WEBVTT - Central Banks, Fed Speak and Adobe Raises Forecast

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<v Speaker 1>This is Bloomberg Daybreak Asia for this Friday, June sixteenth

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<v Speaker 1>in Hong Kong, Thursday June fifteenth in New York and

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<v Speaker 1>coming up today.

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<v Speaker 2>US equities rally, tech shares gain on exuberant surrounding artificial intelligence.

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<v Speaker 1>The ECB hikes interest rates again in President Christine Legard

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<v Speaker 1>says a July increase is also very likely.

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<v Speaker 2>And the Bank of Japan is expected to leave its

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<v Speaker 2>ultra loose monetary policy unchanged today.

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<v Speaker 3>Kissinger says war between China and Taiwan probable without change

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<v Speaker 3>in course blank and writing is for China trip NATO

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<v Speaker 3>pledges more aid for Ukraine. You and Head calls fossil

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<v Speaker 3>fuel companies planet wreckers. I'm at Baxter with Global News.

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<v Speaker 4>That's all straight ahead on Bloomberg Daybreak Asia, the business

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<v Speaker 4>news you need to start your day in just one

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<v Speaker 4>fifteen minute podcast available on Apples, Spotify, the Bloomberg Business app,

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<v Speaker 4>and everywhere you get your podcasts.

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<v Speaker 2>Good morning, I'm Doug Krisner and I'm Brian Curtiz.

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<v Speaker 1>Here are the stories we're following today. The Bank of

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<v Speaker 1>Japan is widely expected to leave its ultra loose monetary

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<v Speaker 1>policy unchanged today. Let's get the story from Bloomberg's Bonnie ow.

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<v Speaker 5>Most economists in a Bloomberg survey predicted the boj's negative

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<v Speaker 5>rate policy and youth curve control program will be kept

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<v Speaker 5>the same. Some say one of the main reasons for

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<v Speaker 5>the hold is the chance for an early election. Governor

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<v Speaker 5>Kazuo Oweita has said that he expects inflation to fall

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<v Speaker 5>below two percent towards the second half of this fiscal year,

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<v Speaker 5>ending in March, but more than half of private sector

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<v Speaker 5>economists disagree with that view. Over a third of economists

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<v Speaker 5>say a policy shift could happen next month due to

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<v Speaker 5>higher inflation in Hong Kong. I'm Bonnie Ol Bloomberg Daybreak Asia.

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<v Speaker 2>Let's talk about the European Central Bank. As expected, we

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<v Speaker 2>got a rate hike of twenty five basis points, so

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<v Speaker 2>the policy rate now is at three and a half percent.

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<v Speaker 2>That's the highest level in more than two decades. It

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<v Speaker 2>is in line with what economists and traders were expecting.

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<v Speaker 2>Now we had ECB President Christine Leguard saying the outlook

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<v Speaker 2>for both economic growth and inflation remain highly uncertain, and

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<v Speaker 2>she said the ECB still has ground to cover in

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<v Speaker 2>its inflation fight.

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<v Speaker 6>It is very likely the case that we will continue

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<v Speaker 6>to increase rates in July, which probably doesn't come as

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<v Speaker 6>a big surprise to you, but that's what I'm telling you.

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<v Speaker 6>And this is so because we are determined to reach

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<v Speaker 6>our target in a timely manner.

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<v Speaker 2>That is ECB President Christine Leguard. Now we are told

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<v Speaker 2>that officials at the ECB are expecting a tough debate

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<v Speaker 2>next month on whether another rate hike will be necessary

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<v Speaker 2>in September. Leguards seem to avoid giving any guidance today

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<v Speaker 2>on what may happen beyond July.

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<v Speaker 7>Bryan Well.

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<v Speaker 1>The ECB's move came a day after the FED paused

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<v Speaker 1>its rate hiking cycle, although the FED did signal that

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<v Speaker 1>they would likely resume tightening at some point in the

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<v Speaker 1>rest of this year. We heard today from former FED

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<v Speaker 1>Vice chair Richard Clara. Clara is saying that he sees

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<v Speaker 1>the fed's hiking campaign ending soon after it observes key

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<v Speaker 1>economic data.

