WEBVTT - Debt Ceiling Standstill, Coupang Beats Estimates

0:00:02.640 --> 0:00:05.680
<v Speaker 1>This is Bloomberg Day Break Asia for this Wednesday, May

0:00:05.720 --> 0:00:08.960
<v Speaker 1>tenth in Hong Kong, Tuesday May ninth in New York,

0:00:09.039 --> 0:00:10.000
<v Speaker 1>and coming up today.

0:00:10.280 --> 0:00:13.160
<v Speaker 2>Markets track efforts to break a stalemate over the US

0:00:13.240 --> 0:00:14.240
<v Speaker 2>debt ceiling.

0:00:14.200 --> 0:00:17.959
<v Speaker 1>US equity slump ahead of a critical inflation report that

0:00:18.160 --> 0:00:20.920
<v Speaker 1>may provide clues on the Fed's rate hiking path.

0:00:21.200 --> 0:00:25.280
<v Speaker 2>South Korean e commerce giant Coupong reports sales above estimates

0:00:25.520 --> 0:00:27.640
<v Speaker 2>after capital spending pays off.

0:00:27.840 --> 0:00:31.639
<v Speaker 3>Debt ceiling meeting ends without much movement. Senate Minority Leader

0:00:31.680 --> 0:00:35.240
<v Speaker 3>Mitch McConnell says there will be no default. Donald Trump

0:00:35.280 --> 0:00:39.000
<v Speaker 3>held libel for sexual assault. I'm at Baxter with Global News.

0:00:42.360 --> 0:00:46.040
<v Speaker 4>That's all straight ahead on Bloomberg Daybreak Asia, The business

0:00:46.080 --> 0:00:48.519
<v Speaker 4>news you need to start your day in just one

0:00:48.640 --> 0:00:53.560
<v Speaker 4>fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App,

0:00:53.600 --> 0:00:55.560
<v Speaker 4>and everywhere you get your podcasts.

0:00:58.680 --> 0:01:01.600
<v Speaker 2>Good morning, I'm det Chris and I'm Brian Curtiz.

0:01:01.640 --> 0:01:03.520
<v Speaker 1>Here are the stories we're following today.

0:01:03.880 --> 0:01:04.160
<v Speaker 5>Well.

0:01:04.280 --> 0:01:08.560
<v Speaker 1>Lisa Shallatte, the chief investment officer at Morgan Stanley Wealth Management,

0:01:08.600 --> 0:01:12.440
<v Speaker 1>says the future spending cuts resulting from any debt ceiling

0:01:12.520 --> 0:01:17.000
<v Speaker 1>deal could threaten economic growth here Shalllotte speaking earlier with Bloomberg.

0:01:17.240 --> 0:01:22.720
<v Speaker 6>It matters, you know, to forward looking expectations of growth

0:01:23.560 --> 0:01:27.640
<v Speaker 6>in terms of what is cut. Those things have been

0:01:27.680 --> 0:01:31.120
<v Speaker 6>a support to growth, and if we need to take

0:01:31.160 --> 0:01:34.399
<v Speaker 6>that out of the forward forecasts, that is going to

0:01:34.480 --> 0:01:36.600
<v Speaker 6>dampen economic growth.

0:01:37.160 --> 0:01:40.839
<v Speaker 1>Shalotte said possible rollbacks related to the Inflation Reduction Act

0:01:40.880 --> 0:01:45.600
<v Speaker 1>and various infrastructure projects could dampen growth. As mentioned, President

0:01:45.640 --> 0:01:48.880
<v Speaker 1>Biden met today with House Speaker Kevin McCarthy and other

0:01:48.920 --> 0:01:52.080
<v Speaker 1>congressional leaders on the debt ceiling. McCarthy said he has

0:01:52.200 --> 0:01:56.720
<v Speaker 1>not seen any movement on the negotiations. Treasury Secretary Janet

0:01:56.760 --> 0:02:00.200
<v Speaker 1>Yellen has warned lawmakers that the Treasury's ability to stay

0:02:00.200 --> 0:02:02.680
<v Speaker 1>within the debt limit could be exhausted.

0:02:02.280 --> 0:02:03.600
<v Speaker 5>As soon as June first.

0:02:03.760 --> 0:02:05.760
<v Speaker 2>There was some FED speak today. We heard from the

0:02:05.760 --> 0:02:08.160
<v Speaker 2>head of the New York Fed, John Williams. He says

0:02:08.200 --> 0:02:11.200
<v Speaker 2>that he is monitoring how the strains across the banking

0:02:11.240 --> 0:02:14.600
<v Speaker 2>sector will affect the American economy, and at the same time,

0:02:14.639 --> 0:02:17.000
<v Speaker 2>he left the door open to leave interest rates on

0:02:17.080 --> 0:02:21.200
<v Speaker 2>hold next month. Here's Williams speaking at an event with

0:02:21.360 --> 0:02:22.920
<v Speaker 2>the Economic Club of New York.

0:02:23.240 --> 0:02:26.160
<v Speaker 7>I will be particularly focused on assessing the evolution of

0:02:26.200 --> 0:02:29.680
<v Speaker 7>credit conditions, and there are effects on the outlook for growth, employment,

0:02:29.800 --> 0:02:30.400
<v Speaker 7>and inflation.

0:02:30.639 --> 0:02:32.200
<v Speaker 8>We're going to get a lot of data between now

0:02:32.200 --> 0:02:33.880
<v Speaker 8>and our June meeting, that is.

