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Speaker 1: This is Bloomberg day Break Asia for this Tuesday February

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Speaker 1: twenty eighth in Hong Kong, Monday February twenty seventh in

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Speaker 1: New York and coming up today. Treasury Secretary Yellen is

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Speaker 1: confident the FED will win its battle with inflation. Canada

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Speaker 1: is the latest country to enforce TikTok restrictions after the

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Speaker 1: Bell Zoom sales meet estimates as the company copes with

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Speaker 1: customer churn. UK and EU headed a post Brexit economic

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Speaker 1: deal regard in Northern Ireland. More US pressure on China

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Speaker 1: regarding Russia. Hong Kong bask mandate decision may come as

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Speaker 1: early as today. I'm at Baxter with Global News. That's

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Speaker 1: all straight ahead on Bloomberg Daybreak Asia, the business news

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Speaker 1: you need to start your day in just one fifteen

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Speaker 1: minute podcast available on Appo, Spotify, the Bloomberg Business App,

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Speaker 1: and everywhere you get your podcasts. Good morning, I'm de

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Speaker 1: Prisoner and I'm Brian Curtis. Here the story we're following today.

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Speaker 1: Let's take a closer look at the comments here from

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Speaker 1: Janet Yellen. The Treasury Secretary is confident in the Fed's

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Speaker 1: ability to bring down US inflation. Yellen spoke with CNN

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Speaker 1: from Kiev, where she made an unexpected appearance to reinforce

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Speaker 1: economic support from the Biden administration. I personally believe that

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Speaker 1: it's possible to bring inflation down while maintaining we have

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Speaker 1: a very strong labor market. I think we can maintain it.

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Speaker 1: I would say, so far, so good. Obviously, there were risks,

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Speaker 1: and the global situation we face is very uncertain. There

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Speaker 1: can be shocks from it. But look, inflation still is

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Speaker 1: too high, but generally, if you look over the last year,

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Speaker 1: inflation has been coming down. Her remarks came days after

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Speaker 1: an unexpectedly strong reading on the Personal consumption Expenditures price index,

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Speaker 1: the Fed's preferred measure of inflation, well after the bell

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Speaker 1: Zoom Video Communications gave an upbeat profit forecast for the

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Speaker 1: current period. We have more from Bloomberg's Charlie Pellet. It

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Speaker 1: is a sign that customers are sticking with the video

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Speaker 1: conferencing software even as they return to pre pandemic habits.

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Speaker 1: The outlook suggest Zoom is finding its footing again after

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Speaker 1: a dramatic boom and bus cycle during the pandemic. The

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Speaker 1: SHARE's sword in twenty twenty, when pandemic lockdowns sent office

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Speaker 1: workers and consumers clamoring for its platform, but zoom Stock

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Speaker 1: lost most of its value in twenty twenty one and

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Speaker 1: twenty twenty two. In New York, Charlie Pellet Bloomberg Daybreak Asia.

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Speaker 1: Yet another country has joined the list of those banning

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Speaker 1: TikTok in some capacity. We get the story with Bloomberg's

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Speaker 1: and Kates. Canada will bar civil servants from using TikTok

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Speaker 1: on government issue devices starting Tuesday. The move follows similar

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Speaker 1: bands made in the last year by the EU and

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Speaker 1: the US. TikTok is owned by China's by Dance. Canada's

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Speaker 1: chief information officers cited an unacceptable level of risk to

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Speaker 1: privacy and security. Prime Minister Justin Trudeau said the curbs

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Speaker 1: on civil servant devices are a first step in keeping

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Speaker 1: Canadian safe. Even so, he didn't commit to other actions,

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Speaker 1: such as banning TikTok from public access. Last week, for privacy,

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Speaker 1: regulators in Canada launched an inquiry citing concerns of data

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Speaker 1: collection and compliance with laws around dealing with younger users

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Speaker 1: and Kate's Bloomberg day Break Asia. Meantime, here in the US,

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Speaker 1: a top Republican lawmaker says China is using TikTok to

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Speaker 1: expand its influence around the world. We have more from

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Speaker 1: Bloomberg's David Ingliss. Republican Mike Gallagher argues the app should

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Speaker 1: be banned completely or sold off. Gallagher is now chairman

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Speaker 1: of a new House committee scrutinizing China. He says it's

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Speaker 1: urgent that the US and Chinese economies be decoupled. The

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Speaker 1: bipartisan House committee will also review other aspects of US

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Speaker 1: competition with China, and that includes export controls and outbound investment.

