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Speaker 1: Good morning. I'm Doug Chrisner and I'm Brian Curtiz. Here

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Speaker 1: are the stories we're following today. UBS is planning to

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Speaker 1: cut more than half of Credit Swee's workforce starting next month.

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Speaker 1: It's a result of UBS's emergency takeover of the Swiss Bank.

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Speaker 1: We hear bankers, traders and support staff in Swis's investment

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Speaker 1: bank are expected to bear the brunt of the cuts,

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Speaker 1: with almost all activities at risk, and this will impact

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Speaker 1: workers in London, in New York and also in parts

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Speaker 1: of Asia. More from Bloomberg, shan Alibossak.

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Speaker 2: Credits Wee had a massive investment bank with a risk

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Speaker 2: tolerance that was not quite the same at UBS. So

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Speaker 2: it'll be interesting to see what the new combined entity

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Speaker 2: seeks to do in the market. But it's very sensible

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Speaker 2: that both in a downturn in the market's relative to

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Speaker 2: a very big boom cycle, as well as a ton

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Speaker 2: of overlap, and then you add in any attrition that

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Speaker 2: you also might get on the heels of any potential

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Speaker 2: overlap that there is when it comes to creditsuits and

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Speaker 2: UBS staff. It's certainly a lot of jobs about to

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Speaker 2: hit the market.

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Speaker 1: We're told the staffers have been told to expect three

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Speaker 1: rounds of cuts this year. The first is expected by

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Speaker 1: the end of July, and then two more rounds are

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Speaker 1: tentatively planned for September and October. UBS has said it

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Speaker 1: will save about six billion dollars in staff costs in

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Speaker 1: the coming years.

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Speaker 3: State side regulators are overhauling rules on reviewing mergers. This

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Speaker 3: is happening for the first time in forty five years.

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Speaker 3: We have more on that from Bloomberg's and Kate's.

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Speaker 4: The revamp of the Hart Scott Rodino process could add

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Speaker 4: two to three months to the timetable for corporate deals.

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Speaker 4: The proposed changes by the Federal Trade Commission and the

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Speaker 4: Justice Department would require details about any acquisitions during the

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Speaker 4: previous ten years, plus information about company officers, directors, and

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Speaker 4: board observers. In addition to workforce data, the FTC estimates,

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Speaker 4: and new regulations laid out on the one hundred and

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Speaker 4: twenty six page document would add more than one hundred

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Speaker 4: hours to the time it takes firms to prepare their

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Speaker 4: merger filings. In Washington and Kate's Bloomberg Day Break Asia.

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Speaker 1: Well as Doug mentioned earlier, a flurry of economic data

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Speaker 1: showed surprising strength in several corners of the US economy,

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Speaker 1: and this may keep trader fears of a recession at bay.

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Speaker 1: We get more from Bloomberg's Ira Jersey.

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Speaker 5: The data that we've seen clearly suggests that the Federal

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Speaker 5: Reserve might be able to hike again, certainly one more time.

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Speaker 5: You know whether or not they do two. I think

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Speaker 5: is going to be very dependent on the path of

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Speaker 5: the economy for the third quarter. But yeah, the data

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Speaker 5: is good. I mean, durable goods, We're strong. Confidence was

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Speaker 5: good housing sales for May.

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Speaker 6: We're pretty much.

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Speaker 5: You still see overall an economy that hasn't yet rolled over.

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Speaker 1: The surprising strength of the economic data comes on the

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Speaker 1: heels of Fedhair Jpal's recent testimony on Capitol Hill. He

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Speaker 1: emphasized that the FED is likely to resume tightening monetary

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Speaker 1: policy after holding steady at this past month's meeting. The

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Speaker 1: meeting earlier this month, Pal may reinforce that Hawk's message

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Speaker 1: on Wednesday, as he and other central bankers convened at

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Speaker 1: an ECB forum in Europe.