0:02:33.880 --> 0:02:36.320
<v Speaker 2>New York Fed President John Williams. He went on to

0:02:36.360 --> 0:02:39.880
<v Speaker 2>say a rate cut is not his baseline forecast this year.

0:02:40.200 --> 0:02:42.639
<v Speaker 2>You'll remember last week the Fed heightd its key rate

0:02:42.720 --> 0:02:45.640
<v Speaker 2>by a quarter point, bringing the target on that benchmark

0:02:45.720 --> 0:02:48.560
<v Speaker 2>rate above five percent. It was back then that Fed

0:02:48.560 --> 0:02:51.919
<v Speaker 2>Shair J. Powell hinted maybe this could be the last

0:02:51.919 --> 0:02:54.360
<v Speaker 2>increase for the time being. He did, though, leave the

0:02:54.400 --> 0:02:57.399
<v Speaker 2>door open for the Fed to do more if inflation

0:02:57.560 --> 0:03:01.040
<v Speaker 2>remains high. Remember that CPI data is due tomorrow morning.

0:03:01.080 --> 0:03:04.240
<v Speaker 1>Brian, Yeah, that's exactly what we're going to talk about here.

0:03:04.320 --> 0:03:07.399
<v Speaker 1>Let's take a closer look a preview from Bloomberg's Michael McKee.

0:03:07.560 --> 0:03:10.280
<v Speaker 9>Higher interest rates have helped cut inflation in half over

0:03:10.320 --> 0:03:12.760
<v Speaker 9>the past nine months. Now, he kind of must say,

0:03:12.800 --> 0:03:15.519
<v Speaker 9>for the hard part, rents and rising wages for hard

0:03:15.520 --> 0:03:19.160
<v Speaker 9>to find employees, particularly in the service sector, will break

0:03:19.200 --> 0:03:21.960
<v Speaker 9>progress towards the Fed's goal of an average two percent

0:03:22.040 --> 0:03:26.200
<v Speaker 9>inflation rate. The central bankers think progress will continue if slowly,

0:03:26.480 --> 0:03:29.079
<v Speaker 9>they will leave rates high to ensure that happens, and

0:03:29.120 --> 0:03:32.079
<v Speaker 9>not worry too much about month to month inflation data

0:03:32.160 --> 0:03:36.680
<v Speaker 9>unless it unexpectedly jumps. The question is what will investors think.

0:03:36.920 --> 0:03:39.680
<v Speaker 9>Will they have the patients of Fed officials, or will

0:03:39.720 --> 0:03:42.560
<v Speaker 9>we see a big rate reaction to the inflation data.

0:03:42.800 --> 0:03:44.640
<v Speaker 9>Michael McKee, Bloomberg Daybreak Asia.

0:03:44.760 --> 0:03:47.720
<v Speaker 2>After the bell, we heard from Rivian Automotive. The company

0:03:47.720 --> 0:03:50.600
<v Speaker 2>reported a narrower than expected loss to begin the year.

0:03:51.120 --> 0:03:53.640
<v Speaker 2>A commedy says it lost a dollar twenty five per

0:03:53.720 --> 0:03:56.360
<v Speaker 2>share on an adjusted basis in Q one. Now, the

0:03:56.360 --> 0:03:59.080
<v Speaker 2>street was looking for a loss of a dollar fifty

0:03:59.200 --> 0:04:02.800
<v Speaker 2>six revenue for the period six hundred and sixty one million.

0:04:02.920 --> 0:04:06.120
<v Speaker 2>That was pretty much in line with straight expectations. The

0:04:06.160 --> 0:04:08.760
<v Speaker 2>electric truck maker has been working to cut cost and

0:04:08.880 --> 0:04:10.840
<v Speaker 2>ramp up production. Here's Bloomberg's Ed.

0:04:10.880 --> 0:04:16.080
<v Speaker 10>Ludlow simplifying everything. Going back to basics is working. Production

0:04:16.680 --> 0:04:19.919
<v Speaker 10>drops sequentially quarter on quarter, but that was only in

0:04:19.960 --> 0:04:23.800
<v Speaker 10>the van that Rivian builds for Amazon, the consumer car.

0:04:23.880 --> 0:04:27.240
<v Speaker 10>They ramp production and now they're just being disciplined.

0:04:26.720 --> 0:04:27.880
<v Speaker 5>Bloomberg's Ed Ludlow.

0:04:27.920 --> 0:04:32.160
<v Speaker 2>There, Rivian also reaffirmed plans to build fifty thousand vehicles

0:04:32.200 --> 0:04:34.520
<v Speaker 2>this year. You might recall last year the company fell

0:04:34.760 --> 0:04:37.960
<v Speaker 2>just shy of its own target at twenty five thousand evs.

0:04:38.520 --> 0:04:41.839
<v Speaker 2>At the same time, Rivian said it's now targeting profitability

0:04:41.880 --> 0:04:45.320
<v Speaker 2>in twenty twenty four. Shares and Rivian up five percent

0:04:45.360 --> 0:04:46.360
<v Speaker 2>in late US trading.

0:04:46.560 --> 0:04:48.800
<v Speaker 1>And let's take a closer look at some earnings here

0:04:48.800 --> 0:04:52.799
<v Speaker 1>in Asia. South Korea's e commerce giant Coupong has reported

0:04:52.839 --> 0:04:55.440
<v Speaker 1>sales that beat estimates in the March quarter. We get

0:04:55.440 --> 0:04:58.400
<v Speaker 1>the story from Bloomberg's Juan Wong in Hong Kong.

