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Speaker 1: This is Bloomberg Daybreak Asia for this Monday, April third

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Speaker 1: in Hong Kong, Sunday April second in New York. Coming

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Speaker 1: up today, OPEC Plus announces a surprise cut in oil

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Speaker 1: production of more than a million barrels a day. Tesla

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Speaker 1: deliveries rise to a record after the company cut prices

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Speaker 1: for evs and ubs. Will reportedly cut staff of up

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Speaker 1: to thirty percent after its takeover of Credit Suee China,

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Speaker 1: urging Japan not to join the US and the CHIP curbs.

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Speaker 1: This comes as Japan asks for the return of a

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Speaker 1: detained citizen from Beijing. Trump to be arraigned on Tuesday.

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Speaker 1: Explosion in Saint Petersburg kills Russian pro war blogger. I'm

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Speaker 1: at Baxter with Global News. That's all straight ahead on

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Speaker 1: Bloomberg Daybreak Asia, the business news you need to start

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Speaker 1: your day in just one fifteen minute podcast available on Apples, Spotify,

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Speaker 1: the Bloomberg Business app and everywhere you get your podcasts.

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Speaker 1: Good morning, I'm Richard Salaman and I'm Dak Krisner. Here

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Speaker 1: are the stories we're following today, and we're looking at

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Speaker 1: OPEC Plus because it announced the surprise oil production cut

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Speaker 1: of more than a million barrels a day. It abandoned

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Speaker 1: previous assurances that it would hold supply steady. Dumb Closer,

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Speaker 1: an analyst at Oil Price Information Service, as the move

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Speaker 1: is not a good one for the consumer. This is

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Speaker 1: probably worth another three, four or five dollars barrel and

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Speaker 1: the price succrued, and that means higher prices for gasoline, diesel,

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Speaker 1: jet fuel, you name it. The resulting price hikes could

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Speaker 1: cause more inflation, which may force center banks to keep

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Speaker 1: interest rates higher for longer. Might house calls OPEC plus

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Speaker 1: is a move ill advised under current market conditions. Today,

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Speaker 1: Saudi Arabia leather Cartel by pledging its own five hundred

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Speaker 1: thousand barrel a day supply reduction. Philommers including Kuwait, the

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Speaker 1: United Air Memorates and Algeria follows it, while Russia said

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Speaker 1: the production cut was it was implementing from March to

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Speaker 1: June would continue until the end of the year. UBS

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Speaker 1: is reportedly reducing its workforce by between twenty and thirty percent. Now.

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Speaker 1: These job cuts come after UBS completed its takeover of

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Speaker 1: Credit Suis. We have more from Bloomberg's Joe n Wang.

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Speaker 1: The Swiss newspaper Sontaks item reported as many as eleven

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Speaker 1: thousand UBS employees will be laid off in Switzerland and

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Speaker 1: another twenty five thousand will be let go worldwide. Both

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Speaker 1: UBS and Credit Suis together employed almost one hundred and

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Speaker 1: twenty five thousand people at the end of last year.

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Speaker 1: Now we hear some firms are gearing up to recruit

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Speaker 1: some of the investment bankers and wealth managers likely to

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Speaker 1: be let go. They include Joische Bank, Citigroup and JP Morgan. Separately,

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Speaker 1: The Financial Times reported Saturday that UBS has a shortlist

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Speaker 1: of four management consultants to advise on integrating Credit Suis.

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Speaker 1: The newspaper reported UBS is soon to decide between Bain

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Speaker 1: and Company, the Boston Consulting Group, McKinsey and Oliver Wyman

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Speaker 1: in Hong Kong, Joan Wang, Bloomberg Day Bricasia Well. In

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Speaker 1: another development, switch Land's Office of the Attorney General is

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Speaker 1: saying it has opened an investigation into UBS's takeover of

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Speaker 1: Credit Suite and the department is working to identify possible crimes. Rashard,

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Speaker 1: All right, well, let's have a look at Tesla now,

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Speaker 1: as it delivered a record four hundred and twenty two thousand,

