1
00:00:02,440 --> 00:00:05,880
Speaker 1: This is Bloomberg Daybreak Asia for this Friday, June sixteenth

2
00:00:05,920 --> 00:00:09,280
Speaker 1: in Hong Kong, Thursday June fifteenth in New York and

3
00:00:09,400 --> 00:00:10,480
Speaker 1: coming up today.

4
00:00:10,360 --> 00:00:15,560
Speaker 2: US equities rally, tech shares gain on exuberant surrounding artificial intelligence.

5
00:00:15,680 --> 00:00:19,160
Speaker 1: The ECB hikes interest rates again in President Christine Legard

6
00:00:19,280 --> 00:00:22,320
Speaker 1: says a July increase is also very likely.

7
00:00:22,200 --> 00:00:24,480
Speaker 2: And the Bank of Japan is expected to leave its

8
00:00:24,560 --> 00:00:27,400
Speaker 2: ultra loose monetary policy unchanged today.

9
00:00:27,600 --> 00:00:31,280
Speaker 3: Kissinger says war between China and Taiwan probable without change

10
00:00:31,280 --> 00:00:34,200
Speaker 3: in course blank and writing is for China trip NATO

11
00:00:34,280 --> 00:00:37,920
Speaker 3: pledges more aid for Ukraine. You and Head calls fossil

12
00:00:37,920 --> 00:00:41,480
Speaker 3: fuel companies planet wreckers. I'm at Baxter with Global News.

13
00:00:44,120 --> 00:00:47,800
Speaker 4: That's all straight ahead on Bloomberg Daybreak Asia, the business

14
00:00:47,840 --> 00:00:50,279
Speaker 4: news you need to start your day in just one

15
00:00:50,400 --> 00:00:55,320
Speaker 4: fifteen minute podcast available on Apples, Spotify, the Bloomberg Business app,

16
00:00:55,360 --> 00:00:57,320
Speaker 4: and everywhere you get your podcasts.

17
00:01:00,280 --> 00:01:03,160
Speaker 2: Good morning, I'm Doug Krisner and I'm Brian Curtiz.

18
00:01:03,160 --> 00:01:06,000
Speaker 1: Here are the stories we're following today. The Bank of

19
00:01:06,080 --> 00:01:09,959
Speaker 1: Japan is widely expected to leave its ultra loose monetary

20
00:01:10,000 --> 00:01:13,679
Speaker 1: policy unchanged today. Let's get the story from Bloomberg's Bonnie ow.

21
00:01:14,319 --> 00:01:17,920
Speaker 5: Most economists in a Bloomberg survey predicted the boj's negative

22
00:01:18,000 --> 00:01:21,280
Speaker 5: rate policy and youth curve control program will be kept

23
00:01:21,319 --> 00:01:23,680
Speaker 5: the same. Some say one of the main reasons for

24
00:01:23,760 --> 00:01:26,520
Speaker 5: the hold is the chance for an early election. Governor

25
00:01:26,560 --> 00:01:29,520
Speaker 5: Kazuo Oweita has said that he expects inflation to fall

26
00:01:29,560 --> 00:01:32,480
Speaker 5: below two percent towards the second half of this fiscal year,

27
00:01:32,640 --> 00:01:35,640
Speaker 5: ending in March, but more than half of private sector

28
00:01:35,680 --> 00:01:39,400
Speaker 5: economists disagree with that view. Over a third of economists

29
00:01:39,520 --> 00:01:42,240
Speaker 5: say a policy shift could happen next month due to

30
00:01:42,360 --> 00:01:46,319
Speaker 5: higher inflation in Hong Kong. I'm Bonnie Ol Bloomberg Daybreak Asia.

31
00:01:46,440 --> 00:01:49,240
Speaker 2: Let's talk about the European Central Bank. As expected, we

32
00:01:49,360 --> 00:01:51,720
Speaker 2: got a rate hike of twenty five basis points, so

33
00:01:51,800 --> 00:01:54,080
Speaker 2: the policy rate now is at three and a half percent.

34
00:01:54,160 --> 00:01:57,040
Speaker 2: That's the highest level in more than two decades. It

35
00:01:57,160 --> 00:01:59,680
Speaker 2: is in line with what economists and traders were expecting.

36
00:01:59,720 --> 00:02:03,640
Speaker 2: Now we had ECB President Christine Leguard saying the outlook

37
00:02:03,720 --> 00:02:08,160
Speaker 2: for both economic growth and inflation remain highly uncertain, and

38
00:02:08,280 --> 00:02:11,520
Speaker 2: she said the ECB still has ground to cover in

39
00:02:11,600 --> 00:02:12,600
Speaker 2: its inflation fight.

40
00:02:13,160 --> 00:02:16,320
Speaker 6: It is very likely the case that we will continue

41
00:02:16,360 --> 00:02:20,440
Speaker 6: to increase rates in July, which probably doesn't come as

42
00:02:20,480 --> 00:02:23,840
Speaker 6: a big surprise to you, but that's what I'm telling you.

43
00:02:24,280 --> 00:02:28,040
Speaker 6: And this is so because we are determined to reach

44
00:02:28,240 --> 00:02:30,400
Speaker 6: our target in a timely manner.