0:04:58.720 --> 0:05:02.320
<v Speaker 8>Revenue rows thirteen percent to five point eight billion dollars,

0:05:02.560 --> 0:05:06.400
<v Speaker 8>exceeding the estimate of five point six billion. Operating profits

0:05:06.480 --> 0:05:08.880
<v Speaker 8>was more than one hundred and six million dollars an

0:05:08.920 --> 0:05:13.000
<v Speaker 8>active customer group five percent to nineteen million. That's as

0:05:13.000 --> 0:05:16.640
<v Speaker 8>the company's core delivery business grew exponentially during the pandemic.

0:05:17.040 --> 0:05:20.640
<v Speaker 8>Coupon also managed to sustain growth in the post pandemic period.

0:05:21.040 --> 0:05:23.920
<v Speaker 8>That's in part thanks to US fast delivery service, known

0:05:24.000 --> 0:05:27.440
<v Speaker 8>for promises of don delivery. Kupa is reportedly looking to

0:05:27.520 --> 0:05:31.159
<v Speaker 8>expand market share among new initiatives, It's expanding its delivery

0:05:31.200 --> 0:05:34.640
<v Speaker 8>business in Taiwan and Hong Kong. Joan one Bloomberg Day

0:05:34.640 --> 0:05:38.039
<v Speaker 8>Brigaisia and I'm Brian Curtis along with Doug Grisner.

0:05:38.480 --> 0:05:42.200
<v Speaker 1>I thought Lisa Shalatt made some interesting comments there. And

0:05:42.480 --> 0:05:45.040
<v Speaker 1>basically what it comes down to is from a market

0:05:45.040 --> 0:05:49.279
<v Speaker 1>point of view, if you do get an agreement, and

0:05:49.400 --> 0:05:52.440
<v Speaker 1>that agreement means a cut in spending, that may not

0:05:52.520 --> 0:05:54.680
<v Speaker 1>be good for markets because it could hurt growth. And

0:05:54.720 --> 0:05:58.119
<v Speaker 1>if there's no agreement, well, the consequences of that are

0:05:58.720 --> 0:05:59.840
<v Speaker 1>almost unmentionable.

0:06:00.080 --> 0:06:02.479
<v Speaker 2>Yeah, it's interesting to try to figure out how much

0:06:02.560 --> 0:06:06.479
<v Speaker 2>the market discounted the economic jolt from the Inflation Reduction

0:06:06.640 --> 0:06:09.360
<v Speaker 2>Act and if some of that now is in doubt,

0:06:10.160 --> 0:06:12.640
<v Speaker 2>perhaps you're right, Brian, that there is a real cloud

0:06:12.680 --> 0:06:15.880
<v Speaker 2>when it comes to growth. And speaking of growth concerns,

0:06:16.320 --> 0:06:19.080
<v Speaker 2>we can talk a little bit now about the disappointing

0:06:19.080 --> 0:06:21.919
<v Speaker 2>read on Chinese imports last night. That was a pretty

0:06:22.000 --> 0:06:26.960
<v Speaker 2>dramatic number negative what eight percent the street was looking

0:06:27.040 --> 0:06:29.599
<v Speaker 2>nearly street was looking for something only two tenths of

0:06:29.640 --> 0:06:31.120
<v Speaker 2>one percent in terms of contraction.

0:06:31.720 --> 0:06:35.440
<v Speaker 1>Yeah, it really speaks to stumbling in domestic consumption. And

0:06:35.480 --> 0:06:37.760
<v Speaker 1>we'll have to see whether that picks up. We have

0:06:37.839 --> 0:06:40.200
<v Speaker 1>been saying all along that with the recovery there that

0:06:41.800 --> 0:06:44.919
<v Speaker 1>people on the street, they're cautious because they were locked

0:06:44.920 --> 0:06:46.840
<v Speaker 1>in for a long time. They don't have the same

0:06:46.880 --> 0:06:50.279
<v Speaker 1>sort of support system and government transfer payments that we

0:06:50.360 --> 0:06:52.800
<v Speaker 1>do in the United States, and so you know, it's

0:06:52.880 --> 0:06:56.279
<v Speaker 1>not easy to let go and to do that revenge spend.

0:06:56.640 --> 0:06:58.880
<v Speaker 1>They have been doing it to a certain degree in

0:06:58.960 --> 0:07:01.680
<v Speaker 1>restaurants and bars and that sort of thing, but it's

0:07:01.680 --> 0:07:05.240
<v Speaker 1>on a lower level. It hasn't fed through yet into

0:07:05.600 --> 0:07:09.520
<v Speaker 1>the bigger ticket items and among them. We just saw

0:07:09.560 --> 0:07:12.000
<v Speaker 1>that express in the exports down seven point nine percent.

0:07:12.240 --> 0:07:14.520
<v Speaker 1>Even the export number was pretty good at eight point

0:07:14.560 --> 0:07:17.920
<v Speaker 1>five percent, but that's such a low base of comparison

0:07:17.960 --> 0:07:20.520
<v Speaker 1>when there was very little business activity at all last

0:07:20.560 --> 0:07:22.800
<v Speaker 1>year during this period because.

0:07:22.560 --> 0:07:23.960
<v Speaker 5>Of the lockdowns in Shanghai.