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<v Speaker 8>The FED has inflation coming down more slowly than a

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<v Speaker 8>lot of folks, and the FED also has a smaller

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<v Speaker 8>rise in unemployment than a lot of people expect. And

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<v Speaker 8>so I do think that if the data is closer

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<v Speaker 8>to market expectations versus FED expectations that they could be

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<v Speaker 8>done in July. So I really think, for the first

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<v Speaker 8>time in a while, they really are data dependent.

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<v Speaker 1>And there isn't all that much data to be dependent

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<v Speaker 1>on or to sink your teeth into. The FED only

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<v Speaker 1>has one more labor report and one consumer price index

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<v Speaker 1>reading to analyze before that next policy decision, by the way,

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<v Speaker 1>that comes up on July twenty fifth and twenty sixth.

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<v Speaker 2>We were talking earlier about this exuberant surrounding artificial intelligence.

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<v Speaker 2>After the bell, Adobe raised its full year outlooks for

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<v Speaker 2>both revenue and profit. It seems the company is optimistic

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<v Speaker 2>that generative AI features will be raising demand for its software.

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<v Speaker 2>We have more from Bloomberg's Charlie Pellett.

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<v Speaker 7>Adobe says sales will be about nineteen point three billion

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<v Speaker 7>dollars in the fiscal year ending in November, compared with

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<v Speaker 7>an earlier forecast of about nineteen point two billion. Adobe

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<v Speaker 7>is the longtime top seller of software for creative professionals.

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<v Speaker 7>It is adding generative AI features throughout its products. Last week,

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<v Speaker 7>the company unveiled enterprise level subscriptions for the new tools,

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<v Speaker 7>which include legal assurance against copyright claims in New York

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<v Speaker 7>Charlie Pellett Bloomberg Daybreak Asia, while.

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<v Speaker 1>The European Commission is taking a more aggressive stance on

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<v Speaker 1>Shiny's tech companies, including Huawei. Bloomberg's Joan Wong has that

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<v Speaker 1>story from Hong Kong.

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<v Speaker 9>The EU has asked as member nations to stop using

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<v Speaker 9>Huawei and z Tes advanced and mobile network equipment. The

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<v Speaker 9>Commission has explicitly labeled the companies for the first time

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<v Speaker 9>as high risk vendors. The latest call comes as EU

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<v Speaker 9>nations face increasing pressure from the US to take a

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<v Speaker 9>harder stance on China. So far, Germany and Spain have

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<v Speaker 9>been relying on Chinese equipment makers. Sources say that EU

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<v Speaker 9>finds the level of reliance unacceptable. Still, the EU has

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<v Speaker 9>limited authority to force members to implement bands in the

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<v Speaker 9>name of national security. In Hong Kong, Join Wang, Bloomberg

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<v Speaker 9>day Brigaisia.

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<v Speaker 1>This along with Doug Krisner Paul Allen will join us shortly,

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<v Speaker 1>so Doug feels a little like a breakout here inequities,

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<v Speaker 1>which will be a pain for the Bears. But there

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<v Speaker 1>was this one from JP Morgan saying that given all

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<v Speaker 1>the gains that we've seen inequity. This will be an

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<v Speaker 1>issue for sovereign wealth and pension funds and they will

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<v Speaker 1>have to rebalance to try to get their bond portfolio

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<v Speaker 1>up to match what's happening in inequity. So I think

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<v Speaker 1>JP Morgan's estimating you could see a five percent pullback

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<v Speaker 1>pretty quickly because of that.

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<v Speaker 2>Then, if you look at what's happening in the bond market,

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<v Speaker 2>an interesting day as yields come in. I think the

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<v Speaker 2>Fed maybe well trying to communicate something that the market

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<v Speaker 2>really doesn't believe. Right now, the Fed speak begins in

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<v Speaker 2>ernest tomorrow. We're going to hear from Governor Chris Waller.