45
00:02:30,800 --> 00:02:33,959
Speaker 2: That is ECB President Christine Leguard. Now we are told

46
00:02:34,000 --> 00:02:37,200
Speaker 2: that officials at the ECB are expecting a tough debate

47
00:02:37,360 --> 00:02:40,559
Speaker 2: next month on whether another rate hike will be necessary

48
00:02:40,800 --> 00:02:44,720
Speaker 2: in September. Leguards seem to avoid giving any guidance today

49
00:02:45,040 --> 00:02:47,000
Speaker 2: on what may happen beyond July.

50
00:02:47,320 --> 00:02:48,280
Speaker 7: Bryan Well.

51
00:02:48,320 --> 00:02:51,120
Speaker 1: The ECB's move came a day after the FED paused

52
00:02:51,160 --> 00:02:55,160
Speaker 1: its rate hiking cycle, although the FED did signal that

53
00:02:55,160 --> 00:02:58,720
Speaker 1: they would likely resume tightening at some point in the

54
00:02:58,760 --> 00:03:01,359
Speaker 1: rest of this year. We heard today from former FED

55
00:03:01,440 --> 00:03:04,720
Speaker 1: Vice chair Richard Clara. Clara is saying that he sees

56
00:03:04,760 --> 00:03:08,639
Speaker 1: the fed's hiking campaign ending soon after it observes key

57
00:03:08,680 --> 00:03:09,440
Speaker 1: economic data.

58
00:03:09,800 --> 00:03:12,440
Speaker 8: The FED has inflation coming down more slowly than a

59
00:03:12,440 --> 00:03:16,160
Speaker 8: lot of folks, and the FED also has a smaller

60
00:03:16,240 --> 00:03:19,720
Speaker 8: rise in unemployment than a lot of people expect. And

61
00:03:19,760 --> 00:03:22,240
Speaker 8: so I do think that if the data is closer

62
00:03:22,280 --> 00:03:26,040
Speaker 8: to market expectations versus FED expectations that they could be

63
00:03:26,120 --> 00:03:28,519
Speaker 8: done in July. So I really think, for the first

64
00:03:28,600 --> 00:03:31,120
Speaker 8: time in a while, they really are data dependent.

65
00:03:31,360 --> 00:03:34,080
Speaker 1: And there isn't all that much data to be dependent

66
00:03:34,160 --> 00:03:36,960
Speaker 1: on or to sink your teeth into. The FED only

67
00:03:37,000 --> 00:03:40,560
Speaker 1: has one more labor report and one consumer price index

68
00:03:40,640 --> 00:03:44,119
Speaker 1: reading to analyze before that next policy decision, by the way,

69
00:03:44,120 --> 00:03:47,120
Speaker 1: that comes up on July twenty fifth and twenty sixth.

70
00:03:47,480 --> 00:03:51,440
Speaker 2: We were talking earlier about this exuberant surrounding artificial intelligence.

71
00:03:51,520 --> 00:03:54,680
Speaker 2: After the bell, Adobe raised its full year outlooks for

72
00:03:54,720 --> 00:03:58,839
Speaker 2: both revenue and profit. It seems the company is optimistic

73
00:03:59,000 --> 00:04:03,040
Speaker 2: that generative AI features will be raising demand for its software.

74
00:04:03,080 --> 00:04:04,840
Speaker 2: We have more from Bloomberg's Charlie Pellett.

75
00:04:05,160 --> 00:04:09,200
Speaker 7: Adobe says sales will be about nineteen point three billion

76
00:04:09,280 --> 00:04:12,440
Speaker 7: dollars in the fiscal year ending in November, compared with

77
00:04:12,520 --> 00:04:17,080
Speaker 7: an earlier forecast of about nineteen point two billion. Adobe

78
00:04:17,160 --> 00:04:21,000
Speaker 7: is the longtime top seller of software for creative professionals.

79
00:04:21,320 --> 00:04:25,839
Speaker 7: It is adding generative AI features throughout its products. Last week,

80
00:04:25,880 --> 00:04:29,839
Speaker 7: the company unveiled enterprise level subscriptions for the new tools,

81
00:04:30,080 --> 00:04:35,279
Speaker 7: which include legal assurance against copyright claims in New York

82
00:04:35,640 --> 00:04:39,040
Speaker 7: Charlie Pellett Bloomberg Daybreak Asia, while.

83
00:04:38,880 --> 00:04:42,320
Speaker 1: The European Commission is taking a more aggressive stance on

84
00:04:42,440 --> 00:04:46,680
Speaker 1: Shiny's tech companies, including Huawei. Bloomberg's Joan Wong has that

85
00:04:46,800 --> 00:04:47,840
Speaker 1: story from Hong Kong.

86
00:04:48,400 --> 00:04:51,080
Speaker 9: The EU has asked as member nations to stop using

87
00:04:51,160 --> 00:04:54,880
Speaker 9: Huawei and z Tes advanced and mobile network equipment. The

88
00:04:54,880 --> 00:04:58,040
Speaker 9: Commission has explicitly labeled the companies for the first time

89
00:04:58,279 --> 00:05:01,599
Speaker 9: as high risk vendors. The latest call comes as EU

90
00:05:01,720 --> 00:05:04,760
Speaker 9: nations face increasing pressure from the US to take a

91
00:05:04,800 --> 00:05:08,120
Speaker 9: harder stance on China. So far, Germany and Spain have

92
00:05:08,200 --> 00:05:11,599
Speaker 9: been relying on Chinese equipment makers. Sources say that EU

93
00:05:11,680 --> 00:05:15,400
Speaker 9: finds the level of reliance unacceptable. Still, the EU has

94
00:05:15,440 --> 00:05:18,159
Speaker 9: limited authority to force members to implement bands in the

95
00:05:18,240 --> 00:05:21,719
Speaker 9: name of national security. In Hong Kong, Join Wang, Bloomberg

96
00:05:21,760 --> 00:05:22,400
Speaker 9: day Brigaisia.