0:07:24.120 --> 0:07:25.680
<v Speaker 2>And if you look at what the market is telling

0:07:25.760 --> 0:07:29.160
<v Speaker 2>us right now, as measured by the Nasdaq Golden Track

0:07:29.240 --> 0:07:31.920
<v Speaker 2>in China index, the ADRs that trade here in the States,

0:07:32.040 --> 0:07:35.160
<v Speaker 2>we are down five point seven percent so far this yere.

0:07:35.240 --> 0:07:36.920
<v Speaker 2>So the market's not expecting a lot.

0:07:37.040 --> 0:07:39.280
<v Speaker 1>And I got a great line for you. It might

0:07:39.320 --> 0:07:41.840
<v Speaker 1>even get the great Doug Krisner to chuckle a little bit.

0:07:41.960 --> 0:07:46.080
<v Speaker 1>And here it is because this is also weighing on markets.

0:07:46.560 --> 0:07:49.720
<v Speaker 1>With Europe and China, we might have hit the point

0:07:50.040 --> 0:07:54.880
<v Speaker 1>where the rubber meets the built in road. You know,

0:07:54.960 --> 0:07:58.360
<v Speaker 1>it's pretty stark what we heard from two leaders in

0:07:58.440 --> 0:08:02.120
<v Speaker 1>Europe overnight. Italy is signaling, at least to the US,

0:08:02.200 --> 0:08:05.120
<v Speaker 1>it's not confirmed yet, but it's signaling it intends to

0:08:05.160 --> 0:08:07.280
<v Speaker 1>pull out of the Belton Road initiative. So that's a

0:08:07.320 --> 0:08:09.720
<v Speaker 1>pretty big deal, the only country in the G seven

0:08:09.760 --> 0:08:12.320
<v Speaker 1>that was taking part. And then you had all Off Schultz,

0:08:12.360 --> 0:08:15.600
<v Speaker 1>the German Chancellor, really talking about China as a rival

0:08:15.680 --> 0:08:17.120
<v Speaker 1>now and not a partner.

0:08:17.760 --> 0:08:20.840
<v Speaker 2>Yeah, and also Germany's foreign minister who is kind of

0:08:20.960 --> 0:08:23.200
<v Speaker 2>applying a little bit of pressure, you would think, on

0:08:23.320 --> 0:08:26.040
<v Speaker 2>Beijing to do more to try to bring some type

0:08:26.080 --> 0:08:27.520
<v Speaker 2>of end to war in Ukraine.

0:08:27.800 --> 0:08:28.080
<v Speaker 5>Yep.

0:08:28.200 --> 0:08:30.560
<v Speaker 1>And we know that that doesn't appear to be happening

0:08:30.600 --> 0:08:34.640
<v Speaker 1>anytime soon. But now it's time for global news and

0:08:34.800 --> 0:08:37.959
<v Speaker 1>speaking of the debt ceiling discussions, well, the summit there

0:08:38.360 --> 0:08:41.760
<v Speaker 1>has apparently ended with no agreement and no real movement.

0:08:41.960 --> 0:08:44.040
<v Speaker 1>Ed Baxter has the story from the nine to sixty

0:08:44.040 --> 0:08:45.280
<v Speaker 1>News from in San Francisco ed.

0:08:45.640 --> 0:08:48.320
<v Speaker 5>Yeah, Brian had a lot more rhetoric. For sure.

0:08:48.520 --> 0:08:51.160
<v Speaker 3>We will be sharing that as the program goes on.

0:08:51.559 --> 0:08:55.319
<v Speaker 3>About while we're able to grab Joe Matthew, the host

0:08:55.360 --> 0:08:57.400
<v Speaker 3>of Sound on Unbalance of Power. We're going to tie

0:08:57.440 --> 0:09:02.680
<v Speaker 3>him up and get some analysis here. So surprise, no surprise, Joe.

0:09:02.720 --> 0:09:05.400
<v Speaker 3>They came out with swords drawn, didn't they. Yeah, I'm

0:09:05.440 --> 0:09:06.920
<v Speaker 3>not the thing, and that wasn't a lot of fun

0:09:06.920 --> 0:09:11.000
<v Speaker 3>in there. I didn't see any new movement, speaker McCarthy

0:09:11.080 --> 0:09:14.400
<v Speaker 3>told reporters in the stakeout position there in the driveway,

0:09:14.440 --> 0:09:16.000
<v Speaker 3>And of course Democrats came out.

0:09:16.000 --> 0:09:17.640
<v Speaker 5>They didn't seem very happy either.

0:09:17.480 --> 0:09:21.520
<v Speaker 11>Chuck Schumer, hawking, Jefferies, everyone speaking very passionately about how

0:09:21.559 --> 0:09:25.400
<v Speaker 11>nothing happened. The meeting lasted about an hour, which is

0:09:25.480 --> 0:09:28.280
<v Speaker 11>not a great sign, but this is clearly an opportunity

0:09:28.320 --> 0:09:32.000
<v Speaker 11>for everyone to kind of start from scratch with their positions.

0:09:32.080 --> 0:09:34.160
<v Speaker 11>We know that the staff will on both ends of

0:09:34.160 --> 0:09:37.640
<v Speaker 11>Pennsylvania Avenue will keep talking tonight, and they did set

0:09:37.640 --> 0:09:40.920
<v Speaker 11>another meeting for Fridays, so that's very important here. If

0:09:40.960 --> 0:09:42.600
<v Speaker 11>that hadn't been done, if we didn't know where this

0:09:42.720 --> 0:09:46.400
<v Speaker 11>was going, this would feel a lot less comforting than

0:09:46.440 --> 0:09:48.960
<v Speaker 11>even this does now. And it seems like everyone was

0:09:49.000 --> 0:09:51.800
<v Speaker 11>really positioning themselves ahead of what would be the second meeting.