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<v Speaker 2>He has been very hawkish. The projection that we learned

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<v Speaker 2>about yesterday is that another fifty basis points in tightening

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<v Speaker 2>as being forecast. But I thought it very interesting today

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<v Speaker 2>that the CIO of louthhold this is Doug Ramsey. He

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<v Speaker 2>was saying his biggest concern by far is the lag

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<v Speaker 2>impact of the last fifteen months of tightening.

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<v Speaker 4>Yeah.

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<v Speaker 1>Yeah, that's something that we just can't know. Can we

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<v Speaker 1>exactly what the impact will be? I know you focused

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<v Speaker 1>quite nicely on how there could be more in the

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<v Speaker 1>regional banking sector that hits and Pal talked about that

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<v Speaker 1>a little bit yesterday, and then, you know, not to

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<v Speaker 1>change the subject completely, but we have another whole set

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<v Speaker 1>of issues in China, and we do have this State

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<v Speaker 1>Council meeting today that we're expecting to produce some new

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<v Speaker 1>stimulus measures. Our story says this could include property and

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<v Speaker 1>we also quoted from officials yesterday talking about some stimulus

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<v Speaker 1>for autos, home appliances, catering industries. Those would be the

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<v Speaker 1>continuation of the targeting. But then, as you mentioned on

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<v Speaker 1>our call, the Wall Street Journal is talking about more

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<v Speaker 1>infrastructure spending. We've certainly seen a lot of that in

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<v Speaker 1>Chine over the years.

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<v Speaker 2>And if you look at the data that we had yesterday,

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<v Speaker 2>the activity data from May, growth and industrial outputs slowing

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<v Speaker 2>to a rate of three and a half percent annually.

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<v Speaker 2>Retail sales missed estimates at twelve point seven percent. So

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<v Speaker 2>there obviously are signs of weakness and that was one

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<v Speaker 2>of the reasons that the PBOC did what it did yesterday.

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<v Speaker 1>Yeah, absolutely, cutting that MLF by ten basis points. All right,

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<v Speaker 1>it's time now for Global news. I should mention we

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<v Speaker 1>have Mark Jim Brony coming up head of US Equities

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<v Speaker 1>at Barrow Hanley Global Investors. That'll be after we get

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<v Speaker 1>to news with Ed Baxter in San Francisco. So Ed,

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<v Speaker 1>the former US Secretary of State Henry Kissinger, who is

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<v Speaker 1>very influential in terms of US China relations, is worried

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<v Speaker 1>about Taiwan. China tell us more.

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<v Speaker 3>Yeah, absolutely, He says military conflict between China and Taiwan

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<v Speaker 3>potentially likely. Brian Kissinger says there needs to be a

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<v Speaker 3>new direction and dialogue. In an exclusive interview with Bloomberg

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<v Speaker 3>News editor in chief John Mitlithwaite, he says the trajectory

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<v Speaker 3>of the talks needs to change.

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<v Speaker 10>They have been signs on both sides of trying to

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<v Speaker 10>end them. They have not yet actually engaged in the

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<v Speaker 10>suit of dialogue. SI that I suggest it.

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<v Speaker 3>So, he says if not, if they don't change, he

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<v Speaker 3>feels military conflict is probable. Remember, Kissinger was a key architect,

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<v Speaker 3>as Brian referenced on the Nixon administration of what is

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<v Speaker 3>called the Opening of China and Ping Pong diplomacy. He

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<v Speaker 3>also told John that if Ukraine prevails against a Russian invasion,

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<v Speaker 3>Vladimir Putin will struggle to hold on to Power. For

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<v Speaker 3>the full conversation, get the latest Bloomberg Talks podcast wherever

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<v Speaker 3>you download, or you can watch it on Friday night,

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<v Speaker 3>seven pm Wall Street Time on Bloomberg Television. Meanwhile, The

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<v Speaker 3>Globe is on the cusp of US Secretary of State

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<v Speaker 3>Anthony Blincoln's trip to Beijing.