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Speaker 1: The committee is set to hold its first hearing on Tuesday,

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Speaker 1: seven pm Washington Time in Hong Kong. I'm David Ingless

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Speaker 1: Bloombrig Daybreak Asia. The Adani Group is said to have

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Speaker 1: told investors at a road show it has plenty of

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Speaker 1: cash to honor its commitments over the coming years. We

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Speaker 1: get the story from Bloomberg's Annabel Jewelers. Investors at the

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Speaker 1: company's Asia roadshow told Bloomberg the Adani executives are confident

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Speaker 1: about having enough cash on hand. The executives also said

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Speaker 1: the firm has an eight hundred million dollar credit facility.

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Speaker 1: Adani has scheduled a week of meetings as part of

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Speaker 1: its effort to reinsure investors after a negative short seller report.

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Speaker 1: Even with the reassurances, most Adani stocks fell in the

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Speaker 1: latest session. Separately, JB. Morgan has wiped its ESG portfolios

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Speaker 1: clean if their exposure to the Adani Empire. The road

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Speaker 1: show continues today in Hong Kong. In Hong Kong, I'm

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Speaker 1: Annabel Rulers, Bloomberg Daybreak Asia, I'm Brian Curtis along with

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Speaker 1: Doug Christner, and we are looking at conditions in these markets.

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Speaker 1: It seems like still a negative tint, but investors are

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Speaker 1: sort of in this position of respecting the price action

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Speaker 1: versus don't fight the Fed. Yeah. And this week we've

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Speaker 1: got a couple of key data points. Brian the ism

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Speaker 1: Manufacturing index on Wednesday and then the services index on Friday.

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Speaker 1: Bloomberg Economics is convinced we're going to see continued weakness

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Speaker 1: and new orders particularly troublesome because these im figures are

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Speaker 1: viewed as being a leading signal for demand. So clearly

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Speaker 1: the economy is softening in terms of the overall growth.

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Speaker 1: The question remains will inflation be sticky? And we had

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Speaker 1: the US pending home sales rising by the most sense

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Speaker 1: tune of twenty twenty. The FED might not like to

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Speaker 1: see that. We also had doubt transports jumping one point

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Speaker 1: three percent today. Now a lot of that was Union

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Speaker 1: Pacific he was up ten percent, and that was mostly

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Speaker 1: a story about an activist investor and switching out the CEO.

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Speaker 1: But it is interesting that the transports performed so well.

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Speaker 1: Also that the socks was up, and those are economically sensitive.

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Speaker 1: So there are a lot across currencyre that investors are

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Speaker 1: dealing with. Yeah, and remember in the Friday session, in

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Speaker 1: the face of that heavy selling, the S and P

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Speaker 1: five hundred was able to hold that two hundred day

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Speaker 1: moving average. For many market technicians, they're convinced that maybe

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Speaker 1: in the near term, at the least, the bottom is in. Yeah,

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Speaker 1: it may be that investors are now suggesting that inflation

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Speaker 1: has peaked. We know everything about what the FIT is

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Speaker 1: planning to do and we're comfortable with it. Could be wrong,

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Speaker 1: could be complacent, but it is an interesting position. It's

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Speaker 1: time for Global news. The UK and the EU have

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Speaker 1: reached a new deal on Northern Ireland's trading arrangements. Ed

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Speaker 1: Baxter has Global News in the nine sixty News from

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Speaker 1: at San Francisco ed, Yeah, that's right, and it is

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Speaker 1: being hallmarked Brian. It is called the windsor frame mark.

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Speaker 1: Is the beginning of a new chapter in our relationship.

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Speaker 1: Our Prime Minister Rischus schunichla are saying it opens a

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Speaker 1: door for goods to move from Britain and Europe to

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Speaker 1: Northern Ireland. This means that if food is available on

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Speaker 1: supermarket shelves in Great Britain and then it will be

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Speaker 1: available on supermarket shelves in Northern Ireland. And unlike the protocol,

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Speaker 1: today's agreement means people sending parcels to friends or family

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Speaker 1: while doing their shopping online will have to complete no

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Speaker 1: customs paperwork and drugs being made more accessible going both

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Speaker 1: directions and soon Act says it sets a clear system

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Speaker 1: if Northern Ireland feels EU controls are becoming too cumbersome.