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Speaker 3: Well, speaking of the ECB, we had the President of

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Speaker 3: the European Central Bank putting the markets on notice today,

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Speaker 3: Christine Leguard said the ECB probably won't be able to

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Speaker 3: declare an end to its historic cycle of interest rate

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Speaker 3: hikes anytime soon, and she told an ECB forum today

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Speaker 3: that a more persistent policy is needed to tackle inflation.

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Speaker 7: It is unlikely that in the near future the Central

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Speaker 7: Bank will be able to state with full confidence that

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Speaker 7: the peak rates have indeed been reached. Bearing a material

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Speaker 7: change to our expectations for inflation, we will continue to

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Speaker 7: increase rates.

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Speaker 3: In July now. Leguard went on to say that interest

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Speaker 3: rates will stay at elevated levels for as long and necessary,

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Speaker 3: and this will allow more time for the full impact

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Speaker 3: of those past actions to materialize. Separately, today a member

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Speaker 3: of the Governing Council, this ISS Boss Jion Vassley, was

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Speaker 3: saying that hikes will need to continue if inflation proves

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Speaker 3: to be more stubborn than is currently expected.

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Speaker 1: Right and those hawkish comments, particularly from the Guard definitely

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Speaker 1: let his strengthen.

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Speaker 5: The year.

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Speaker 1: The euro training at a dollar nine sixty two, the

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Speaker 1: dollar generally weaker, the yen was weaker as well. Dhli

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Speaker 1: Yen here one forty four four.

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Speaker 6: Well.

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Speaker 1: Hungary has warned that d risking from China would be

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Speaker 1: brutal suicide for European countries. Bloomberg's Joan Wong has the

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Speaker 1: story from Hong Kong.

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Speaker 8: Hungary is Foreign Minister Peter Siartle said de risking supply

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Speaker 8: chains from China would be devastating. He spoke at a

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Speaker 8: World Economic Forum in Tianjin, China earlier. Chinese Premier Li

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Speaker 8: Changs that governments attempting to politicize our economies would only

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Speaker 8: cause confrontation. Lee called for countries to work together to

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Speaker 8: keep global industrial and supply chain stable. Hungary is one

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Speaker 8: of Europ's biggest China supporters. It has become a key

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Speaker 8: site for Chinese investment. In the past year alone, China

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Speaker 8: invested in an eight billion dollar battery factory in Hungary,

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Speaker 8: is the largest single investment in the country ever in

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Speaker 8: Hong Kong. I'm Joanne Wang, Bloomberg Day Brigaesia.

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Speaker 1: I'm Brian Curtis along with Doug Chrisner. Rish will join

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Speaker 1: us in a few moments, So we have like forever

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Speaker 1: to talk about these comments from the Chinese premier and

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Speaker 1: the response by Hungary, and the response that we might

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Speaker 1: see from other countries. Doug, I mean four hours is

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Speaker 1: almost forever in terms of broadcasting. But I wanted to

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Speaker 1: start off with the economic data that you featured and

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Speaker 1: the data check and that we mentioned as well.

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Speaker 9: And you have.

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Speaker 1: To think about this. It's a little bit of a

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Speaker 1: flip of what we thought might happen. But in some ways,

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Speaker 1: the long period of low interest rates actually allowed people

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Speaker 1: to turn out their loans, so that a hike in

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Speaker 1: interest rates, a rise in interest rates just didn't eventually

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Speaker 1: have the negative impact that we were so sure it

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Speaker 1: would have. We thought people will have taken so many

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Speaker 1: loans at such low interest rates, and they'll be overwhelmed

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Speaker 1: by the hike in interest rates. But it turns out

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Speaker 1: that people actually are pretty well positioned and they're not

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Speaker 1: responding the way that the Fed and others thought.