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<v Speaker 11>They're trying to kind of reestablish, you know, a line

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<v Speaker 11>of communication, and I think there's ascentive on both sides

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<v Speaker 11>to do that.

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<v Speaker 3>Bloomberg's Dan Flatley says, Taiwan certainly on the table.

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<v Speaker 11>Anytime that you talk to anyone from the Chinese government,

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<v Speaker 11>you're going to be talking about Taiwan, because that is

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<v Speaker 11>a core issue for them, as they call it, and

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<v Speaker 11>it is a very important issue for the US as

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<v Speaker 11>well for a variety of reasons. And so if Blincoln

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<v Speaker 11>does meet with Chinese President Jijimping, I'm sure that will

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<v Speaker 11>be a topic that they may touch upon, although I

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<v Speaker 11>don't think it will be a primary topic of discussion.

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<v Speaker 3>He says, try to keep forward momentum to talk about

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<v Speaker 3>economic issues and climate change, among other things. Meanwhile, NATO

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<v Speaker 3>and the US are meeting today about providing more aid

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<v Speaker 3>and arms to Ukraine. US provided a three hundred and

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<v Speaker 3>twenty five million dollar eight package this week.

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<v Speaker 2>This is General Mark Millie. This package procures critical cap

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<v Speaker 2>abilities including Patriot munitions, Hawk air defense systems, artillery, rock, communitions, maintenance, statement, sport,

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<v Speaker 2>much more.

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<v Speaker 3>And NATO Secretary General Jen Stottenberg says Ukraine's counteroffensive is

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<v Speaker 3>going better.

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<v Speaker 12>Ukrainians have launched their counter offensive. They're making making gains

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<v Speaker 12>and of course this is due to the bravery of

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<v Speaker 12>the skills of the Ukrainian forces. But the supporter from

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<v Speaker 12>natan LAS is also of course critical.

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<v Speaker 3>And he says could be more aid coming as the

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<v Speaker 3>meetings continue. You and Secretary General Antonio Guteras today calling

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<v Speaker 3>on the oil and gas industry to leave their products

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<v Speaker 3>in the ground. He says the companies that operate now

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<v Speaker 3>are planet Wreckers PGA. As we go live to the

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<v Speaker 3>LA Live Us Open at the Los Angeles Country Club

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<v Speaker 3>in California. Now they are in the clubhouse. The two

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<v Speaker 3>leaders now and they're up by five strokes are Ricky

0:10:57.040 --> 0:11:01.920
<v Speaker 3>Fowler and Xander Shuffley. They're shot a round of sixty two.

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<v Speaker 3>So they're in the clubhouse at eight under and they're

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<v Speaker 3>up on the leaderboard. Global New was fired by more

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<v Speaker 3>than twenty seven hundred journalists and analysts in over one

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<v Speaker 3>hundred and twenty countries in San Francisco. I'm Ed Baxter,

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<v Speaker 3>and this is Bloomberg.

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<v Speaker 1>I'm Brian Curtis here in Hong Kong, along with Paul

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<v Speaker 1>Allen in Sydney, and our guest is Mark Gimbroni, who's

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<v Speaker 1>head of US equities at Barrow Hanley Global Investors. Mark,

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<v Speaker 1>great to have you on the program. Feels like a

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<v Speaker 1>breakout in stocks here, especially with this broadening out. You

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<v Speaker 1>had eight out of eleven sectors all eleven higher, but

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<v Speaker 1>eight out of eleven up more than one percent, So

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<v Speaker 1>as a real broadening out of the rally. The Fed

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<v Speaker 1>might not like it, The Bears certainly won't like it,

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<v Speaker 1>but you know, for the rest of us, it's kind

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<v Speaker 1>of like a party on garth. Do you feel comfortable

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<v Speaker 1>with this?