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Speaker 1: eight hundred and seventy five cars worldwide in the first quarter,

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Speaker 1: and that compares with the bad what four twenty one

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Speaker 1: thousand that anlets have been expecting. Although deliveries were roughly

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Speaker 1: in line, Tesla would have to pick up the pace

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Speaker 1: of deliveries for the rest of the year. That's according

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Speaker 1: to Gene Munster Deepwater Asset Management, saying that Tesla deliveries

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Speaker 1: group thirty six percent from a year ago. But months

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Speaker 1: have pointed out that CEO Elon Muska's call for fifty

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Speaker 1: percent delivery growth during the company's last earnings call. Tesla

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Speaker 1: even slash prices early in the year to to boost demand.

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Speaker 1: After fourth quarter deliveries are disappointed, Elon Musk and Tesla

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Speaker 1: aiming to make between one point eight to two million

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Speaker 1: vehicles this year. Well, the inflation data released in the

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Speaker 1: US last Friday was below estimates. The core rate of

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Speaker 1: the Personal Consumption Expenditures Price Index or PC rose a

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Speaker 1: mere three tenths of one percent last month. Now, as

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Speaker 1: you know, this is the Fed's preferred measure of inflation.

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Speaker 1: This seems to suggest an end of an aggressive rate

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Speaker 1: hike cycle, maybe near an end. However, the head of

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Speaker 1: the Boston Fed as Susan Collins says it's simply too

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Speaker 1: early to assess whether FED policy where it will go next.

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Speaker 1: My assessment at the last meeting just last week with

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Speaker 1: the summary of economic projections did suggest an additional rate

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Speaker 1: hike and then pausing and holding over the year. But

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Speaker 1: I need to assess all of the data that's going

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Speaker 1: to come in between now and when our next meeting

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Speaker 1: is in early May. The new data that I've seen

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Speaker 1: just in the past week has not materially changed how

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Speaker 1: I'm thinking about things. Boston FED President Susan Collins. There,

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Speaker 1: she went on to say the American economy will likely

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Speaker 1: see some credit tightening as the result of the recent

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Speaker 1: turmoil seen in the banking system, and she said the

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Speaker 1: path to easing inflation would not necessarily trigger an economic downturn.

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Speaker 1: Rashot Yeah. And meantime, former Treasury Secretary Larry Summers said

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Speaker 1: it's too early to give any kind of all clear

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Speaker 1: sign on recent financial troubles in the US. Summers said

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Speaker 1: that there's well under a fifty percent chance of a

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Speaker 1: repeat of the bank runs that brought down Silicon Valley

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Speaker 1: Bank and Signature Bank earlier in March, but he did

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Speaker 1: say that there could still be some kind of other

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Speaker 1: accident that causes a constriction in credit. When you have

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Speaker 1: a series of earthquake tremors, it's a fairly long time

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Speaker 1: before you should be in a position to be confident

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Speaker 1: that you've seen the last of them. And that's why

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Speaker 1: the Fed's got such a difficult job. Summer said, it's

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Speaker 1: plausible the recent banking woes subside without a big impact

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Speaker 1: on credit, leaving in place serious inflation issues. In such

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Speaker 1: a scenario, he thinks the fair will have to tighten

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Speaker 1: much more than what is already priced into mukets. So

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Speaker 1: I think it goes without saying that our top story

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Speaker 1: today is this unexpected cut in production of crude oil

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Speaker 1: from OPEC plus, and I think it's fair to say

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Speaker 1: it's coming at a very inopportune time, just as some

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Speaker 1: of this disinflationary force seems to be taking hold. And

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Speaker 1: this is undoubtedly going to complicate what the FEED has

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Speaker 1: been trying to achieve. The impact of a cut by

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Speaker 1: one point one million barrels will likely lead to higher

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Speaker 1: inflation expectations in the month ahead. So even if credit

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Speaker 1: conditions tighten in the second half as a result of

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Speaker 1: a lot of the stress that we have been seeing

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Speaker 1: in the banking system, the notion of rate cuts that

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Speaker 1: may be a little more difficult to conceive. We're going

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Speaker 1: to take a closer look at that dynamic with our

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Speaker 1: guest Peter Cheer of Academy Securities. Coming up, and before

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Speaker 1: we go to Global news from Dow Jones, McDonald's will

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Speaker 1: reportedly close its US offices temporarily this week. The fast

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Speaker 1: food chain is preparing to inform corporate employees about layoffs

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Speaker 1: as part of a broader restructuring. News is next. China

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Speaker 1: is urging Japan to refrain from joining the US in

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Speaker 1: restricting the export and access to chip making equipment at Baxter.