0:09:52.160 --> 0:09:55.840
<v Speaker 3>Yeah, and this we expected they would come out and

0:09:55.920 --> 0:09:58.880
<v Speaker 3>be preaching to the base, which apparently did happen. But

0:09:58.960 --> 0:10:02.640
<v Speaker 3>Chuck Schumer did say that the budget appropriations process could

0:10:02.679 --> 0:10:05.000
<v Speaker 3>begin tonight. That is a good sign, is it not?

0:10:05.280 --> 0:10:06.400
<v Speaker 5>Well, I suppose that's true.

0:10:06.400 --> 0:10:08.280
<v Speaker 11>It's just that they can't even agree on top lines,

0:10:08.320 --> 0:10:11.160
<v Speaker 11>never mind on the actual nuts and bolts of a budget.

0:10:11.160 --> 0:10:12.679
<v Speaker 5>I mean, we really don't have a budget yet.

0:10:12.679 --> 0:10:15.520
<v Speaker 11>There's when the President dropped the bill that Speaker McCarthy

0:10:15.559 --> 0:10:17.880
<v Speaker 11>had passed in the House a couple of weeks ago.

0:10:18.240 --> 0:10:20.920
<v Speaker 11>Addresses the debt ceiling. It addresses top line issues, but

0:10:21.000 --> 0:10:24.360
<v Speaker 11>doesn't kind of go through the budgeting process of drilling

0:10:24.400 --> 0:10:27.040
<v Speaker 11>down on what each department in the government needs.

0:10:27.600 --> 0:10:28.760
<v Speaker 5>There are a lot of concerns though.

0:10:28.640 --> 0:10:31.439
<v Speaker 11>About the calendar tonight, you know, knowing that going into

0:10:31.520 --> 0:10:33.920
<v Speaker 11>this meeting, both sides McCarthy and the White House said

0:10:33.960 --> 0:10:37.560
<v Speaker 11>they are not entertaining the idea of a short term solution,

0:10:37.679 --> 0:10:41.160
<v Speaker 11>either suspending or extending the debt ceiling, for instance, till

0:10:41.200 --> 0:10:43.640
<v Speaker 11>the end of September to coincide with the fiscal year.

0:10:44.000 --> 0:10:46.040
<v Speaker 11>At a lot of people that suggested that this was,

0:10:46.080 --> 0:10:48.560
<v Speaker 11>in fact what was going to happen ahead of this meeting.

0:10:48.679 --> 0:10:51.720
<v Speaker 11>Both sides say, it's not even on the table. That's

0:10:51.760 --> 0:10:53.840
<v Speaker 11>a little bit concerning, knowing that we have so little

0:10:53.840 --> 0:10:56.360
<v Speaker 11>time to figure this out between now and as early

0:10:56.400 --> 0:10:58.800
<v Speaker 11>as the first of June. I'll be very curious to

0:10:58.800 --> 0:11:01.120
<v Speaker 11>see what the market reaction is tomorrow morning after all

0:11:01.160 --> 0:11:01.360
<v Speaker 11>of this.

0:11:01.679 --> 0:11:04.720
<v Speaker 3>Now the leaders are saying there'll be no default. I mean,

0:11:04.800 --> 0:11:07.079
<v Speaker 3>I mean Mitch McConnell came up and that's the first

0:11:07.080 --> 0:11:09.559
<v Speaker 3>thing that he said coming out of How does this

0:11:09.640 --> 0:11:12.600
<v Speaker 3>square with what Janet Yellen is saying out akashould beginning

0:11:12.600 --> 0:11:13.120
<v Speaker 3>of June.

0:11:13.240 --> 0:11:15.319
<v Speaker 11>Well, look, he's saying that because he thinks that they

0:11:15.320 --> 0:11:17.439
<v Speaker 11>in fact can cut a deal between now and then.

0:11:18.160 --> 0:11:19.880
<v Speaker 11>The thing that we were lacking though, was really a

0:11:19.920 --> 0:11:23.160
<v Speaker 11>sense of optimism. When Kevin McCarthy came out of the

0:11:23.240 --> 0:11:26.520
<v Speaker 11>meeting at the beginning of February with President Biden, he said, look,

0:11:26.559 --> 0:11:28.079
<v Speaker 11>we don't agree on a lot of things, but we

0:11:28.880 --> 0:11:32.439
<v Speaker 11>know now that we can find common ground. That spirit

0:11:32.600 --> 0:11:35.400
<v Speaker 11>was really not in his remarks or the answers to

0:11:35.480 --> 0:11:37.600
<v Speaker 11>questions from reporters today, it was, you know what, we

0:11:37.640 --> 0:11:39.920
<v Speaker 11>don't like anything that we just heard, and we are

0:11:39.960 --> 0:11:42.520
<v Speaker 11>not on the same page. That's going to start trickling

0:11:42.559 --> 0:11:44.800
<v Speaker 11>into the stock market at some point soon. It's not

0:11:44.880 --> 0:11:48.080
<v Speaker 11>just Janet Yellen. The Bipartisan Policy Center, which we follow

0:11:48.120 --> 0:11:51.120
<v Speaker 11>closely on matters like this in Washington, they crunch numbers

0:11:51.160 --> 0:11:53.559
<v Speaker 11>on their own and they agree that this is likely

0:11:53.559 --> 0:11:56.000
<v Speaker 11>mid June, as early as the first of June. And

0:11:56.040 --> 0:11:59.040
<v Speaker 11>it really does not give the folks at the table here,

0:11:59.120 --> 0:12:01.240
<v Speaker 11>whether it's the President or the speaker, much time to

0:12:01.280 --> 0:12:01.920
<v Speaker 11>figure this out.

