russian false flag. Says

0:12:11.760 --> 0:12:16.120
<v Speaker 3>not very good one either. Former chairman of the Proud Boys,

0:12:16.360 --> 0:12:20.760
<v Speaker 3>Henry Enrique Tario, has been convicted of seditious conspiracy tie

0:12:20.760 --> 0:12:25.079
<v Speaker 3>to the January sixth insurrection and in the US and Europe,

0:12:25.120 --> 0:12:27.680
<v Speaker 3>today is the fourth of May.

0:12:28.160 --> 0:12:34.640
<v Speaker 6>Ice drink flow from the force, off the dark side, anger, aggression,

0:12:34.880 --> 0:12:36.880
<v Speaker 6>the dark side of the horse name.

0:12:42.160 --> 0:12:44.360
<v Speaker 4>May the fourth be with you.

0:12:45.480 --> 0:12:49.120
<v Speaker 3>Global News powered by more Than and Galaxy News more

0:12:49.160 --> 0:12:51.800
<v Speaker 3>than twenty seven hundred journalists and analysts and over one

0:12:51.920 --> 0:12:55.520
<v Speaker 3>hundred twenty countries. In San Francisco, I'm at Baxter in

0:12:55.600 --> 0:12:57.559
<v Speaker 3>this is Bloomberg.

0:12:57.800 --> 0:13:00.480
<v Speaker 1>I'm Brain Curtis along with Rashad Salama. We have Doug

0:13:00.520 --> 0:13:03.679
<v Speaker 1>Crisner on Markets and head Baxter there on News. And

0:13:03.760 --> 0:13:07.479
<v Speaker 1>now our guest is Christina Hooper, chief Global market strategist

0:13:07.679 --> 0:13:11.360
<v Speaker 1>at Invesco. Christina, we were just talking about the different

0:13:11.360 --> 0:13:17.040
<v Speaker 1>positioning from the FED and the swaps market. The swaps market,

0:13:17.160 --> 0:13:19.840
<v Speaker 1>the WORP function on the Bloomberg tells us it's more

0:13:19.880 --> 0:13:22.800
<v Speaker 1>than fifty two percent the likelihood that we'll get a

0:13:22.840 --> 0:13:26.080
<v Speaker 1>cut by July. Do you think that that's possible.

0:13:27.160 --> 0:13:31.320
<v Speaker 12>I think it's very unlikely, but there's always a possibility

0:13:31.400 --> 0:13:33.520
<v Speaker 12>something like that could happen. But I don't think we

0:13:33.600 --> 0:13:36.840
<v Speaker 12>would want to get to a scenario with the economy

0:13:37.280 --> 0:13:39.680
<v Speaker 12>where we would see the FED cut rates.

0:13:40.600 --> 0:13:43.160
<v Speaker 1>Hey, you know, Christina, I wanted to just phrase the

0:13:43.240 --> 0:13:45.960
<v Speaker 1>question differently. I'm kind of curious whether or not is

0:13:46.000 --> 0:13:49.200
<v Speaker 1>that like a hedging. It's not the market predicting it

0:13:49.320 --> 0:13:51.800
<v Speaker 1>or saying this is going to happen, but it's like

0:13:51.880 --> 0:13:54.920
<v Speaker 1>positioning yourself as a hedge in case it does happen.

0:13:55.520 --> 0:13:57.120
<v Speaker 12>Well, I think that's part of it. But I really

0:13:57.120 --> 0:14:03.800
<v Speaker 12>do believe markets are more are increasingly anticipating that the

0:14:03.840 --> 0:14:09.720
<v Speaker 12>FED has committed overkill and that we could see a

0:14:09.760 --> 0:14:13.920
<v Speaker 12>situation where the economy deteriorates significantly. We're also, of course,

0:14:14.320 --> 0:14:18.440
<v Speaker 12>in a disinflationary environment and that will continue. I think

0:14:18.440 --> 0:14:22.680
<v Speaker 12>that will accelerate. So but I think for the FED

0:14:22.720 --> 0:14:26.200
<v Speaker 12>to actually cut rates in July, we'd have to see

0:14:26.200 --> 0:14:30.120
<v Speaker 12>a very significant economic downturn. I hope we don't see it,

0:14:30.120 --> 0:14:31.080
<v Speaker 12>and I don't think it's.