97
00:05:22,720 --> 00:05:25,560
Speaker 1: This along with Doug Krisner Paul Allen will join us shortly,

98
00:05:25,760 --> 00:05:29,520
Speaker 1: so Doug feels a little like a breakout here inequities,

99
00:05:29,880 --> 00:05:32,400
Speaker 1: which will be a pain for the Bears. But there

100
00:05:32,520 --> 00:05:35,640
Speaker 1: was this one from JP Morgan saying that given all

101
00:05:35,680 --> 00:05:38,040
Speaker 1: the gains that we've seen inequity. This will be an

102
00:05:38,080 --> 00:05:40,880
Speaker 1: issue for sovereign wealth and pension funds and they will

103
00:05:40,880 --> 00:05:45,200
Speaker 1: have to rebalance to try to get their bond portfolio

104
00:05:45,400 --> 00:05:48,200
Speaker 1: up to match what's happening in inequity. So I think

105
00:05:48,279 --> 00:05:51,480
Speaker 1: JP Morgan's estimating you could see a five percent pullback

106
00:05:51,520 --> 00:05:53,120
Speaker 1: pretty quickly because of that.

107
00:05:53,720 --> 00:05:55,600
Speaker 2: Then, if you look at what's happening in the bond market,

108
00:05:55,680 --> 00:05:58,520
Speaker 2: an interesting day as yields come in. I think the

109
00:05:58,560 --> 00:06:02,880
Speaker 2: Fed maybe well trying to communicate something that the market

110
00:06:02,920 --> 00:06:05,920
Speaker 2: really doesn't believe. Right now, the Fed speak begins in

111
00:06:06,040 --> 00:06:08,520
Speaker 2: ernest tomorrow. We're going to hear from Governor Chris Waller.

112
00:06:08,560 --> 00:06:11,919
Speaker 2: He has been very hawkish. The projection that we learned

113
00:06:11,920 --> 00:06:15,839
Speaker 2: about yesterday is that another fifty basis points in tightening

114
00:06:15,880 --> 00:06:18,599
Speaker 2: as being forecast. But I thought it very interesting today

115
00:06:18,640 --> 00:06:21,800
Speaker 2: that the CIO of louthhold this is Doug Ramsey. He

116
00:06:21,920 --> 00:06:25,479
Speaker 2: was saying his biggest concern by far is the lag

117
00:06:25,520 --> 00:06:27,919
Speaker 2: impact of the last fifteen months of tightening.

118
00:06:28,480 --> 00:06:28,760
Speaker 4: Yeah.

119
00:06:28,880 --> 00:06:31,080
Speaker 1: Yeah, that's something that we just can't know. Can we

120
00:06:31,279 --> 00:06:34,080
Speaker 1: exactly what the impact will be? I know you focused

121
00:06:34,960 --> 00:06:38,000
Speaker 1: quite nicely on how there could be more in the

122
00:06:38,000 --> 00:06:40,919
Speaker 1: regional banking sector that hits and Pal talked about that

123
00:06:41,000 --> 00:06:43,800
Speaker 1: a little bit yesterday, and then, you know, not to

124
00:06:43,880 --> 00:06:46,360
Speaker 1: change the subject completely, but we have another whole set

125
00:06:46,400 --> 00:06:49,320
Speaker 1: of issues in China, and we do have this State

126
00:06:49,360 --> 00:06:53,120
Speaker 1: Council meeting today that we're expecting to produce some new

127
00:06:53,160 --> 00:06:57,600
Speaker 1: stimulus measures. Our story says this could include property and

128
00:06:57,680 --> 00:07:02,200
Speaker 1: we also quoted from officials yesterday talking about some stimulus

129
00:07:02,200 --> 00:07:06,279
Speaker 1: for autos, home appliances, catering industries. Those would be the

130
00:07:06,320 --> 00:07:09,560
Speaker 1: continuation of the targeting. But then, as you mentioned on

131
00:07:09,600 --> 00:07:12,360
Speaker 1: our call, the Wall Street Journal is talking about more

132
00:07:12,440 --> 00:07:14,720
Speaker 1: infrastructure spending. We've certainly seen a lot of that in

133
00:07:14,840 --> 00:07:15,640
Speaker 1: Chine over the years.

134
00:07:15,680 --> 00:07:17,680
Speaker 2: And if you look at the data that we had yesterday,

135
00:07:17,720 --> 00:07:21,280
Speaker 2: the activity data from May, growth and industrial outputs slowing

136
00:07:21,280 --> 00:07:23,600
Speaker 2: to a rate of three and a half percent annually.

137
00:07:23,840 --> 00:07:28,120
Speaker 2: Retail sales missed estimates at twelve point seven percent. So

138
00:07:28,160 --> 00:07:31,520
Speaker 2: there obviously are signs of weakness and that was one

139
00:07:31,520 --> 00:07:34,440
Speaker 2: of the reasons that the PBOC did what it did yesterday.