0:12:02.040 --> 0:12:04.040
<v Speaker 3>Yeah, what they got right today was a time period

0:12:04.080 --> 0:12:07.960
<v Speaker 3>about two weeks. Joe, thank you so much. Joe Matthew,

0:12:08.000 --> 0:12:10.439
<v Speaker 3>the host of Sound On and Balance of Power here

0:12:10.440 --> 0:12:13.880
<v Speaker 3>on Bloomberg Radio and Television, Global News powered by more

0:12:13.920 --> 0:12:16.480
<v Speaker 3>than twenty seven hundred journalists and analysts in over one

0:12:16.520 --> 0:12:18.960
<v Speaker 3>hundred twenty countries in San Francisco.

0:12:19.080 --> 0:12:22.400
<v Speaker 5>I'm Ed Baxter, and this is Bloomberg. Let's get to

0:12:22.520 --> 0:12:23.080
<v Speaker 5>our guest.

0:12:23.240 --> 0:12:27.720
<v Speaker 1>Dana Peterson, chief economist at the Conference Board, will join us,

0:12:27.840 --> 0:12:31.479
<v Speaker 1>as does Rishad Salamet with me Brian Curtis here in

0:12:31.559 --> 0:12:35.440
<v Speaker 1>our Hong Kong Studios. So we made the comment Dana

0:12:35.559 --> 0:12:39.000
<v Speaker 1>about whether or not there is an agreement on these

0:12:39.000 --> 0:12:43.000
<v Speaker 1>debt ceialing negotiations, that that might mean a cut in spending.

0:12:43.360 --> 0:12:44.560
<v Speaker 5>I'm sure you've looked at this.

0:12:45.640 --> 0:12:49.080
<v Speaker 1>How bad might that be for markets and growth in

0:12:49.120 --> 0:12:49.800
<v Speaker 1>the economy.

0:12:51.080 --> 0:12:53.280
<v Speaker 12>Well, I mean the cuts in spending would likely be

0:12:53.320 --> 0:12:56.080
<v Speaker 12>over a period of five to ten years, so it

0:12:56.120 --> 0:13:00.360
<v Speaker 12>wouldn't necessarily be an immediate effect, but certainly because they're

0:13:00.360 --> 0:13:02.400
<v Speaker 12>going to pull that forward and say, well, this is

0:13:02.440 --> 0:13:05.319
<v Speaker 12>a negative for the economy. But we have to remember

0:13:05.520 --> 0:13:08.040
<v Speaker 12>debt is really outsize in the US. It's just under

0:13:08.080 --> 0:13:10.800
<v Speaker 12>one hundred percent. It's going to two hundred percent of

0:13:10.880 --> 0:13:15.640
<v Speaker 12>GDP in thirty years, and so that's not really the

0:13:15.720 --> 0:13:18.080
<v Speaker 12>scenario that's good for the economy. So there needs to

0:13:18.080 --> 0:13:22.360
<v Speaker 12>be some addressing with respect to some fiscal discipline here.

0:13:22.760 --> 0:13:26.360
<v Speaker 12>Will it be painful, yes, but it's necessary in order

0:13:26.400 --> 0:13:29.079
<v Speaker 12>to make sure that the US remains a competitive economy,

0:13:29.760 --> 0:13:33.520
<v Speaker 12>not only in financial markets but globally data.

0:13:33.679 --> 0:13:36.760
<v Speaker 7>But you know, the thing is being the having the

0:13:36.760 --> 0:13:39.360
<v Speaker 7>world's reserve currency, you can print as much of it

0:13:39.400 --> 0:13:42.440
<v Speaker 7>as you like, so it doesn't really affect the US

0:13:42.480 --> 0:13:44.000
<v Speaker 7>as badly as it does other countries.

0:13:45.720 --> 0:13:49.480
<v Speaker 12>I think the US doesn't go around printing money necessarily

0:13:49.520 --> 0:13:51.360
<v Speaker 12>in the way that you might think that there's this

0:13:51.720 --> 0:13:54.600
<v Speaker 12>machine that's pumping out cash. But the thing is that

0:13:54.640 --> 0:14:00.839
<v Speaker 12>the US rides itself on paying its debt right and

0:14:01.400 --> 0:14:07.280
<v Speaker 12>also fiscal responsibility, and that certainly comes under question every

0:14:07.280 --> 0:14:10.880
<v Speaker 12>time you have a debt ceiling debacle, and certainly their

0:14:10.960 --> 0:14:14.040
<v Speaker 12>concerns that debt as a share of GDP is going

0:14:14.040 --> 0:14:16.240
<v Speaker 12>to get so out of control it's going to erode

0:14:16.600 --> 0:14:19.760
<v Speaker 12>the government's ability to invest in things that actually do

0:14:19.880 --> 0:14:22.600
<v Speaker 12>produce growth, or if there is some other crisis or

0:14:22.600 --> 0:14:25.320
<v Speaker 12>a big recession, there will be no fiscal space. It

0:14:25.360 --> 0:14:28.520
<v Speaker 12>also crowds out private investment because if you're a private investor,

0:14:29.240 --> 0:14:33.560
<v Speaker 12>would you prefer to spend or invest in a high

0:14:33.600 --> 0:14:36.840
<v Speaker 12>yield corporate bond with a lot of uncertainty or something

0:14:36.880 --> 0:14:38.880
<v Speaker 12>that might be perceived as a safe haven, which is

0:14:39.000 --> 0:14:42.200
<v Speaker 12>US treasuries. And if all that's called into doubt, then

0:14:42.200 --> 0:14:44.680
<v Speaker 12>we certainly have a big crisis on our hands, not

0:14:44.720 --> 0:14:47.280
<v Speaker 12>only in the US, but certainly for global financial markets.