0:14:31.040 --> 0:14:34.040
<v Speaker 13>Likely because you know, I had a guest in two

0:14:34.040 --> 0:14:37.800
<v Speaker 13>thousand and eight, and this is in July of that year,

0:14:38.040 --> 0:14:40.840
<v Speaker 13>and that's when the European Center Bank raised interest rates,

0:14:41.040 --> 0:14:45.320
<v Speaker 13>and he called it an economic war crime. I had

0:14:45.320 --> 0:14:48.040
<v Speaker 13>a guest on yesterday suggesting that tightening during a banking

0:14:48.120 --> 0:14:51.720
<v Speaker 13>crisis is an act of insanity. What are your thoughts.

0:14:52.720 --> 0:14:55.560
<v Speaker 12>Well, I won't use such extreme language, but I do

0:14:55.600 --> 0:14:59.040
<v Speaker 12>think it's foolhardy. I think it's a mistake on the

0:14:59.080 --> 0:15:01.560
<v Speaker 12>part of the Fed. It is looking in the rear

0:15:01.640 --> 0:15:05.560
<v Speaker 12>view mirror at inflation. Inflation is a problem that is

0:15:06.480 --> 0:15:09.560
<v Speaker 12>certainly has been a very significant problem, but it is

0:15:09.640 --> 0:15:14.400
<v Speaker 12>going away, and it needs to be worried about breaking things,

0:15:14.840 --> 0:15:17.760
<v Speaker 12>and it needs to be worried about just how much

0:15:17.880 --> 0:15:20.920
<v Speaker 12>damage it is doing to the US economy and quite

0:15:20.920 --> 0:15:25.880
<v Speaker 12>frankly the global economy with the aggressive hikes that it

0:15:25.920 --> 0:15:29.920
<v Speaker 12>has made over the past fourteen or so months. Okay,

0:15:30.240 --> 0:15:32.760
<v Speaker 12>and we've got, of course, it's quite synchronized, right, We've

0:15:32.760 --> 0:15:35.480
<v Speaker 12>had a lot of central banks to it. So that's

0:15:35.920 --> 0:15:40.480
<v Speaker 12>adding to the kind of a very treacherous environment we're in.

0:15:40.920 --> 0:15:42.880
<v Speaker 1>Let me take the other side of the argument, is

0:15:42.920 --> 0:15:47.440
<v Speaker 1>what we do and defend Jerome pal He said quite

0:15:47.440 --> 0:15:50.640
<v Speaker 1>clearly yesterday that with the jobs market at this level,

0:15:51.440 --> 0:15:56.120
<v Speaker 1>that he doesn't really see that many hurdles on the horizon,

0:15:56.760 --> 0:16:00.720
<v Speaker 1>and that basically the reason they would cut would be

0:16:00.760 --> 0:16:03.440
<v Speaker 1>if inflation were coming down rapidly, and he does not

0:16:03.560 --> 0:16:06.600
<v Speaker 1>see that happening. If you look at the earnings that

0:16:06.640 --> 0:16:09.120
<v Speaker 1>we just got and put that together with a strong

0:16:09.200 --> 0:16:13.000
<v Speaker 1>jobs market, can you really see recession coming anytime soon?

0:16:14.040 --> 0:16:16.880
<v Speaker 12>Well, I certainly hope not. That is not my base case.