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Speaker 1: Sonac calls it a decisive moment us day to day

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Speaker 1: trying to put more pressure on China to not help

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Speaker 1: Russia in any way in its war effort. National Security

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Speaker 1: Council Communications Director John Kirby today on Bloomberg says it

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Speaker 1: is well, it's just very simple and they do have

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Speaker 1: a choice to make and we wanted to make the

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Speaker 1: right choice. We'd like to see him join the rest

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Speaker 1: of the international community in condemning this invasion, in enforcing

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Speaker 1: sanctions and doing nothing to make it easier for mister

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Speaker 1: Putin to continue to conduct this war. Kirby says it's

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Speaker 1: not in their interest to help Russia. Meanwhile, on the

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Speaker 1: report regarding the US Energy Department, saying it is more

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Speaker 1: than likely that COVID started in a China biologic lab,

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Speaker 1: President weaves, it's really important that we continue that work

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Speaker 1: and that we find out as best we can how

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Speaker 1: it started so that we can better prevent a future pandemic. Yeah,

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Speaker 1: Kirby is also saying today no definitive answer. The White

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Speaker 1: House is saying no consensus. Meanwhile, Kremlin spokesman Dmitri Peskoff

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Speaker 1: is saying that China's proposal on Ukraine deserves great attention.

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Speaker 1: Bloomberg's sources are saying that Hong Kong's official announcement regarding

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Speaker 1: ending mask mandates may come as early as today. Multiple

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Speaker 1: media reports have said that early March, indoor and outdoor

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Speaker 1: mask requirements may be removed. At the same time, Hong

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Speaker 1: Kong's official response has been that the Health Department is

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Speaker 1: examining all the data, so maybe as early as today,

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Speaker 1: a lot of movement. The Republican Party's contest for presidential nomination,

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Speaker 1: Rhonda Santis, has a book signing coming out tomorrow. Bloomberg's

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Speaker 1: Rick Davis says, it really now has the wheels and

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Speaker 1: motions just a few miles away from our lago. I

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Speaker 1: think Ron De Santis taunting Donald Trump a little bit

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Speaker 1: with a bunch of major downers from all over the country,

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Speaker 1: many of whom used to be Trump downers. But Bloomberg's

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Speaker 1: Genie Sanzano reminds us the reality is, if you look

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Speaker 1: at the polls, Donald Trump remains very much in the lead,

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Speaker 1: and depending on which poll you think about, or you

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Speaker 1: look at Ron De Santis either edging him out or

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Speaker 1: very close second, and everyone else from you know, Mike Pompeo,

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Speaker 1: Nicky Hailey, you know former Vice President Mike Pence, all

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Speaker 1: sort of far, far distant. Let the games begin. Global

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Speaker 1: News powered by more than twenty seven hundred journalists and

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Speaker 1: analysts and over one hundred twenty countries. Ian San Francisco,

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Speaker 1: I'm at Baxter and this is Bloomberg. This is Bloomberg

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Speaker 1: Daybreak Asia. I'm Brian Curtis alone with Rishad so I'm

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Speaker 1: at and our guest is Eva Ados, COO and chief

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Speaker 1: investment strategist at er shares Ava. Thanks very much for

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Speaker 1: taking out the time to be with us. So you

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Speaker 1: probably heard Doug and I just discussing there about how

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Speaker 1: invest just have had some time now to discount FED

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Speaker 1: policy and sticky inflation. We've seen a pullback in February,

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Speaker 1: but it may not be to the extent that some

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Speaker 1: of the bears would like. Why well, we need to

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Speaker 1: remember that the yield curve is still inverted, but it

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Speaker 1: experienced as a recent shift up. The rise was significant

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Speaker 1: and now implies choppy waters are ahead. But rising rates

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Speaker 1: are rarely helpful to equities, and we have noticed that

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Speaker 1: in the last year that log duration assets are not

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Speaker 1: doing that well and taken high growth stocks in particular

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Speaker 1: are most vulnerable to rising interest rates. But as they

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Speaker 1: pre looked to recent events, rates beat in the third

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Speaker 1: week of October and then started to drop at the

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Speaker 1: year end until early February. So it's not surprisingly that

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Speaker 1: rate declines corresponded with a strong market rally, coinciding with

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Speaker 1: a shrinking two year and ten year yield spread differential.

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Speaker 1: So what you know, the two and ten year treasury

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Speaker 1: yield spreads. Why then in February from fourty seven to

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Speaker 1: eighty seven bibs. And so we're expecting this you know,

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Speaker 1: hawkishness to continue and that CPI will continue to increase,

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Speaker 1: and I think investors are getting more and more concerned

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Speaker 1: with what we saw in recent evidence when the last

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Speaker 1: CPI reading. Okay, if you know, you look at the

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Speaker 1: data and you see how strong the US economy is,

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Speaker 1: and you know, many people are talking about their not

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Speaker 1: not there being a soft or hard landing, but no landing.