0:14:48.520 --> 0:14:48.880
<v Speaker 5>Also.

0:14:49.160 --> 0:14:52.320
<v Speaker 1>In listening to trader comments, I mean, we've talked a

0:14:52.320 --> 0:14:56.120
<v Speaker 1>little bit about the complacency in markets with this debt

0:14:56.120 --> 0:14:59.520
<v Speaker 1>ceiling discussion, because we've got another three weeks to go

0:14:59.560 --> 0:15:02.200
<v Speaker 1>before we get to the deadline period, so this is

0:15:02.200 --> 0:15:04.280
<v Speaker 1>probably going to play out over the next three weeks.

0:15:04.520 --> 0:15:06.680
<v Speaker 1>But we do have the CPI report coming tomorrow, and

0:15:06.720 --> 0:15:09.000
<v Speaker 1>I was about to say that in kind of listening

0:15:09.120 --> 0:15:11.960
<v Speaker 1>to what traders have been saying and kind of testing

0:15:12.000 --> 0:15:16.080
<v Speaker 1>the waters, generally, it doesn't seem like the looming CPI

0:15:16.280 --> 0:15:18.360
<v Speaker 1>is causing a lot of angst in markets.

0:15:18.360 --> 0:15:22.600
<v Speaker 12>Why well, I guess because people are just waiting for

0:15:22.680 --> 0:15:25.240
<v Speaker 12>it to come out and it's either going to show

0:15:25.280 --> 0:15:28.400
<v Speaker 12>material improvement or not much at all. Right, So we

0:15:28.480 --> 0:15:32.400
<v Speaker 12>have seen headline PPI come off, and that's because gasoline

0:15:32.400 --> 0:15:35.960
<v Speaker 12>prices have gone negative, But it's that core measure excluding

0:15:36.000 --> 0:15:37.880
<v Speaker 12>food and energy, where you still have a lot of

0:15:38.000 --> 0:15:43.400
<v Speaker 12>pricing press pressures from housing which reflects which is really rent,

0:15:43.520 --> 0:15:46.680
<v Speaker 12>which reflects what happened eighteen months ago in the housing market,

0:15:47.120 --> 0:15:51.240
<v Speaker 12>and also very strong demand for services and insufficient supply

0:15:51.320 --> 0:15:54.560
<v Speaker 12>of workers causing labor shortages and higher wages that are

0:15:54.560 --> 0:15:56.760
<v Speaker 12>getting passed on to the consumer. So this is the

0:15:56.800 --> 0:15:59.200
<v Speaker 12>same story that we've been dealing with. So I think

0:15:59.520 --> 0:16:02.720
<v Speaker 12>markets probably only be really surprised if we saw material

0:16:02.800 --> 0:16:06.000
<v Speaker 12>improvement in that core measure. That might cause the FED

0:16:06.080 --> 0:16:06.800
<v Speaker 12>to take a look.

0:16:08.080 --> 0:16:09.640
<v Speaker 5>Dan, you know, how are you.

0:16:09.600 --> 0:16:13.920
<v Speaker 7>At the moment assessing what's happening with the American consumer?

0:16:14.360 --> 0:16:18.360
<v Speaker 7>We should always refer to the US consumers being indefatigable.

0:16:18.880 --> 0:16:20.520
<v Speaker 5>Is that consumers still that.

0:16:22.160 --> 0:16:22.480
<v Speaker 8>Well.

0:16:22.720 --> 0:16:25.600
<v Speaker 12>We do actually ask consumers worth they're thinking, and in

0:16:25.640 --> 0:16:27.640
<v Speaker 12>the short run that continue to say that they are

0:16:27.640 --> 0:16:31.320
<v Speaker 12>doing okay. That's because most consumers are working and or

0:16:31.360 --> 0:16:34.400
<v Speaker 12>they saw a modest and treats in their wages. But

0:16:34.480 --> 0:16:37.680
<v Speaker 12>when it comes to the six month outlook, consumers continually

0:16:37.720 --> 0:16:40.160
<v Speaker 12>say over the last year that they expect a recession

0:16:40.760 --> 0:16:43.200
<v Speaker 12>on the way, and they're becoming more concerned about the

0:16:43.240 --> 0:16:47.280
<v Speaker 12>business outlook, their own personal finances and certainly the jobs outlook.

0:16:47.680 --> 0:16:51.640
<v Speaker 12>And so consumers have already started pulling back on buying

0:16:51.720 --> 0:16:56.200
<v Speaker 12>durable goods, and that's because you have higher interest rates.

0:16:56.240 --> 0:16:59.320
<v Speaker 12>It costs more to finance that car, that furniture, or

0:16:59.360 --> 0:17:02.320
<v Speaker 12>that house. But consumers they're also saying they're cutting back

0:17:02.400 --> 0:17:06.680
<v Speaker 12>on highly discretionary services and really just focusing on the basics.