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<v Speaker 13>Well, I will say that you're right. First of all,

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<v Speaker 13>thank you for having me on. It is good to

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<v Speaker 13>see the market breath so strong, and that gives us

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<v Speaker 13>some confidence that, you know, the market can continue to

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<v Speaker 13>have gains. We saw that again and the week or

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<v Speaker 13>so Friday when we got the employment report, and that

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<v Speaker 13>was also very positive. We saw good breath in the market,

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<v Speaker 13>and what that's trying to telegraph is a soft landing

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<v Speaker 13>in the economy. So clearly we have the thread raising rates,

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<v Speaker 13>but the economy is still strong. We have equidity coming

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<v Speaker 13>out of the system, but the consumer is still strong

0:12:19.000 --> 0:12:21.920
<v Speaker 13>and employment is still strong. And if we can have

0:12:22.040 --> 0:12:26.079
<v Speaker 13>those two things continue, we could see the market continue

0:12:26.080 --> 0:12:28.880
<v Speaker 13>to have strength and broadening out. I think that's really

0:12:28.960 --> 0:12:32.760
<v Speaker 13>important because the market's been too narrow for most of

0:12:32.800 --> 0:12:35.120
<v Speaker 13>this year. In order for us to really have a

0:12:35.160 --> 0:12:38.280
<v Speaker 13>sustained rally, we need to have more broadening out and

0:12:38.360 --> 0:12:41.360
<v Speaker 13>the active stock, I mean, the average stock do better

0:12:41.400 --> 0:12:42.360
<v Speaker 13>than the biggest stocks.

0:12:42.640 --> 0:12:46.439
<v Speaker 14>Yeah, the theme of that broadening out. If you look

0:12:46.480 --> 0:12:48.720
<v Speaker 14>at that ISMP rally and you strip out those big

0:12:48.760 --> 0:12:52.160
<v Speaker 14>tech names, you strip out the AI rally, suddenly it's

0:12:52.240 --> 0:12:56.200
<v Speaker 14>not looking quite so convincing. How convinced to you that

0:12:56.240 --> 0:12:57.720
<v Speaker 14>we're going to see that broadening out.

0:12:58.240 --> 0:13:01.040
<v Speaker 13>I think that at the moment, I'm a little bit

0:13:01.120 --> 0:13:04.280
<v Speaker 13>more concerned about the rally continuing for the rest of

0:13:04.320 --> 0:13:06.440
<v Speaker 13>the year than not. And there's kind of two reasons

0:13:06.480 --> 0:13:10.360
<v Speaker 13>for that. One is the FED. It is the pulling

0:13:10.400 --> 0:13:13.120
<v Speaker 13>of the liquidity there in rising rates, and the natural

0:13:13.880 --> 0:13:19.000
<v Speaker 13>you know, roll through or lag of those effects. I

0:13:19.000 --> 0:13:21.440
<v Speaker 13>think we're seeing that. I think the market's trying to grip,

0:13:22.040 --> 0:13:24.920
<v Speaker 13>you know, with that or deal with it. And frankly,

0:13:24.960 --> 0:13:27.160
<v Speaker 13>the market hasn't believed that the FED is going to

0:13:27.200 --> 0:13:30.160
<v Speaker 13>be as strong as it has throughout the whole year.

0:13:30.679 --> 0:13:33.079
<v Speaker 13>The second thing that worries me though, more than the FED,

0:13:33.120 --> 0:13:35.680
<v Speaker 13>and so I think the market understands what the FED

0:13:35.760 --> 0:13:39.440
<v Speaker 13>is doing. Economy is strong. I think we can climb

0:13:39.440 --> 0:13:42.280
<v Speaker 13>that wall of worry. But the second piece to me

0:13:42.360 --> 0:13:44.600
<v Speaker 13>is what happened in March in the US is real

0:13:45.040 --> 0:13:47.800
<v Speaker 13>from a liquidity in a banking system perspective. And so

0:13:48.480 --> 0:13:52.560
<v Speaker 13>while we're through kind of the fear or crisis of

0:13:52.600 --> 0:13:55.160
<v Speaker 13>confidence for a few of the institutions now that are

0:13:55.160 --> 0:14:00.840
<v Speaker 13>no longer around, what may be coming next is additional regulation.