0:16:17.400 --> 0:16:20.520
<v Speaker 12>But we don't know what the lagged effects are of

0:16:20.600 --> 0:16:25.440
<v Speaker 12>such aggressive monetary policy tightening. Let's face it, there tends

0:16:25.480 --> 0:16:28.280
<v Speaker 12>to be a twelve to eighteen month lag, which means

0:16:28.320 --> 0:16:31.160
<v Speaker 12>we've only just begun to see the impact of rate

0:16:31.240 --> 0:16:34.600
<v Speaker 12>hikes on the economy, and so it could be quite

0:16:34.640 --> 0:16:37.360
<v Speaker 12>significant and there could be a lot of damage done.

0:16:37.440 --> 0:16:41.080
<v Speaker 12>But I do think he makes certainly a coherent argument

0:16:41.560 --> 0:16:44.640
<v Speaker 12>that the economy is in good shape right now, but

0:16:44.960 --> 0:16:48.720
<v Speaker 12>employment tends to be a lagging indicator. Let's hope it

0:16:48.800 --> 0:16:51.320
<v Speaker 12>holds up. Let's hope we don't see much in the

0:16:51.320 --> 0:16:55.240
<v Speaker 12>way of an increase in unemployment. Let's hope labor force

0:16:55.320 --> 0:16:59.360
<v Speaker 12>participation continues to improve. I certainly think there is a

0:16:59.400 --> 0:17:02.760
<v Speaker 12>scenario where we see I wouldn't say a soft landing,

0:17:02.840 --> 0:17:05.679
<v Speaker 12>but a bumpy landing, not a hard landing.

0:17:06.560 --> 0:17:07.680
<v Speaker 13>Tell me, what does the fixed thing came?

0:17:07.720 --> 0:17:07.880
<v Speaker 5>Muck?

0:17:07.960 --> 0:17:10.600
<v Speaker 13>It's a sovereign debt anyway. Treasury is actually at the

0:17:10.640 --> 0:17:12.399
<v Speaker 13>moment pricing in well.

0:17:12.440 --> 0:17:15.719
<v Speaker 12>I think their expectation is an economic slowdown, and that

0:17:15.880 --> 0:17:18.440
<v Speaker 12>is certainly in the cards given the kind of aggressive

0:17:18.520 --> 0:17:22.439
<v Speaker 12>tightening we've seen, but economic disaster definitely not.

0:17:24.160 --> 0:17:26.760
<v Speaker 1>Let's talk a little bit more about the banking crisis.

0:17:27.119 --> 0:17:31.440
<v Speaker 1>Doug raised a point several times on the program, not

0:17:31.480 --> 0:17:34.400
<v Speaker 1>really making the point, but raising the question should there

0:17:34.440 --> 0:17:36.520
<v Speaker 1>be a ban on short selling, because it seems like

0:17:37.080 --> 0:17:40.359
<v Speaker 1>a lot of banks are being targeted now that otherwise

0:17:40.800 --> 0:17:44.200
<v Speaker 1>look like solid banks, but their stock price is plummeting,

0:17:44.880 --> 0:17:48.639
<v Speaker 1>and it's an easy way for speculators in the market

0:17:48.680 --> 0:17:52.360
<v Speaker 1>to take advantage of fear. Do you see that as

0:17:52.480 --> 0:17:56.840
<v Speaker 1>reasonable as something that might be considered, well, I just.

0:17:56.760 --> 0:17:59.920
<v Speaker 12>Think there are other options that are less drastic.

0:18:00.280 --> 0:18:00.440
<v Speaker 8>Right.