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Speaker 1: With more from the Bloomberg Newserman San Francisco Eddie. Yeah,

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Speaker 1: that's right do. Beijing is saying the US is trying

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Speaker 1: to suppress the Chinese semiconductor industry, and the suggestion comes

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Speaker 1: with a veiled threat because it comes at the same

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Speaker 1: time Japan is asking for the swift return of a

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Speaker 1: Japanese citizen being detained in China. Beijing says a chip

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Speaker 1: blockade will only strengthen its resolve and chief self reliance.

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Speaker 1: China says a US in the past is suppress Japan

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Speaker 1: and now is suppressing China. Meanwhile, the US is called

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Speaker 1: in the G seven nations to take joint countermeasures if

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Speaker 1: China engages an economic coercion. Donald Trump, the first former

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Speaker 1: or sitting president to be criminally indicted, is set to

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Speaker 1: be processed, photoed, fingerprinted, and arrange and on Tuesday, US.

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Speaker 1: His attorney, Joe Tacopino says that Trump will plead not guilty.

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Speaker 1: He's gearing up for a battle. You know, this is

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Speaker 1: something that obviously we believe it is a political persecution,

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Speaker 1: and I think people on both sides of the I'll

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Speaker 1: believe that that's a complete abuse of power. Tacopin on

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Speaker 1: ABC has heard here on Bloomberg, says they're thinking about

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Speaker 1: a motion to move the trial to Staten Island, but

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Speaker 1: needs to actually see the charges first. And we're ready

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Speaker 1: for this fight, and I look forward to moving this

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Speaker 1: thing along as quickly as possible to exonerate him. He says.

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Speaker 1: If this case wasn't Donald Trump, it would never have

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Speaker 1: gone this far. Now, if there is a trial, the

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Speaker 1: key witness will be Trump fixer Michael Cohen on CBS

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Speaker 1: has heard here on Bloomberg. Cohen says well, his testimony

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Speaker 1: will not be about him. This is solely about accountability.

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Speaker 1: I should not be held accountable for Donald Trump's dirty deeds.

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Speaker 1: Let him be held accountable. Let those in his orbit

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Speaker 1: that are truly accountable, like Bill Barr Right, who he

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Speaker 1: used to weaponize the Justice Department against his critics. He

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Speaker 1: says he's ready to be a powerful witness. Meanwhile, Donald

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Speaker 1: Trump last week on Fox News said that the final analysis,

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Speaker 1: Vladimir Putin will win in Ukraine, but ultimately he's going

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Speaker 1: to take over all of Ukraine. So should a former

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Speaker 1: president be making those kinds of statements. Well, on CNN today,

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Speaker 1: the chair of the Foreign Intelligence Committee, Mike Turner said

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Speaker 1: that is not a foregone conclusion at all, and people

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Speaker 1: should stop making those kinds of statements. He says Putin

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Speaker 1: didn't expect the kind of help in Ukraine that Ukraine

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Speaker 1: is getting from NATO. Putin has said, this is not

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Speaker 1: about Ukraine, this is about Eastern Europe, this is about NATO,

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Speaker 1: this is about our allies. And President She of China

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Speaker 1: and Putin together said this is a result of they're

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Speaker 1: trying to turn back one hundred years. This is authoritarianism

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Speaker 1: versus democracy. We all need to be on the side

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Speaker 1: of democracy turners. In southern Poland today, an explosion to

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Speaker 1: cafe in Saint Petersburg, Russia, has killed Ladin Tatarowski, the