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Speaker 1: But you're suggesting that's simply not going to happen. Why

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Speaker 1: so so and no landing, to ask where the economy

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Speaker 1: will continue to expand is just not a likely scenario anymore.

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Speaker 1: So the recent CPI data that suggests inflation is rate,

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Speaker 1: you know, increasingly rising. And then you have the rising

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Speaker 1: consumer spanning too. In fact, consumer spending for products increased

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Speaker 1: by two point eight percent, a consumer spending for services

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Speaker 1: and by one point three percent. So these news all

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Speaker 1: have given the Fed a green light to increase rates

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Speaker 1: by more than we previously expect it. So it's clear

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Speaker 1: that we're going to see at least two or possibly

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Speaker 1: even three twenty five basis point rate heights, or perhaps

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Speaker 1: a fifty basis point and another twenty five And so this,

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Speaker 1: I think, you know, has shaken the market that the

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Speaker 1: Fed is going to take a tough stand and inflation,

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Speaker 1: which means that growth will come further down and will

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Speaker 1: have more layoffs potentially, and so this is not a

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Speaker 1: no landing scenario. We've had a lot of interest in

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Speaker 1: the bond market here in the past month or so.

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Speaker 1: It seems like everybody's talking about how exciting it is

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Speaker 1: to get around five percent for a short term treasury debt.

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Speaker 1: But there's some rollover risk there, right, How much is

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Speaker 1: that forcing investors to make some tough decisions? So the

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Speaker 1: yield curve, the news with a yield curve is that

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Speaker 1: the shift, the twenty five basis point shift, was across

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Speaker 1: the whole yield curve, both in short term and the

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Speaker 1: long term, and so we did not see a twist,

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Speaker 1: which is the good news here. So I think we

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Speaker 1: now have to digest that we have another twenty five

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Speaker 1: basis on rate height and that the Federate will reach

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Speaker 1: five point two five or five point five even percent.

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Speaker 1: But once you digest that and once we incorporate that

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Speaker 1: into the current valuations, and I think a lot of

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Speaker 1: this work has already been done in the last few days.

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Speaker 1: I think once that's done, we'll see the markets come

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Speaker 1: back again strongly. So in what particular industry groups are

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Speaker 1: you looking in particular? So what we're doing, we're investing

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Speaker 1: in entrepreneurial companies and entrepreneurs by when traditionally are the

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Speaker 1: ones who can best navigate complex economies such as the

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Speaker 1: one we live in. And so we need to stay

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Speaker 1: focused on relative valuation and cash flow generation. And I

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Speaker 1: think the market is now rewarding companies that deliver immediately

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Speaker 1: rather that and future promises. So we you know, we're

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Speaker 1: moving on with looking at what are the companies delivering now.

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Speaker 1: And we also have larger than usual amounts of cash

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Speaker 1: right now, which we are about to redeploy opportunistically as

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Speaker 1: we see that the markets have already digested the news

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Speaker 1: that we got for inflation. So our flagship ATF is

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Speaker 1: now seventeen percent up year to date just because it's

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Speaker 1: heavily invested in growth. And we still inflation come down

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Speaker 1: earlier this year, which helped our growth strategy. Yeah, that's

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Speaker 1: an interesting flip from the action last year. Let's start

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Speaker 1: just briefly about China. Is there now a kind of

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Speaker 1: permanent equity discount for China stocks given what we've seen

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Speaker 1: from policy of late, a discount similar to what we

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Speaker 1: have with Korean shares. So the global tensions have created

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Speaker 1: a risk discount making I think traders traders now wary

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Speaker 1: of the content bring attractiveness of the investment in China.

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Speaker 1: And last time we spoke, I was bullish on China actually,

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Speaker 1: but now given the China US relations that are very tanged,

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Speaker 1: the balloon, the conflict with Russia, upray and the weapons,

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Speaker 1: the purchase of Russian oil, tensions with Taiwan, all these

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Speaker 1: political tensions are very high and perhaps among the highest

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Speaker 1: they have been in a long time. So if you

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Speaker 1: look at the agent side, the hang Sting index that

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Speaker 1: has rallied by fifty percent in the last three months,

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Speaker 1: that's a significant appreciation in a very short period of time.

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Speaker 1: So I think it's not a bad time to take

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Speaker 1: profits off. This is Bloomberg Gaybreak Asia, your morning brief

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