140
00:07:35,000 --> 00:07:38,720
Speaker 1: Yeah, absolutely, cutting that MLF by ten basis points. All right,

141
00:07:38,720 --> 00:07:42,560
Speaker 1: it's time now for Global news. I should mention we

142
00:07:42,600 --> 00:07:45,520
Speaker 1: have Mark Jim Brony coming up head of US Equities

143
00:07:45,560 --> 00:07:48,760
Speaker 1: at Barrow Hanley Global Investors. That'll be after we get

144
00:07:48,800 --> 00:07:51,920
Speaker 1: to news with Ed Baxter in San Francisco. So Ed,

145
00:07:51,960 --> 00:07:54,960
Speaker 1: the former US Secretary of State Henry Kissinger, who is

146
00:07:55,080 --> 00:07:58,800
Speaker 1: very influential in terms of US China relations, is worried

147
00:07:58,840 --> 00:08:00,800
Speaker 1: about Taiwan. China tell us more.

148
00:08:01,080 --> 00:08:05,000
Speaker 3: Yeah, absolutely, He says military conflict between China and Taiwan

149
00:08:05,080 --> 00:08:08,360
Speaker 3: potentially likely. Brian Kissinger says there needs to be a

150
00:08:08,400 --> 00:08:11,920
Speaker 3: new direction and dialogue. In an exclusive interview with Bloomberg

151
00:08:11,920 --> 00:08:15,280
Speaker 3: News editor in chief John Mitlithwaite, he says the trajectory

152
00:08:15,360 --> 00:08:17,240
Speaker 3: of the talks needs to change.

153
00:08:17,720 --> 00:08:23,120
Speaker 10: They have been signs on both sides of trying to

154
00:08:23,560 --> 00:08:29,040
Speaker 10: end them. They have not yet actually engaged in the

155
00:08:29,240 --> 00:08:33,560
Speaker 10: suit of dialogue. SI that I suggest it.

156
00:08:34,000 --> 00:08:36,600
Speaker 3: So, he says if not, if they don't change, he

157
00:08:36,640 --> 00:08:41,360
Speaker 3: feels military conflict is probable. Remember, Kissinger was a key architect,

158
00:08:41,400 --> 00:08:44,040
Speaker 3: as Brian referenced on the Nixon administration of what is

159
00:08:44,080 --> 00:08:47,320
Speaker 3: called the Opening of China and Ping Pong diplomacy. He

160
00:08:47,400 --> 00:08:51,479
Speaker 3: also told John that if Ukraine prevails against a Russian invasion,

161
00:08:51,800 --> 00:08:55,720
Speaker 3: Vladimir Putin will struggle to hold on to Power. For

162
00:08:55,800 --> 00:08:59,160
Speaker 3: the full conversation, get the latest Bloomberg Talks podcast wherever

163
00:08:59,200 --> 00:09:01,800
Speaker 3: you download, or you can watch it on Friday night,

164
00:09:01,840 --> 00:09:05,480
Speaker 3: seven pm Wall Street Time on Bloomberg Television. Meanwhile, The

165
00:09:05,480 --> 00:09:07,720
Speaker 3: Globe is on the cusp of US Secretary of State

166
00:09:07,760 --> 00:09:09,760
Speaker 3: Anthony Blincoln's trip to Beijing.

167
00:09:10,480 --> 00:09:13,280
Speaker 11: They're trying to kind of reestablish, you know, a line

168
00:09:13,280 --> 00:09:15,800
Speaker 11: of communication, and I think there's ascentive on both sides

169
00:09:15,840 --> 00:09:16,160
Speaker 11: to do that.

170
00:09:16,440 --> 00:09:19,440
Speaker 3: Bloomberg's Dan Flatley says, Taiwan certainly on the table.

171
00:09:19,480 --> 00:09:22,959
Speaker 11: Anytime that you talk to anyone from the Chinese government,

172
00:09:23,160 --> 00:09:25,760
Speaker 11: you're going to be talking about Taiwan, because that is

173
00:09:25,800 --> 00:09:28,400
Speaker 11: a core issue for them, as they call it, and

174
00:09:28,440 --> 00:09:30,560
Speaker 11: it is a very important issue for the US as

175
00:09:30,600 --> 00:09:33,480
Speaker 11: well for a variety of reasons. And so if Blincoln

176
00:09:33,559 --> 00:09:37,120
Speaker 11: does meet with Chinese President Jijimping, I'm sure that will

177
00:09:37,120 --> 00:09:39,480
Speaker 11: be a topic that they may touch upon, although I

178
00:09:39,520 --> 00:09:42,679
Speaker 11: don't think it will be a primary topic of discussion.

179
00:09:42,480 --> 00:09:44,640
Speaker 3: He says, try to keep forward momentum to talk about

180
00:09:44,679 --> 00:09:48,240
Speaker 3: economic issues and climate change, among other things. Meanwhile, NATO

181
00:09:48,320 --> 00:09:50,920
Speaker 3: and the US are meeting today about providing more aid

182
00:09:51,040 --> 00:09:54,439
Speaker 3: and arms to Ukraine. US provided a three hundred and

183
00:09:54,480 --> 00:09:56,640
Speaker 3: twenty five million dollar eight package this week.

184
00:09:56,800 --> 00:09:59,920
Speaker 2: This is General Mark Millie. This package procures critical cap

185
00:10:00,040 --> 00:10:05,720
Speaker 2: abilities including Patriot munitions, Hawk air defense systems, artillery, rock, communitions, maintenance, statement, sport,

186
00:10:05,840 --> 00:10:06,320
Speaker 2: much more.