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Speaker 1: military blogger who has supported the war in Ukraine. The

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Speaker 1: explosion also injured twenty five people. The device was the

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Speaker 1: size of a bar of soap, was hidden in a

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Speaker 1: statuette presented to him. That's a task report Global News

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Speaker 1: powered by more than twenty seven hundred journalist and a

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Speaker 1: list in over one hundred twenty countries. In San Francisco,

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Speaker 1: I'm Ed Baxter, and this is Bloomberg. Let's get to

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Speaker 1: our guest to Peter Cheer is with us. He is

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Speaker 1: head of macro strategy at Academy Securities. On the line

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Speaker 1: from here in New York City, Peter, it's always a pleasure.

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Speaker 1: Thanks so much. Just when the market seemed to be

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Speaker 1: taking a little bit of comfort in this reading on

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Speaker 1: the PCE that was below forecast, we have an oil

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Speaker 1: shock now with OPEC plus cutting production unexpectedly by more

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Speaker 1: than a million barrels a day. What does this do

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Speaker 1: to the idea that inflation is going to come down

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Speaker 1: anytime soon. I think it throws a little bit of

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Speaker 1: a rent into that plan. So just this past week

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Speaker 1: I highlighted how much freight shipments were down in the US.

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Speaker 1: The imports into ports were way down. So it's actually

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Speaker 1: not surprising if OPEC is responding because they're probably seeing

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Speaker 1: demand for oil's shrink as the economy is slowing. So

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Speaker 1: to me, that's a bit of confirmation the economy is slowing.

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Speaker 1: That's why OPEC is responding that way. And the flip

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Speaker 1: side of this, it's probably a good reminder of the

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Speaker 1: geopolitical influences that are around right now, where countries in

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Speaker 1: the the least are less dependent on the US than

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Speaker 1: they once were and may be I don't want to

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Speaker 1: say lashing out, but expressing their frustration at policies towards

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Speaker 1: the Middle East at US. The thing is how much

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Speaker 1: of an impact will this have on inflation? And that's

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Speaker 1: going to be key here is that we look at

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Speaker 1: the federal result. I think it's not going to have

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Speaker 1: as much as people thinks. Obviously, the price of oil

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Speaker 1: is going to go higher. I think it's trading five

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Speaker 1: or six dollars a barrel more and that's going to

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Speaker 1: put some pressure on the system. But as a whole.

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Speaker 1: I think it's in response to the slowing that they're

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Speaker 1: seeing that showing up in the data, that freight's turning down,

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Speaker 1: that things like the Baltic Drive and turning down. So

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Speaker 1: I think it's going to create a little bit of

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Speaker 1: inflation fear earlier in the week, But to me, it's

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Speaker 1: really going to resonate with the recession is coming crowd

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Speaker 1: and people are going to be able to talk about

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Speaker 1: ALPEC doing this because they're seeing so much less demand

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Speaker 1: because the economy is slowing much more than the official

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Speaker 1: data is hinting at. But I'm wondering if we begin

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Speaker 1: to see a move up in inflation expectations even before

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Speaker 1: some of the data points began to roll over, and

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Speaker 1: whether or not that complicates the Fed's job and the

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Speaker 1: notion of rate cuts really are taken off the table

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Speaker 1: between now and the end of the year. I think

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Speaker 1: the FED was already trying to get the rate cuts

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Speaker 1: off the table, and they already have an incredibly tough

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Speaker 1: job trying to figure out what they've already done had

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Speaker 1: they pushed too far, what triggered the crisis with Silicon

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Speaker 1: Valley Bank. So they were already in a rock and

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Speaker 1: hard place. This is just going to add to that

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Speaker 1: pressure right now. With that in mind, I mean, let's

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Speaker 1: not forget that. You know, as we see what happened

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Speaker 1: with the banks and the liquidity issues, when does this

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Speaker 1: also affect credit? And I mean that we got these

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Speaker 1: banks who are lightly to be putting up the drool

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Speaker 1: bridge is going to be having much stricter criteria for