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Speaker 3: Yeah, it's kind of interesting, isn't it, Particularly when you

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Speaker 3: look at the configuration of the yield curve is inverted

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Speaker 3: as it is. It's been telegraphing recession for such a

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Speaker 3: long time, it seems like, and it's really not played

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Speaker 3: out yet. And another thing that I think is very

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Speaker 3: interesting there's a model from Bloomberg Intelligence. It's known as

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Speaker 3: the Market Regime Index. This is signaling brighter times ahead

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Speaker 3: for the equity market. It basically clusters periods into three phases,

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Speaker 3: one of accelerated growth, another from moderate growth, and another

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Speaker 3: a third for declining growth. So we've flipped out the

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Speaker 3: declining phase after fifteen straight months and we've moved into

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Speaker 3: moderate growth. So I think maybe the term soft landing applies.

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Speaker 3: Who knows.

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Speaker 1: Yeah, Russell two thousand and one and a half percent today,

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Speaker 1: So it wasn't a day where it was only tech.

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Speaker 1: Tech did have a lot of muscle with the Nasdaq

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Speaker 1: one hundred almost two percent and the Nasdaq Composite of

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Speaker 1: one point seven percent. But then when you see a

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Speaker 1: game like that, one and a half percent for small caps.

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Speaker 9: Pretty good.

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Speaker 1: I have to say this, you know, looking for interesting

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Speaker 1: lines every day on the Republican campaign trail, the line

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Speaker 1: of the day was from Miami Mayor Francis Suarez, when

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Speaker 1: asked about wigers in Shinjong, he said, what's.

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Speaker 3: A wiger Mmm.

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Speaker 1: He later tweeted that he did not recognize the pronunciation

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Speaker 1: used by Hugh Hewitt, who had been the person who'd

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Speaker 1: asked him about it. But it's a little embarrassing and

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Speaker 1: it's a little telling that still a lot of candidates

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Speaker 1: are not so familiar with China while still being very

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Speaker 1: critical of it.

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Speaker 3: It's one of the points that companies have made when

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Speaker 3: they talk about decoupling. I'm going to use that term right,

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Speaker 3: human rights violations. That certainly is an important issue for

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Speaker 3: Western companies, and it makes sense to kind of focus

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Speaker 3: on story in chi'uan Chong when you're talking about those developments.

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Speaker 1: Yeah, and it's funny that we got those comments from

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Speaker 1: Lee Chiang saying, you know, warning countries as well as

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Speaker 1: companies that de risking from China, you know, could be disaster.

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Speaker 1: And actually the Hungarian foreign minister weighed in sort of

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Speaker 1: in agreement with China and up. I imagine that over

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Speaker 1: the next couples will be getting response from a lot

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Speaker 1: of countries on these types of comments. Deglobalization, de risking bad.

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Speaker 3: For the world.

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Speaker 1: China says, stay with us. Now, it's time for global news.

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Speaker 6: Right.

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Speaker 1: The time is about eleven minutes past the hour. You

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Speaker 1: have Jenny Progosion arrives in Belarus and we get the

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Speaker 1: latest on this. The reaction from all sides from Dan

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Speaker 1: Schwarzman in New York, Dan.

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Speaker 10: Yeah, Brian. According to Belarusian President Alexander Lukashenko, Wagner Mercenary

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Speaker 10: Group leader Pregosian has flown into Belarus. Lukashenko negotiating a

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Speaker 10: deal late on Saturday for Progosion to end his armed

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Speaker 10: uprising and to remove his troops from Russia while exiling

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Speaker 10: in Belarus. Russia's Federal Security Service saying earlier today that

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Speaker 10: it had closed a criminal investigation into the Wagner Group

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Speaker 10: as part of Lukashenko's deal. The Autocratic Rule of Belarus

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Speaker 10: says he told Pregosan by phone that if he didn't

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Speaker 10: stop his march towards Moscow, he will get crushed like

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Speaker 10: a bug. Lukashank also saying he urged Vladimir Putin to

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Speaker 10: not kill Pregosian. The Belarussian ruler also offering Wagner fighters

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Speaker 10: an abandoned military base to use, but said the group

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Speaker 10: could not set up recruitment offices in his country. US

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Speaker 10: State Department spokesperson Matthew Miller on Progosian exiling in Belarus.