187
00:10:06,440 --> 00:10:10,200
Speaker 3: And NATO Secretary General Jen Stottenberg says Ukraine's counteroffensive is

188
00:10:10,200 --> 00:10:10,680
Speaker 3: going better.

189
00:10:10,800 --> 00:10:16,400
Speaker 12: Ukrainians have launched their counter offensive. They're making making gains

190
00:10:16,440 --> 00:10:19,160
Speaker 12: and of course this is due to the bravery of

191
00:10:19,160 --> 00:10:23,040
Speaker 12: the skills of the Ukrainian forces. But the supporter from

192
00:10:23,480 --> 00:10:27,199
Speaker 12: natan LAS is also of course critical.

193
00:10:26,880 --> 00:10:29,640
Speaker 3: And he says could be more aid coming as the

194
00:10:29,640 --> 00:10:33,520
Speaker 3: meetings continue. You and Secretary General Antonio Guteras today calling

195
00:10:33,520 --> 00:10:36,800
Speaker 3: on the oil and gas industry to leave their products

196
00:10:36,840 --> 00:10:41,079
Speaker 3: in the ground. He says the companies that operate now

197
00:10:41,920 --> 00:10:46,880
Speaker 3: are planet Wreckers PGA. As we go live to the

198
00:10:47,360 --> 00:10:50,440
Speaker 3: LA Live Us Open at the Los Angeles Country Club

199
00:10:50,480 --> 00:10:53,960
Speaker 3: in California. Now they are in the clubhouse. The two

200
00:10:54,040 --> 00:10:56,760
Speaker 3: leaders now and they're up by five strokes are Ricky

201
00:10:57,040 --> 00:11:01,920
Speaker 3: Fowler and Xander Shuffley. They're shot a round of sixty two.

202
00:11:02,080 --> 00:11:05,160
Speaker 3: So they're in the clubhouse at eight under and they're

203
00:11:05,280 --> 00:11:07,360
Speaker 3: up on the leaderboard. Global New was fired by more

204
00:11:07,360 --> 00:11:09,640
Speaker 3: than twenty seven hundred journalists and analysts in over one

205
00:11:09,720 --> 00:11:12,720
Speaker 3: hundred and twenty countries in San Francisco. I'm Ed Baxter,

206
00:11:12,840 --> 00:11:14,679
Speaker 3: and this is Bloomberg.

207
00:11:14,760 --> 00:11:17,400
Speaker 1: I'm Brian Curtis here in Hong Kong, along with Paul

208
00:11:17,440 --> 00:11:21,360
Speaker 1: Allen in Sydney, and our guest is Mark Gimbroni, who's

209
00:11:21,400 --> 00:11:25,560
Speaker 1: head of US equities at Barrow Hanley Global Investors. Mark,

210
00:11:25,840 --> 00:11:27,480
Speaker 1: great to have you on the program. Feels like a

211
00:11:27,520 --> 00:11:30,200
Speaker 1: breakout in stocks here, especially with this broadening out. You

212
00:11:30,240 --> 00:11:33,320
Speaker 1: had eight out of eleven sectors all eleven higher, but

213
00:11:33,440 --> 00:11:36,120
Speaker 1: eight out of eleven up more than one percent, So

214
00:11:36,240 --> 00:11:39,440
Speaker 1: as a real broadening out of the rally. The Fed

215
00:11:39,559 --> 00:11:42,160
Speaker 1: might not like it, The Bears certainly won't like it,

216
00:11:42,240 --> 00:11:43,880
Speaker 1: but you know, for the rest of us, it's kind

217
00:11:43,920 --> 00:11:46,760
Speaker 1: of like a party on garth. Do you feel comfortable

218
00:11:46,760 --> 00:11:47,079
Speaker 1: with this?

219
00:11:47,480 --> 00:11:49,520
Speaker 13: Well, I will say that you're right. First of all,

220
00:11:49,559 --> 00:11:51,800
Speaker 13: thank you for having me on. It is good to

221
00:11:51,840 --> 00:11:55,120
Speaker 13: see the market breath so strong, and that gives us

222
00:11:55,120 --> 00:11:57,880
Speaker 13: some confidence that, you know, the market can continue to

223
00:11:57,920 --> 00:12:00,240
Speaker 13: have gains. We saw that again and the week or

224
00:12:00,280 --> 00:12:02,840
Speaker 13: so Friday when we got the employment report, and that

225
00:12:03,000 --> 00:12:05,760
Speaker 13: was also very positive. We saw good breath in the market,

226
00:12:06,360 --> 00:12:10,120
Speaker 13: and what that's trying to telegraph is a soft landing

227
00:12:10,120 --> 00:12:12,760
Speaker 13: in the economy. So clearly we have the thread raising rates,

228
00:12:13,160 --> 00:12:16,480
Speaker 13: but the economy is still strong. We have equidity coming

229
00:12:16,520 --> 00:12:18,720
Speaker 13: out of the system, but the consumer is still strong

230
00:12:19,000 --> 00:12:21,920
Speaker 13: and employment is still strong. And if we can have

231
00:12:22,040 --> 00:12:26,079
Speaker 13: those two things continue, we could see the market continue

232
00:12:26,080 --> 00:12:28,880
Speaker 13: to have strength and broadening out. I think that's really

233
00:12:28,960 --> 00:12:32,760
Speaker 13: important because the market's been too narrow for most of

234
00:12:32,800 --> 00:12:35,120
Speaker 13: this year. In order for us to really have a

235
00:12:35,160 --> 00:12:38,280
Speaker 13: sustained rally, we need to have more broadening out and

236
00:12:38,360 --> 00:12:41,360
Speaker 13: the active stock, I mean, the average stock do better

237
00:12:41,400 --> 00:12:42,360
Speaker 13: than the biggest stocks.