0:14:01.559 --> 0:14:04.400
<v Speaker 13>Certainly for the small and mid sized banks. We're seeing

0:14:04.440 --> 0:14:08.360
<v Speaker 13>a focus on liquidity, and in doing so, we're seeing

0:14:08.360 --> 0:14:11.440
<v Speaker 13>a tightening of underwriting standards. And when you get within

0:14:11.480 --> 0:14:15.120
<v Speaker 13>a community, small and medium sized businesses have about seventy

0:14:15.160 --> 0:14:18.600
<v Speaker 13>percent of their lending needs within the community in which

0:14:18.640 --> 0:14:22.560
<v Speaker 13>they serve, and so as those banks pull back to

0:14:22.640 --> 0:14:25.840
<v Speaker 13>focus on liquidity, that's going to have a ripple effect

0:14:26.080 --> 0:14:28.520
<v Speaker 13>that I don't think the market is quite prepared for yet,

0:14:28.520 --> 0:14:31.360
<v Speaker 13>nor do we really know how to project beyond what

0:14:31.400 --> 0:14:33.400
<v Speaker 13>the Fed is doing. But it's going to be additive

0:14:34.160 --> 0:14:36.480
<v Speaker 13>in terms of the impact on the economy, and that's

0:14:36.520 --> 0:14:38.840
<v Speaker 13>what has me the most worried as we work through

0:14:38.880 --> 0:14:39.760
<v Speaker 13>the rest of this year.

0:14:40.120 --> 0:14:43.960
<v Speaker 1>And well, there's also there's also technical aspects like rebalancing.

0:14:44.000 --> 0:14:46.880
<v Speaker 1>I mentioned JP Morgan is concerned about sovereign wealth and

0:14:46.960 --> 0:14:51.280
<v Speaker 1>pension funds needing to probably reduce equity exposure and add

0:14:51.520 --> 0:14:54.800
<v Speaker 1>to their fixed income exposure. However, I might add that

0:14:55.120 --> 0:14:57.160
<v Speaker 1>they are an awful lot of people that got all

0:14:57.160 --> 0:15:01.640
<v Speaker 1>excited about, you know, getting short term US treasuries with

0:15:01.680 --> 0:15:04.320
<v Speaker 1>a four and a half percent yield, and they're kind

0:15:04.320 --> 0:15:07.040
<v Speaker 1>of sweating bullets here, and all their friends are talking about,

0:15:07.080 --> 0:15:10.120
<v Speaker 1>you know, twenty thirty percent gains in tech and such.

0:15:10.520 --> 0:15:12.720
<v Speaker 1>So there might be some rebalancing from that as well.

0:15:12.920 --> 0:15:14.920
<v Speaker 1>Does that neutralize a little?

0:15:15.240 --> 0:15:17.960
<v Speaker 13>I think so. I think those are technical and more

0:15:18.000 --> 0:15:20.560
<v Speaker 13>short term issues. That's not what the market is going

0:15:20.600 --> 0:15:22.120
<v Speaker 13>to be focused on over a long period of time,

0:15:22.280 --> 0:15:24.360
<v Speaker 13>or earnings or cash flows are going I do think

0:15:24.400 --> 0:15:27.080
<v Speaker 13>for a while the market finally has some competition, right,

0:15:27.160 --> 0:15:30.400
<v Speaker 13>meaning interest rates are attractive enough to get a risk

0:15:30.440 --> 0:15:34.240
<v Speaker 13>free return. That is okay, right, But having said that,

0:15:34.800 --> 0:15:36.560
<v Speaker 13>the mark is still the best place to be over