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Speaker 11: Everywhere that Wagner goes, death and destruction follows in their wake.

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Speaker 11: He has been a destabilizing agent, and so the decision

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Speaker 11: by President Lukashenka to welcome Prodosion to Belarus I think

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Speaker 11: is another example of him choosing the interests of Vladimir

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Speaker 11: Putin and choosing the interests of the Kremlin over the

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Speaker 11: interests of the Belarusian people.

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Speaker 10: In a show of force, the US is planning to

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Speaker 10: send the Navy's largest nuclear submarine to South Korea for

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Speaker 10: the first time in almost four decades. The Ohio class

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Speaker 10: sub is capable of staying submerged indefinitely and can fire

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Speaker 10: nuclear warheads at targets thousands of miles away. The visit

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Speaker 10: will be the first visible sign of an accord struck

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Speaker 10: in April between the US and the South, where the

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Speaker 10: South agreed to not develop their own nuclear weapons while

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Speaker 10: the US US we'll give them bigger say in a

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Speaker 10: potential retaliatory strike on the North in the event of

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Speaker 10: a nuclear attack. Former President Trump was in New Hampshire

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Speaker 10: speaking to the New Hampshire Federation for Republican Women's Lavender

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Speaker 10: Luncheon in Concord. Trump struggling a defiant ton as he

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Speaker 10: talked about the Justice Department and President Biden.

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Speaker 12: The most important step in truly draining the swamp is

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Speaker 12: to end the weaponization of the Justice Department and the

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Speaker 12: abuse of law enforcement. To stop political dissent. As you know,

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Speaker 12: two weeks ago, Crooked Joe Biden ordered his top political

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Speaker 12: opponent arrested.

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Speaker 10: Oh who is that opponent?

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Speaker 12: Oh it's me.

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Speaker 10: Oh more, Smoke from the wildfires plaguing eastern Canada expected

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Speaker 10: to create possible hazardous air conditions in New York City

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Speaker 10: in the mid Atlantic regions starting on Wednesday. New York

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Speaker 10: Governor Kathy Hokels saying New Yorker should visit the Environmental

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Speaker 10: Protection Agency's website AirNow dot gov to check for updates.

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Speaker 10: Earlier this month, the city experienced the worst air quality

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Speaker 10: in the world as thick haze settled over New York

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Speaker 10: from those wildfires. Global News twenty four hours a day,

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Speaker 10: powered by more than twenty seven hundred journalists and analysts

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Speaker 10: and more than one hundred and twenty countries. I'm Dan Schwartzman.

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Speaker 10: This is Bloomberg.

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Speaker 1: I'm Brian Curtis here in Hong Kong, along with Rashad Salamat.

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Speaker 1: Our guest is Chi Chow, financial advisor and managing director

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Speaker 1: at UBS. She Chow thanks very much for coming on

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Speaker 1: the program. So let's take a look at the markets.

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Speaker 8: First.

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Speaker 1: There's a lot of money that is parked in short

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Speaker 1: term treasuries and also in money market funds. We've seen

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Speaker 1: it come down just a little in money market funds.

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Speaker 1: It appears that this money is itching now to enjoy

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Speaker 1: the gains that we've seen in the equity market. It's

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Speaker 1: only a blip so far, but could it be a force?

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Speaker 1: And I asked that to someone who's actually postured pretty

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Speaker 1: defensively in markets.

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Speaker 6: Absolutely, I mean there's just a lot, still a lot

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Speaker 6: of money sitting on a sidelines, and you know, investors

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Speaker 6: are just very cautious. It has been all cautious, very

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Speaker 6: cautious all year of getting into the market because it's

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Speaker 6: just not sure that policies when the hikes will be over,

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Speaker 6: or when will be po when it will pass. But

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Speaker 6: looking at you know, the SMP, I mean very strong,

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Speaker 6: still very resilient even today, even with the more hawkish tone.