0:17:07.040 --> 0:17:09.480
<v Speaker 1>But Dana, if people don't lose their jobs. Can you

0:17:09.520 --> 0:17:12.080
<v Speaker 1>really see that dramatic of a pullback in spending.

0:17:13.720 --> 0:17:17.119
<v Speaker 12>Well, we've already seen spending pull back for durable goods,

0:17:17.240 --> 0:17:19.959
<v Speaker 12>and so the last piece of the puzzle really is services.

0:17:20.440 --> 0:17:22.840
<v Speaker 12>And if people think that they might lose their job,

0:17:23.280 --> 0:17:26.560
<v Speaker 12>even though they probably won't, but if they believe that,

0:17:26.600 --> 0:17:28.560
<v Speaker 12>then they will pull back on spending. And I think

0:17:28.600 --> 0:17:30.720
<v Speaker 12>that's really the last shoot to drop in terms of

0:17:31.200 --> 0:17:33.680
<v Speaker 12>softening the economy to help bring down inflation.

0:17:34.280 --> 0:17:36.800
<v Speaker 1>Right, we just came through an earning season that held

0:17:36.880 --> 0:17:39.520
<v Speaker 1>up pretty well even with the cutback and spending. The

0:17:39.640 --> 0:17:42.880
<v Speaker 1>cut back and durable goods that you mentioned. Is that

0:17:43.160 --> 0:17:46.600
<v Speaker 1>something that can continue and would they just shift to

0:17:47.440 --> 0:17:51.119
<v Speaker 1>smaller items like we talked about what we're seeing in China.

0:17:51.240 --> 0:17:53.320
<v Speaker 12>Well, I think when you look at earnings, it really

0:17:53.359 --> 0:17:56.040
<v Speaker 12>depends upon the industry. Certainly, the tech sector is not

0:17:56.160 --> 0:18:00.920
<v Speaker 12>doing very well. We're hearing of ominous soundings from transportation

0:18:01.119 --> 0:18:04.679
<v Speaker 12>warehousing because people are not purchasing as many goods as

0:18:04.720 --> 0:18:07.439
<v Speaker 12>they were purchasing, and so that means there's less the ship.

0:18:08.080 --> 0:18:11.600
<v Speaker 12>We're also seeing angst in the real estate market, certainly

0:18:11.680 --> 0:18:16.159
<v Speaker 12>as housing activity has fallen off consistent with higher interest rates.

0:18:16.440 --> 0:18:19.280
<v Speaker 12>So we do think consumers are saying to us that

0:18:19.320 --> 0:18:23.800
<v Speaker 12>they're going to shift to cheaper forms of services instead

0:18:23.840 --> 0:18:26.480
<v Speaker 12>of going to the movies, they're going to stream. So

0:18:26.520 --> 0:18:27.960
<v Speaker 12>we do think that's going to happen.

0:18:29.440 --> 0:18:30.960
<v Speaker 1>Okay, Dana, excellent stuff.

0:18:31.080 --> 0:18:32.679
<v Speaker 5>Always a pleasure to have you on the program.

0:18:32.760 --> 0:18:35.800
<v Speaker 1>Thanks very much for joining us. Dana Peterson, chief economist

0:18:36.200 --> 0:18:39.720
<v Speaker 1>at the Conference Board, And if anybody knows consumers, it's

0:18:39.760 --> 0:18:44.000
<v Speaker 1>the Conference Board. This is Bloomberg Daybreak Asia, your morning

0:18:44.040 --> 0:18:46.560
<v Speaker 1>brief on the story is making news from Hong Kong

0:18:46.640 --> 0:18:48.240
<v Speaker 1>to Singapore and Wall Street.

0:18:48.280 --> 0:18:52.240
<v Speaker 2>Look for us on your podcast feed every day on Apple, Spotify,

0:18:52.520 --> 0:18:54.520
<v Speaker 2>and anywhere else you get your podcasts.

0:18:54.520 --> 0:18:57.080
<v Speaker 1>You can also listen live each day on Bloomberg eleven

0:18:57.160 --> 0:18:59.480
<v Speaker 1>three to zero in New York, Bloomberg ninety nine to

0:18:59.520 --> 0:19:03.119
<v Speaker 1>one Ishington, Bloomberg one oh sixty one in Boston, and

0:19:03.160 --> 0:19:05.480
<v Speaker 1>Bloomberg nine sixty in San Francisco.

0:19:05.600 --> 0:19:08.440
<v Speaker 2>Our flagship New York station is also available on your

0:19:08.480 --> 0:19:13.560
<v Speaker 2>Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.

0:19:13.400 --> 0:19:16.560
<v Speaker 1>Plus listen coast to coast on the Bloomberg Business app.

0:19:16.880 --> 0:19:21.040
<v Speaker 1>Sirius XM Channel one nineteen. The iHeartRadio app and on

0:19:21.119 --> 0:19:22.440
<v Speaker 1>Bloomberg dot Com.

0:19:22.680 --> 0:19:25.800
<v Speaker 2>I'm Brian Curtis and I'm Doug Krisner. Join us again

0:19:25.840 --> 0:19:27.840
<v Speaker 2>tomorrow for all the news you need to start your

0:19:27.920 --> 0:19:33.200
<v Speaker 2>day right here on Bloomberg Daybreak Asia