0:15:36.600 --> 0:15:38.840
<v Speaker 13>a longer period of time, and there's been a lot

0:15:38.840 --> 0:15:40.800
<v Speaker 13>of cash on the sidelines, and frankly, there's quite a

0:15:40.800 --> 0:15:43.040
<v Speaker 13>bit of short interest still. So I think I wouldn't

0:15:43.040 --> 0:15:45.120
<v Speaker 13>worry so much about the rebalancing. I think there are

0:15:45.160 --> 0:15:48.560
<v Speaker 13>counters to that. It's more to focus on what's happening

0:15:48.560 --> 0:15:51.160
<v Speaker 13>in my mind with cash flow and earnings, and that's

0:15:51.200 --> 0:15:52.800
<v Speaker 13>what is going to lead to market one way or

0:15:52.840 --> 0:15:53.120
<v Speaker 13>the other.

0:15:53.840 --> 0:15:56.520
<v Speaker 14>Brian mentioned yields. There the Yeld curve of course remaining

0:15:56.600 --> 0:15:59.960
<v Speaker 14>heavily inverted, and that is of course the recession indicated.

0:16:00.120 --> 0:16:03.280
<v Speaker 14>But you mentioned earlier you've got a sense we are

0:16:03.360 --> 0:16:05.600
<v Speaker 14>hitting for a soft landing. Is the runway now in view?

0:16:06.600 --> 0:16:08.040
<v Speaker 13>Is the runway narrow in that view?

0:16:08.080 --> 0:16:13.200
<v Speaker 2>I'm sorry, A good line.

0:16:13.680 --> 0:16:18.400
<v Speaker 13>I think a soft landing is a Goldilock scenario. I

0:16:18.440 --> 0:16:21.440
<v Speaker 13>think frankly it's starting to be priced in and so

0:16:21.600 --> 0:16:25.840
<v Speaker 13>the likelihood of a FED mistake is high. It's not

0:16:25.880 --> 0:16:29.640
<v Speaker 13>their fault, right, It's a difficult environment and they often

0:16:29.680 --> 0:16:31.760
<v Speaker 13>make policy mistakes one way or the other, and more

0:16:31.760 --> 0:16:36.320
<v Speaker 13>in this circumstance with significant inflation, partially because there were

0:16:36.320 --> 0:16:38.640
<v Speaker 13>other mistakes made, and so as we look for a

0:16:38.680 --> 0:16:40.840
<v Speaker 13>soft landing. While I think that'd be the best case

0:16:40.880 --> 0:16:43.680
<v Speaker 13>scenario and what the market is currently focused on and

0:16:43.720 --> 0:16:48.040
<v Speaker 13>why we're rallying, I think the probability is lower than

0:16:48.880 --> 0:16:51.960
<v Speaker 13>of a mistake or a slowdown later in the year,

0:16:52.360 --> 0:16:56.200
<v Speaker 13>or frankly just a continuation of inflation being too high

0:16:56.280 --> 0:16:58.240
<v Speaker 13>and the set having to come back into the market.

0:16:58.720 --> 0:17:00.920
<v Speaker 1>Now, we haven't talked too much about how you'd play

0:17:00.960 --> 0:17:04.720
<v Speaker 1>this in terms of strategy. Yeah, I mentioned a lot

0:17:04.760 --> 0:17:07.199
<v Speaker 1>over the past week or so that regional banks have

0:17:07.280 --> 0:17:10.200
<v Speaker 1>rallied quite sharply over the past month, at one point

0:17:10.480 --> 0:17:13.919
<v Speaker 1>up eighteen percent, just because of the past week, a

0:17:13.960 --> 0:17:16.120
<v Speaker 1>little bit of a little bit of downward push. We're

0:17:16.160 --> 0:17:18.200
<v Speaker 1>only up ten percent over the past month. But would

0:17:18.280 --> 0:17:19.679
<v Speaker 1>you do that, would you go into some of the

0:17:19.720 --> 0:17:22.040
<v Speaker 1>beaten down sectors or would you try to run with

0:17:22.359 --> 0:17:24.320
<v Speaker 1>some of the high flyers like tech.