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Speaker 6: That race might go up a little bit more towards

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Speaker 6: the end of the year, but you know, some of

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Speaker 6: that cash is going to be coming out of the US,

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Speaker 6: some of the US treasuries and put to work. But

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Speaker 6: you know, we're investors are just very cautious and looking

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Speaker 6: for those opportunities to get get invested.

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Speaker 9: Uh, okay, with a NASDA up already nearly thirty percent,

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Speaker 9: and that is that one hundred even more so, it's

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Speaker 9: probably a fool's errand to be trying to chase this

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Speaker 9: rally though surely.

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Speaker 6: Yes, I mean, you know, the prospects are looking good

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Speaker 6: for most investors, especially with how resilience economy has been

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Speaker 6: and the market has been all year. I mean, we

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Speaker 6: think investors should look to rebalance US equity exposure, just

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Speaker 6: as you mentioned, tech has had a very strong run

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Speaker 6: this year, and look towards more of the attractively valued area,

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Speaker 6: defensive some of the you know, tilding and just kind

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Speaker 6: of tilling away from technology and towards more lagging sectors

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Speaker 6: such as consumer stables and the industrial and even looking

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Speaker 6: outside of the US into emerging markets and some other

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Speaker 6: international markets that are probably a little bit more attractively

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Speaker 6: valued than the US.

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Speaker 1: At this point, when I listened to some of your

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Speaker 1: conviction calls and review them, I find it interesting because

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Speaker 1: there's a lot of defensiveness, which we already mentioned, but

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Speaker 1: there's also you know, some pretty strong offensive moves too.

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Speaker 1: I mean, you like artificial intelligence, big data, and cybersecurity,

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Speaker 1: and you prefer Chinese equities within Asia, which I mean,

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Speaker 1: to be honest, that hasn't been the place to be

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Speaker 1: in the first half of the year. That doesn't mean

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Speaker 1: it won't be in the second half. But if you

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Speaker 1: think it will be a good place to be in

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Speaker 1: the second half of the year, tell me why.

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Speaker 6: Yeah, I mean, that's a good point. Chinese linked investments

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Speaker 6: have lagged on growth and geopolitics in the first half,

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Speaker 6: for sure, I mean, but we hope that, you know,

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Speaker 6: because China is such a strong economy, just as the US,

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Speaker 6: both very very important. We hope in the second half,

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Speaker 6: you know, with stronger internal consumption as China's coming out

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Speaker 6: of the pandemics, one of the last to come out

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Speaker 6: of the pandemic, and stronger earnings and hopefully more geopolitical

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Speaker 6: clarity that just support Chinese thoughts in the second half.

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Speaker 6: And we do expect that China's economy to grow around

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Speaker 6: five and a half percent this year, but that's all

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Speaker 6: going to be tense if we get that clarity in

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Speaker 6: the second half.

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Speaker 9: Well, clarity aside, it's going to need some sort of

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Speaker 9: catalyst because it's fast that it's shake off the uninvestible

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Speaker 9: tag that Chinese equities have at the moment. What other

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Speaker 9: catalysts could they be.

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Speaker 6: I mean, it's just I think a lot of the

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Speaker 6: catalysts would be just the US and China relations. I mean,

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Speaker 6: this is a very big part of what a lot

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Speaker 6: of the talk is about, right, So once we have

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Speaker 6: more clarity on that, I think China has just a

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Speaker 6: huge economy is hard to miss, and hopefully some of

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Speaker 6: that will start to come back in the second half,

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Speaker 6: and some of the lagging investments in China in the Internet,

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Speaker 6: e commerce and all the different including the property markets

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Speaker 6: will start to come back a little bit.