238
00:12:42,640 --> 00:12:46,439
Speaker 14: Yeah, the theme of that broadening out. If you look

239
00:12:46,480 --> 00:12:48,720
Speaker 14: at that ISMP rally and you strip out those big

240
00:12:48,760 --> 00:12:52,160
Speaker 14: tech names, you strip out the AI rally, suddenly it's

241
00:12:52,240 --> 00:12:56,200
Speaker 14: not looking quite so convincing. How convinced to you that

242
00:12:56,240 --> 00:12:57,720
Speaker 14: we're going to see that broadening out.

243
00:12:58,240 --> 00:13:01,040
Speaker 13: I think that at the moment, I'm a little bit

244
00:13:01,120 --> 00:13:04,280
Speaker 13: more concerned about the rally continuing for the rest of

245
00:13:04,320 --> 00:13:06,440
Speaker 13: the year than not. And there's kind of two reasons

246
00:13:06,480 --> 00:13:10,360
Speaker 13: for that. One is the FED. It is the pulling

247
00:13:10,400 --> 00:13:13,120
Speaker 13: of the liquidity there in rising rates, and the natural

248
00:13:13,880 --> 00:13:19,000
Speaker 13: you know, roll through or lag of those effects. I

249
00:13:19,000 --> 00:13:21,440
Speaker 13: think we're seeing that. I think the market's trying to grip,

250
00:13:22,040 --> 00:13:24,920
Speaker 13: you know, with that or deal with it. And frankly,

251
00:13:24,960 --> 00:13:27,160
Speaker 13: the market hasn't believed that the FED is going to

252
00:13:27,200 --> 00:13:30,160
Speaker 13: be as strong as it has throughout the whole year.

253
00:13:30,679 --> 00:13:33,079
Speaker 13: The second thing that worries me though, more than the FED,

254
00:13:33,120 --> 00:13:35,680
Speaker 13: and so I think the market understands what the FED

255
00:13:35,760 --> 00:13:39,440
Speaker 13: is doing. Economy is strong. I think we can climb

256
00:13:39,440 --> 00:13:42,280
Speaker 13: that wall of worry. But the second piece to me

257
00:13:42,360 --> 00:13:44,600
Speaker 13: is what happened in March in the US is real

258
00:13:45,040 --> 00:13:47,800
Speaker 13: from a liquidity in a banking system perspective. And so

259
00:13:48,480 --> 00:13:52,560
Speaker 13: while we're through kind of the fear or crisis of

260
00:13:52,600 --> 00:13:55,160
Speaker 13: confidence for a few of the institutions now that are

261
00:13:55,160 --> 00:14:00,840
Speaker 13: no longer around, what may be coming next is additional regulation.

262
00:14:01,559 --> 00:14:04,400
Speaker 13: Certainly for the small and mid sized banks. We're seeing

263
00:14:04,440 --> 00:14:08,360
Speaker 13: a focus on liquidity, and in doing so, we're seeing

264
00:14:08,360 --> 00:14:11,440
Speaker 13: a tightening of underwriting standards. And when you get within

265
00:14:11,480 --> 00:14:15,120
Speaker 13: a community, small and medium sized businesses have about seventy

266
00:14:15,160 --> 00:14:18,600
Speaker 13: percent of their lending needs within the community in which

267
00:14:18,640 --> 00:14:22,560
Speaker 13: they serve, and so as those banks pull back to

268
00:14:22,640 --> 00:14:25,840
Speaker 13: focus on liquidity, that's going to have a ripple effect

269
00:14:26,080 --> 00:14:28,520
Speaker 13: that I don't think the market is quite prepared for yet,

270
00:14:28,520 --> 00:14:31,360
Speaker 13: nor do we really know how to project beyond what

271
00:14:31,400 --> 00:14:33,400
Speaker 13: the Fed is doing. But it's going to be additive

272
00:14:34,160 --> 00:14:36,480
Speaker 13: in terms of the impact on the economy, and that's

273
00:14:36,520 --> 00:14:38,840
Speaker 13: what has me the most worried as we work through

274
00:14:38,880 --> 00:14:39,760
Speaker 13: the rest of this year.

275
00:14:40,120 --> 00:14:43,960
Speaker 1: And well, there's also there's also technical aspects like rebalancing.

276
00:14:44,000 --> 00:14:46,880
Speaker 1: I mentioned JP Morgan is concerned about sovereign wealth and

277
00:14:46,960 --> 00:14:51,280
Speaker 1: pension funds needing to probably reduce equity exposure and add

278
00:14:51,520 --> 00:14:54,800
Speaker 1: to their fixed income exposure. However, I might add that

279
00:14:55,120 --> 00:14:57,160
Speaker 1: they are an awful lot of people that got all

280
00:14:57,160 --> 00:15:01,640
Speaker 1: excited about, you know, getting short term US treasuries with

281
00:15:01,680 --> 00:15:04,320
Speaker 1: a four and a half percent yield, and they're kind

282
00:15:04,320 --> 00:15:07,040
Speaker 1: of sweating bullets here, and all their friends are talking about,

283
00:15:07,080 --> 00:15:10,120
Speaker 1: you know, twenty thirty percent gains in tech and such.