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Speaker 1: making loans and the light that that could, of course

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Speaker 1: act as I think they fed themselves suggested between twenty

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Speaker 1: five and fifty basis points as tightening, but it could

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Speaker 1: be much more surely, So I think it's happening. The

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Speaker 1: good news, I guess in some ways is that it

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Speaker 1: started happening over a year ago. So when I talked

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Speaker 1: to large banks, large institutional lenders, they were already tightening

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Speaker 1: credit standards. So this has been in the past, so

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Speaker 1: it's going to hurt a little bit more. I think

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Speaker 1: what's really difficult to tell is that it's probably going

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Speaker 1: to hit small and midsized companies more than the big

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Speaker 1: companies or anythink the big companies have been very good

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Speaker 1: credits companies that have went to them have done well,

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Speaker 1: so I don't think it's going to be dramatic, but

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Speaker 1: it is going to be there. I think we're gonna

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Speaker 1: have to watch local economies very closely because I think

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Speaker 1: this is going to be a very local phenomena. Peter,

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Speaker 1: as you know, we saw enormous volatility in US treasuries

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Speaker 1: for most of the month of March. In your view

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Speaker 1: or things going to be calmer now as we get

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Speaker 1: into the second order, I hope so, But the reality

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Speaker 1: is I don't think they will be. I think we've

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Speaker 1: traded our liquidity system for something that creates the perception

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Speaker 1: of liquidity when you don't get big moves, so everything's

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Speaker 1: super liquid looking. There's little bit off or costs because

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Speaker 1: all these algos are there. But if someone has some

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Speaker 1: size to move, liquidity dissipates pretty quickly. And we're heading

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Speaker 1: into the summer, so I think this might just be

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Speaker 1: a brief respite from that higher volatility. April it's traditionally

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Speaker 1: the best, if not one of the best months for equities.

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Speaker 1: Are you killing your loins in optimism and an anticipation?

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Speaker 1: I am actually not this time. I started being a

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Speaker 1: little bit cautious last week. Obviously was wrong. We had

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Speaker 1: a nice three and a half percent equity rally in

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Speaker 1: the US, and I'm actually getting more cautious. You know,

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Speaker 1: I had to rethink about was I wrong, what did

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Speaker 1: I miss? And I think the markets got ahead of

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Speaker 1: themselves last week, and I'm looking for a bit of

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Speaker 1: a pullback and if anything, hopefully for my sake, these

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Speaker 1: higher oil prices push us down a little bit on

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Speaker 1: I'm curious to get your take on China right now, Peter,

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Speaker 1: and how you're viewing what has been a pretty impressive

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Speaker 1: reopening story. It may be waning just a little bit

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Speaker 1: at the moment, but are you bullish on the China story?

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Speaker 1: I am not. I continue to see the one thing

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Speaker 1: the US politicians are bipartisan on is their distrust of China,

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Speaker 1: and I think that friction is real. I thought it

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Speaker 1: was encouraging jack Ma was allegedly back on shore and

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Speaker 1: being involved in some things. I just see this long

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Speaker 1: term trend that China is less to do with the US,

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Speaker 1: and so that's why I can't get too bullish over

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Speaker 1: China again. You know, you know sort of seen the

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Speaker 1: regulatory I guess a storm Claus disappeared, But you know,

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Speaker 1: when you've got something like the breakup of Ali Baba

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Speaker 1: doesn't that in any way change that you're thinking, given

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Speaker 1: that it perhaps may indicate that they are turning more

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Speaker 1: market friendly once again, there's certainly it was an encouraging steps.

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Speaker 1: So it made me from Diehardberrish to Okay, let's think

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Speaker 1: about what they're doing. But China does play a long game,

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Speaker 1: and I can't really tell whether this is a significant

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Speaker 1: concession that's going to be good for us in the

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Speaker 1: long run, or this is just keeping the wheels turning right.