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Speaker 1: So we had this big speech from the Premier Lee

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Speaker 1: Chiang yesterday, and of course a lot of people have

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Speaker 1: focused on the comments that he made about de globalization

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Speaker 1: and de risking, kind of scolding countries that you shouldn't

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Speaker 1: be doing this because it will be very bad for

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Speaker 1: you know, global relations. But there were some other angles

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Speaker 1: that quite a few commentators packed up on. One was

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Speaker 1: he was pretty confident about growth coming back in China,

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Speaker 1: So that probably was music to yours. If you've got

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Speaker 1: a chance to review some of those key comments from

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Speaker 1: Lie Chung, share them with us.

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Speaker 13: Yeah, I mean, I think in general, I mean we

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Speaker 13: we it's not just China. I mean, we definitely prefer

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Speaker 13: Chinese equities within our Asia strategy, but regardless of what

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Speaker 13: happens with China, I mean, we want to focus on

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Speaker 13: in Asia in general, and also the.

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Speaker 6: Surrounding economies around China, you know, some of the Southeast

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Speaker 6: and Asian countries, Korea. I mean, there's a lot of

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Speaker 6: countries around China will be listed if China starts to recover,

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Speaker 6: and again a lot of that will have to be

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Speaker 6: when China does have stronger consumption and earnings.

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Speaker 9: All right, So, I mean the thing this has been

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Speaker 9: a market shift that if we look at a particularly

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Speaker 9: fixed income market and various options as well. Now where

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Speaker 9: people are no longer in any significant form just as

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Speaker 9: they were a mere three weeks ago, thinking they're going

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Speaker 9: to be rate cuts by the end of the year.

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Speaker 9: They're firmly kind of getting the federal reserves message. I'm sorry,

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Speaker 9: dialing back to FED and do you believe you buy

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Speaker 9: into this new narrative that this is the way it's

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Speaker 9: going to be. We're going to be on a tight

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Speaker 9: monetary policy for longer.

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Speaker 6: Yes, I think it will be tighter for a little longer.

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Speaker 6: Race will stay a little high. I mean, you know,

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Speaker 6: the said, uh, the Fed hockets tone is not surprising.

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Speaker 6: We are expecting probably two more quarter point ray hikes,

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Speaker 6: and I think it's just, you know, the fighter is

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Speaker 6: trying to balance the battle with inflation right against the

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Speaker 6: risk to the economic growth and uh financial stability. So

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Speaker 6: you know, expecting race probably not to go too much higher,

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Speaker 6: but we are going to have higher rates for a

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Speaker 6: little longer.

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Speaker 1: Yeah, just for fun, we have a minute so very

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Speaker 1: short answer. Have you not bought anything recently because interest

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Speaker 1: rates have gone up in your person? Your personal life?

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Speaker 1: In your personal life, I mean like a house or

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Speaker 1: a car, Have you not bought anything that because rates

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Speaker 1: went up?

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Speaker 6: I mean I would say yes. I mean it's definitely okay.

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Speaker 6: It's harder when rates are a little more. Okay.

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Speaker 1: I was going to ask risch risch have you not

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Speaker 1: bought anything recently because of how interest rates?

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Speaker 6: I never buy anything?

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Speaker 1: Okay, all right, Anyway, I haven't really changed my behavior.

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Speaker 1: I have to say, I've been living my life basically

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Speaker 1: the same. Rates going up haven't affected me that much.

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Speaker 1: It's maybe uh made your you know, adjusting your investment

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Speaker 1: profile a little. But I just like to ask that

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Speaker 1: question to people, because I think a lot of people

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Speaker 1: think that rates going up is really flummished a lot

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Speaker 1: of people. But you know that's two out of three.

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Speaker 1: That's not bad, not that big a deal. Sheats out

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Speaker 1: out of time. Unfortunately, we'll talk again soon. Thank you.

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Speaker 1: She Chaw, financial advisor, managing director at Ubs. This is

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