284
00:15:10,520 --> 00:15:12,720
Speaker 1: So there might be some rebalancing from that as well.

285
00:15:12,920 --> 00:15:14,920
Speaker 1: Does that neutralize a little?

286
00:15:15,240 --> 00:15:17,960
Speaker 13: I think so. I think those are technical and more

287
00:15:18,000 --> 00:15:20,560
Speaker 13: short term issues. That's not what the market is going

288
00:15:20,600 --> 00:15:22,120
Speaker 13: to be focused on over a long period of time,

289
00:15:22,280 --> 00:15:24,360
Speaker 13: or earnings or cash flows are going I do think

290
00:15:24,400 --> 00:15:27,080
Speaker 13: for a while the market finally has some competition, right,

291
00:15:27,160 --> 00:15:30,400
Speaker 13: meaning interest rates are attractive enough to get a risk

292
00:15:30,440 --> 00:15:34,240
Speaker 13: free return. That is okay, right, But having said that,

293
00:15:34,800 --> 00:15:36,560
Speaker 13: the mark is still the best place to be over

294
00:15:36,600 --> 00:15:38,840
Speaker 13: a longer period of time, and there's been a lot

295
00:15:38,840 --> 00:15:40,800
Speaker 13: of cash on the sidelines, and frankly, there's quite a

296
00:15:40,800 --> 00:15:43,040
Speaker 13: bit of short interest still. So I think I wouldn't

297
00:15:43,040 --> 00:15:45,120
Speaker 13: worry so much about the rebalancing. I think there are

298
00:15:45,160 --> 00:15:48,560
Speaker 13: counters to that. It's more to focus on what's happening

299
00:15:48,560 --> 00:15:51,160
Speaker 13: in my mind with cash flow and earnings, and that's

300
00:15:51,200 --> 00:15:52,800
Speaker 13: what is going to lead to market one way or

301
00:15:52,840 --> 00:15:53,120
Speaker 13: the other.

302
00:15:53,840 --> 00:15:56,520
Speaker 14: Brian mentioned yields. There the Yeld curve of course remaining

303
00:15:56,600 --> 00:15:59,960
Speaker 14: heavily inverted, and that is of course the recession indicated.

304
00:16:00,120 --> 00:16:03,280
Speaker 14: But you mentioned earlier you've got a sense we are

305
00:16:03,360 --> 00:16:05,600
Speaker 14: hitting for a soft landing. Is the runway now in view?

306
00:16:06,600 --> 00:16:08,040
Speaker 13: Is the runway narrow in that view?

307
00:16:08,080 --> 00:16:13,200
Speaker 2: I'm sorry, A good line.

308
00:16:13,680 --> 00:16:18,400
Speaker 13: I think a soft landing is a Goldilock scenario. I

309
00:16:18,440 --> 00:16:21,440
Speaker 13: think frankly it's starting to be priced in and so

310
00:16:21,600 --> 00:16:25,840
Speaker 13: the likelihood of a FED mistake is high. It's not

311
00:16:25,880 --> 00:16:29,640
Speaker 13: their fault, right, It's a difficult environment and they often

312
00:16:29,680 --> 00:16:31,760
Speaker 13: make policy mistakes one way or the other, and more

313
00:16:31,760 --> 00:16:36,320
Speaker 13: in this circumstance with significant inflation, partially because there were

314
00:16:36,320 --> 00:16:38,640
Speaker 13: other mistakes made, and so as we look for a

315
00:16:38,680 --> 00:16:40,840
Speaker 13: soft landing. While I think that'd be the best case

316
00:16:40,880 --> 00:16:43,680
Speaker 13: scenario and what the market is currently focused on and

317
00:16:43,720 --> 00:16:48,040
Speaker 13: why we're rallying, I think the probability is lower than

318
00:16:48,880 --> 00:16:51,960
Speaker 13: of a mistake or a slowdown later in the year,

319
00:16:52,360 --> 00:16:56,200
Speaker 13: or frankly just a continuation of inflation being too high

320
00:16:56,280 --> 00:16:58,240
Speaker 13: and the set having to come back into the market.

321
00:16:58,720 --> 00:17:00,920
Speaker 1: Now, we haven't talked too much about how you'd play

322
00:17:00,960 --> 00:17:04,720
Speaker 1: this in terms of strategy. Yeah, I mentioned a lot

323
00:17:04,760 --> 00:17:07,199
Speaker 1: over the past week or so that regional banks have

324
00:17:07,280 --> 00:17:10,200
Speaker 1: rallied quite sharply over the past month, at one point

325
00:17:10,480 --> 00:17:13,919
Speaker 1: up eighteen percent, just because of the past week, a

326
00:17:13,960 --> 00:17:16,120
Speaker 1: little bit of a little bit of downward push. We're

327
00:17:16,160 --> 00:17:18,200
Speaker 1: only up ten percent over the past month. But would

328
00:17:18,280 --> 00:17:19,679
Speaker 1: you do that, would you go into some of the

329
00:17:19,720 --> 00:17:22,040
Speaker 1: beaten down sectors or would you try to run with

330
00:17:22,359 --> 00:17:24,320
Speaker 1: some of the high flyers like tech.