0:17:24.520 --> 0:17:26.760
<v Speaker 13>I think that you know, one of the focuses is

0:17:26.800 --> 0:17:30.639
<v Speaker 13>to be active, and being active means, you know, to

0:17:30.680 --> 0:17:34.600
<v Speaker 13>be more selective the largest names at the moment are

0:17:34.600 --> 0:17:37.280
<v Speaker 13>at the highest percentage of the market that they've been

0:17:37.320 --> 0:17:40.840
<v Speaker 13>in a long time, and from a historical perspective extremely high.

0:17:41.080 --> 0:17:44.040
<v Speaker 13>Seems to me those valuations have gotten ahead of themselves.

0:17:44.400 --> 0:17:45.960
<v Speaker 13>So you don't have to go to the beaten up

0:17:46.000 --> 0:17:48.840
<v Speaker 13>areas of the market necessary, like financials, but there are

0:17:48.880 --> 0:17:51.920
<v Speaker 13>other places to find value. So again, if we talked

0:17:51.920 --> 0:17:55.159
<v Speaker 13>about the consumer being very strong, consumer discretion area is

0:17:55.200 --> 0:17:59.040
<v Speaker 13>an excellent and very diverse place to find unique opportunities

0:17:59.040 --> 0:18:01.560
<v Speaker 13>in the market. If the economy is going to continue

0:18:01.600 --> 0:18:04.080
<v Speaker 13>to be relatively strong, or even if we're going to

0:18:04.080 --> 0:18:10.560
<v Speaker 13>see spending specifically for AI data centers, network's cloud, then

0:18:10.560 --> 0:18:13.440
<v Speaker 13>you can find that within the industrial space. It doesn't

0:18:13.480 --> 0:18:16.040
<v Speaker 13>have to be just tech, just the high flyers. I

0:18:16.119 --> 0:18:18.880
<v Speaker 13>think that's where the most risk is. But I think,

0:18:19.000 --> 0:18:22.439
<v Speaker 13>as you've suggested, the market on average has lagged, and

0:18:22.480 --> 0:18:25.080
<v Speaker 13>because the market on an average has lagged, that gives

0:18:25.080 --> 0:18:29.120
<v Speaker 13>opportunities to other sectors, not necessarily just the beaten down ones,

0:18:29.119 --> 0:18:32.280
<v Speaker 13>although financials are clearly in that category. I would say

0:18:32.320 --> 0:18:36.200
<v Speaker 13>we'd rather focus on things that we have more control

0:18:36.200 --> 0:18:38.760
<v Speaker 13>over and less concern about. What a slowdown in the

0:18:38.760 --> 0:18:41.639
<v Speaker 13>economy could really mean again to earning cash flow for

0:18:41.680 --> 0:18:42.520
<v Speaker 13>those businesses.

0:18:43.240 --> 0:18:45.040
<v Speaker 1>All right, Marky, I was just having a look at

0:18:45.640 --> 0:18:49.440
<v Speaker 1>at RSP, which is the equal weight US equity ETF,

0:18:49.480 --> 0:18:51.080
<v Speaker 1>and it's up about.

0:18:50.800 --> 0:18:52.480
<v Speaker 2>Five percent over the past month.

0:18:52.640 --> 0:18:55.840
<v Speaker 1>And that's basically just the whole S and P five

0:18:55.920 --> 0:18:58.760
<v Speaker 1>hundred on an equaloid basis. Marik, thanks so much for

0:18:58.840 --> 0:19:01.880
<v Speaker 1>joining us. Marky and Broni, head of US equities at

0:19:01.920 --> 0:19:07.680
<v Speaker 1>Barrowhanley Global Investors. This is Bloomberg Daybreak Asia, your morning

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