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Speaker 1: I think China is very good every time the US

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Speaker 1: pushes hard on it, coming up with some plan that

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Speaker 1: lets the US back off and say, Okay, China's playing

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Speaker 1: nice again, only to realize six months to a year

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Speaker 1: down the road they're not. And I think the earlier

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Speaker 1: segment you were talking about China and Japan on chips,

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Speaker 1: I think that's a much bigger issue. There's this overall

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Speaker 1: almost chip battle going on, and that's going to override

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Speaker 1: all the little things that we're seeing. So I just

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Speaker 1: can't get that comfortable with China. Well, you mentioned Japan there, Peter,

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Speaker 1: And as you know, at the end of the week,

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Speaker 1: Harihiko Coroda will end what has been a ten year

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Speaker 1: run as the head of the Bank of Japan. A

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Speaker 1: new governor, Kazuo Ueita, will take the reins, and there

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Speaker 1: had been a lot of speculation as to whether or

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Speaker 1: not we're going to see a Polish to shift on

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Speaker 1: the part of the BOJ under this new governor. Is

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Speaker 1: that something you're expecting. I would expect to see a

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Speaker 1: little bit of a shift. They've been somewhat the one outlier,

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Speaker 1: I think, as the ECB and FET have been so aggressive.

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Speaker 1: Japan has done a few things like these restrictions on

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Speaker 1: their targeting of where the tenure has to trade, but

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Speaker 1: they've still been relatively easy money. So it would not

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Speaker 1: surprise me to see them fold into the world order

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Speaker 1: a little bit more and come out a little bit hockey,

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Speaker 1: which I think would be a surprise. Well as what's

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Speaker 1: his legacy. Yeah, that's a hard one to say. I

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Speaker 1: think China, you know, sorry, Japan. The one thing they

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Speaker 1: managed to go through this crisis is they did not

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Speaker 1: have the inflation that the rest of the world had,

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Speaker 1: and that's something I think we're all trying to figure

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Speaker 1: out why why not. I do think Japan's actually gonna

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Speaker 1: be a really interesting investing story as countries get more

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Speaker 1: and more nervous about China and their sphere of influence. Japan,

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Speaker 1: I think is a very good foil to that, and

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Speaker 1: I'm expecting Japan to actually do very well of the

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Speaker 1: coming years. So, Peter, if you had to begin the

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Speaker 1: second quarter on taking a long position in markets globally

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Speaker 1: right now, is there a case or something that you

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Speaker 1: see a scenario that is particularly attractive. I actually like Japan.

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Speaker 1: I think is interesting, and I've got to rethink. I

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Speaker 1: was actually very bullish energy because I believe a lot

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Speaker 1: of people were playing energy from the short side, thinking

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Speaker 1: that that was going to be one way to express

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Speaker 1: the economic slowdown, and OPEC plus's willingness to restrict that

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Speaker 1: might make that trade even more interesting and could help

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Speaker 1: energy companies across the globe. What would be your trade though,

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Speaker 1: what would be your favorite trade? I like some of

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Speaker 1: the European energy companies that are very progressive in terms

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Speaker 1: of moving towards sustainability, but have a very good core business.

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Speaker 1: So I like that right now, and I would probably

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Speaker 1: buy some long dated treasuries, and overall, I would short

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Speaker 1: some of the more disruptive things that have moved up recently,

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Speaker 1: very quickly Peter on the subject of geopolitics, how are

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Speaker 1: you evalue waiting that risk globally right now? So you know,

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Speaker 1: at Academy we work for seventeen retire generals and admirals.

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Speaker 1: We talked about this all the time. We've felt some

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Speaker 1: recent summits. There has not been a time in the

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Speaker 1: last five years that we have seen as much geopolitical

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Speaker 1: risk out there, and very meaningful geopolitical risk that you

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Speaker 1: could see China's selling weapons to Russia, which I think

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Speaker 1: would be dramatic for the markets. North Korea is saber

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Speaker 1: rattling again, so I'm very nervous and I don't see

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Speaker 1: a lot of good outcomes on the geopolitical front. So

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Speaker 1: that's something I think the market is not pricing in

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Speaker 1: right now. This is Bloomberg day Break Asia. You're a

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