0:18:00.520 --> 0:18:04.000
<v Speaker 12>We all want to believe in free markets. So the

0:18:04.040 --> 0:18:07.160
<v Speaker 12>better course, in my opinion, would be for the Fed

0:18:07.240 --> 0:18:09.160
<v Speaker 12>to come out, for the US Treasury to come out

0:18:09.240 --> 0:18:14.720
<v Speaker 12>and guarantee you know, the FDIC insurance would be more

0:18:14.760 --> 0:18:20.800
<v Speaker 12>broadly applied, perhaps an unlimited amount for deposits at least,

0:18:21.040 --> 0:18:24.480
<v Speaker 12>you know, in the very short term, because that seems

0:18:24.520 --> 0:18:27.560
<v Speaker 12>to be the catalyst for all that we're seeing. I

0:18:27.560 --> 0:18:31.520
<v Speaker 12>think there's this expectation that some of these banks are

0:18:31.640 --> 0:18:37.159
<v Speaker 12>very vulnerable because they don't have that insurance covering you know,

0:18:37.200 --> 0:18:40.760
<v Speaker 12>a significant portion of their deposits that could easily be remedied,

0:18:41.000 --> 0:18:44.360
<v Speaker 12>and that really, I think would end the short selling frenzy.

0:18:44.920 --> 0:18:47.520
<v Speaker 1>Okay, thirty seconds. We always like to talk about the

0:18:47.520 --> 0:18:50.400
<v Speaker 1>big macro conditions, but we want to know about actions too.

0:18:50.720 --> 0:18:52.920
<v Speaker 1>What would you buy here? What's your single best pick

0:18:52.920 --> 0:18:53.399
<v Speaker 1>of the moment.

0:18:54.000 --> 0:18:58.040
<v Speaker 12>I actually think it's technology, and my rationale is that

0:18:58.119 --> 0:19:02.240
<v Speaker 12>we're actually seeing rates come down. That's likely to benefit

0:19:02.280 --> 0:19:05.520
<v Speaker 12>tech more than other areas. But more importantly, the economy

0:19:05.560 --> 0:19:08.000
<v Speaker 12>is clearly in a slowdown mode and that's a time

0:19:08.080 --> 0:19:11.640
<v Speaker 12>to be in more defensive sectors as well as secular

0:19:11.720 --> 0:19:14.439
<v Speaker 12>growth areas of the economy, and technology is front and

0:19:14.520 --> 0:19:15.080
<v Speaker 12>center for that.

0:19:16.440 --> 0:19:19.320
<v Speaker 1>This is Bloomberg Daybreak Asia, your morning brief on the

0:19:19.359 --> 0:19:23.000
<v Speaker 1>story's making news from Hong Kong to Singapore and Wall Street.

0:19:23.040 --> 0:19:27.040
<v Speaker 2>Look for us on your podcast feed every day, on Apple, Spotify,

0:19:27.280 --> 0:19:29.280
<v Speaker 2>and anywhere else you get your podcasts.

0:19:29.280 --> 0:19:31.879
<v Speaker 1>You can also listen live each day on Bloomberg eleven

0:19:31.920 --> 0:19:34.320
<v Speaker 1>three to zero in New York, Bloomberg ninety nine to

0:19:34.320 --> 0:19:37.520
<v Speaker 1>one in Washington, Bloomberg one oh six to one in Boston,

0:19:37.840 --> 0:19:40.359
<v Speaker 1>and Bloomberg nine sixty in San Francisco.

0:19:40.640 --> 0:19:43.560
<v Speaker 2>Our flagship New York station is also available on your

0:19:43.600 --> 0:19:48.600
<v Speaker 2>Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.

0:19:48.400 --> 0:19:51.520
<v Speaker 1>Plus listen coast to coast on the Bloomberg Business app,

0:19:51.840 --> 0:19:56.040
<v Speaker 1>serious XM Channel one nineteen, the iHeartRadio app, and on

0:19:56.080 --> 0:19:59.160
<v Speaker 1>Bloomberg dot Com. I'm Brian Curtis.

0:19:58.920 --> 0:20:01.359
<v Speaker 2>And I'm Doug Chrisner. Join us again tomorrow for all

0:20:01.400 --> 0:20:03.840
<v Speaker 2>the news you need to start your day right here

0:20:03.960 --> 0:20:07.320
<v Speaker 2>on Bloomberg Daybreak Asia