331
00:17:24,520 --> 00:17:26,760
Speaker 13: I think that you know, one of the focuses is

332
00:17:26,800 --> 00:17:30,639
Speaker 13: to be active, and being active means, you know, to

333
00:17:30,680 --> 00:17:34,600
Speaker 13: be more selective the largest names at the moment are

334
00:17:34,600 --> 00:17:37,280
Speaker 13: at the highest percentage of the market that they've been

335
00:17:37,320 --> 00:17:40,840
Speaker 13: in a long time, and from a historical perspective extremely high.

336
00:17:41,080 --> 00:17:44,040
Speaker 13: Seems to me those valuations have gotten ahead of themselves.

337
00:17:44,400 --> 00:17:45,960
Speaker 13: So you don't have to go to the beaten up

338
00:17:46,000 --> 00:17:48,840
Speaker 13: areas of the market necessary, like financials, but there are

339
00:17:48,880 --> 00:17:51,920
Speaker 13: other places to find value. So again, if we talked

340
00:17:51,920 --> 00:17:55,159
Speaker 13: about the consumer being very strong, consumer discretion area is

341
00:17:55,200 --> 00:17:59,040
Speaker 13: an excellent and very diverse place to find unique opportunities

342
00:17:59,040 --> 00:18:01,560
Speaker 13: in the market. If the economy is going to continue

343
00:18:01,600 --> 00:18:04,080
Speaker 13: to be relatively strong, or even if we're going to

344
00:18:04,080 --> 00:18:10,560
Speaker 13: see spending specifically for AI data centers, network's cloud, then

345
00:18:10,560 --> 00:18:13,440
Speaker 13: you can find that within the industrial space. It doesn't

346
00:18:13,480 --> 00:18:16,040
Speaker 13: have to be just tech, just the high flyers. I

347
00:18:16,119 --> 00:18:18,880
Speaker 13: think that's where the most risk is. But I think,

348
00:18:19,000 --> 00:18:22,439
Speaker 13: as you've suggested, the market on average has lagged, and

349
00:18:22,480 --> 00:18:25,080
Speaker 13: because the market on an average has lagged, that gives

350
00:18:25,080 --> 00:18:29,120
Speaker 13: opportunities to other sectors, not necessarily just the beaten down ones,

351
00:18:29,119 --> 00:18:32,280
Speaker 13: although financials are clearly in that category. I would say

352
00:18:32,320 --> 00:18:36,200
Speaker 13: we'd rather focus on things that we have more control

353
00:18:36,200 --> 00:18:38,760
Speaker 13: over and less concern about. What a slowdown in the

354
00:18:38,760 --> 00:18:41,639
Speaker 13: economy could really mean again to earning cash flow for

355
00:18:41,680 --> 00:18:42,520
Speaker 13: those businesses.

356
00:18:43,240 --> 00:18:45,040
Speaker 1: All right, Marky, I was just having a look at

357
00:18:45,640 --> 00:18:49,440
Speaker 1: at RSP, which is the equal weight US equity ETF,

358
00:18:49,480 --> 00:18:51,080
Speaker 1: and it's up about.

359
00:18:50,800 --> 00:18:52,480
Speaker 2: Five percent over the past month.

360
00:18:52,640 --> 00:18:55,840
Speaker 1: And that's basically just the whole S and P five

361
00:18:55,920 --> 00:18:58,760
Speaker 1: hundred on an equaloid basis. Marik, thanks so much for

362
00:18:58,840 --> 00:19:01,880
Speaker 1: joining us. Marky and Broni, head of US equities at

363
00:19:01,920 --> 00:19:07,680
Speaker 1: Barrowhanley Global Investors. This is Bloomberg Daybreak Asia, your morning

364
00:19:07,680 --> 00:19:10,359
Speaker 1: brief on the stories making news from Hong Kong to

365
00:19:10,440 --> 00:19:11,879
Speaker 1: Singapore and Wall Street.

366
00:19:11,920 --> 00:19:15,920
Speaker 2: Look for us on your podcast feed every day, on Apple, Spotify,

367
00:19:16,160 --> 00:19:18,159
Speaker 2: and anywhere else you get your podcasts.

368
00:19:18,160 --> 00:19:20,760
Speaker 1: You can also listen live each day on Bloomberg eleven

369
00:19:20,800 --> 00:19:23,159
Speaker 1: three to zero in New York, Bloomberg ninety nine to

370
00:19:23,200 --> 00:19:26,400
Speaker 1: one in Washington, Bloomberg one oh sixty one in Boston,

371
00:19:26,720 --> 00:19:29,160
Speaker 1: and Bloomberg nine sixty in San Francisco.

372
00:19:29,240 --> 00:19:32,080
Speaker 2: Our flagship New York station is also available on your

373
00:19:32,119 --> 00:19:36,800
Speaker 2: Amazon Alexa devices. Just say Alexa play Bloomberg eleven.

374
00:19:36,560 --> 00:19:40,200
Speaker 1: Thirty plus listen coast to coast on the Bloomberg Business app.

375
00:19:40,520 --> 00:19:44,719
Speaker 1: Sirius XM Channel one nineteen. The iHeartRadio app and on

376
00:19:44,760 --> 00:19:47,840
Speaker 1: Bloomberg dot Com. I'm Brian Curtis.

377
00:19:47,760 --> 00:19:50,200
Speaker 2: And I'm Doug Prisner. Join us again tomorrow for all

378
00:19:50,200 --> 00:19:52,720
Speaker 2: the news you need to start your day right here

379
00:19:52,800 --> 00:19:56,840
Speaker 2: on Bloomberg day Break Asia