Speaker 1: This is Bloomberg Daybreak Asia for this Thursday, May twenty
Speaker 1: fifth in Hong Kong, Wednesday May twenty fourth in New
Speaker 1: York and coming up.
Speaker 2: Today, US equities decline as negotiations over raising the debt
Speaker 2: ceiling remain at an impasse.
Speaker 1: Fed Minute show officials who are divided in May over
Speaker 1: whether future rate hikes would be necessary.
Speaker 2: And in Nvidia gives a bullish revenue forecast for the
Speaker 2: current quarter.
Speaker 3: Ron desantus officially in presidential race. Microsoft blames China for
Speaker 3: state sponsored hacks to US systems. Debt ceiling sides again
Speaker 3: say they're optimistic, and then again far apart. I'm at
Speaker 3: Baxter with Global News.
Speaker 4: That's all straight ahead on Bloomberg Daybreak Asia, the business
Speaker 4: news you need to start your day in just one
Speaker 4: fifteen minute podcast available on Apples, Spotify, the Bloomberg Business App,
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Speaker 1: Good morning, I'm Doug Chrisner and I'm Brian Curtiz. Here
Speaker 1: are the stories we're following today. Nvidia is trading up
Speaker 1: right now twenty six point six percent in late trading.
Speaker 1: Nvidia is already by far the world's most valuable chip maker,
Speaker 1: and it gave a bullish revenue forecast for the current quarter.
Speaker 1: It said sales would be about eleven billion dollars that
Speaker 1: shattered estimates of seven point one eight billion by analysts.
Speaker 1: The outlook shows that Nvidia is benefiting from the booming
Speaker 1: demand for artificial intelligence services. The company has positioned itself
Speaker 1: as the top provider of components for AI software, and
Speaker 1: that has helped in Vidia weather a broader slowdown in
Speaker 1: technology spending. Let's get more here from Bloomberg's men, Deep Sing.
Speaker 5: I think what this company has showed is data center
Speaker 5: is now sixty percent off their revenue, clearly. I think
Speaker 5: they've found new applications where their technology and the chips
Speaker 5: can be used, and there is a software element, and
Speaker 5: the auto side is also new, which could be huge.
Speaker 1: So we gave you the forecare asked on revenue, and
Speaker 1: Nvidia also reported revenue in the first quarter that beat
Speaker 1: analyst estimates by the widest margin in five years. And again,
Speaker 1: Nvidia shares up twenty six percent in late trading.
Speaker 2: Well, the elephant in the room, so to speak, seems
Speaker 2: to be the debt ceiling. Today, Treasury Secretary Yellen said
Speaker 2: signs of market stress are now beginning to emerge as
Speaker 2: the federal government moves closer to running out of cash,
Speaker 2: and Yellen said, the Biden administration is focusing on completing
Speaker 2: a debt limit deal.
Speaker 6: We are committed to not having mispayments and raising the
Speaker 6: debt ceiling, so that's not a situation we face. We're
Speaker 6: not involved in planning for what happens if there's a default.
Speaker 2: That is Treasury Secretary Yellen there, who went on to
Speaker 2: emphasize the level of uncertainty about day to day government
Speaker 2: payments and receipts. She repeated Treasury may run out of
Speaker 2: cash to pay its bills as soon as June first.
Speaker 2: Now today, commisto for a JP Morgan Chase said there's
Speaker 2: roughly a one in four chance twenty five percent probability
Speaker 2: that the US will hit this state without a deal
Speaker 2: to raise the death limit, and the Bank said those
Speaker 2: odds are rising right well.
Speaker 1: The Fed May minutes showed that officials were split on
Speaker 1: monetary policy going forward, not on the May move because
Speaker 1: that was unanimous, but looking ahead to June, some officials
Speaker 1: saw additional tightening as warranted to lower inflation. Several figured
Speaker 1: it may be time to stop hiking so as you
Speaker 1: might imagine, one of the first questions to our guest
Speaker 1: will be, what's more some or several. We'll get some
Speaker 1: views on that anyway. Many were focused on the need
Speaker 1: to retain optionality. Many participants emphasized communicating a data dependent approach.
Speaker 1: Earlier in the day, FED Governor Chris Waller said it's
Speaker 1: premature to declare that the tightening cycle is over.
Speaker 7: I do not support stopping rate hikes unless we get
Speaker 7: clear evidence that inflation is moving down towards our two
Speaker 7: percent objective. Well, whether we should hike or skip at
Speaker 7: the JEW meeting will depend on how the data come
Speaker 7: in over the next three weeks.
Speaker 1: Investors currently see the odds of a July rate cut
Speaker 1: in above seventy percent, according to pricing and futures contracts
Speaker 1: that officials have raised rates by five full percentage points
Speaker 1: five hundred basis points over the past fourteen months.
Speaker 2: Federal prosecutors are reviewing stock trades buy some employees at
Speaker 2: First Republic Bank during the lenders collapse that story from
Speaker 2: Bloomberg's and Kates.
Speaker 8: The Justice Department is looking at whether anyone working at
Speaker 8: First Republic used inside information as it was crumbling in
Speaker 8: the second biggest bank failure in American history. The probe
Speaker 8: is also scrutinizing the lenders' financial disclosures. Plus the Securities
Speaker 8: and Exchange Commission is investigating whether any First Republic senior
Speaker 8: executives traded using insider information. The inquiry significantly adds to
Speaker 8: the legal scrutiny surrounding the demise of First Republic in
Speaker 8: Washington and Kates bloomberg Our Day Break Asia.
Speaker 1: Well, the Bank of Korea is likely to hold its
Speaker 1: policy rate steady today for a third straight meeting. Bloomberg's
Speaker 1: David and Glace as the story from Hong Kong.
Speaker 9: All economists surveyed think the central bank will keep its
Speaker 9: main rate at three and a half percent. Officials are
Speaker 9: thought to be concerned about growth. The BOKA will update
Speaker 9: its forecast for key economic indicators, including growth and inflation,
Speaker 9: at today's meeting. Policymakers already said in recent weeks that
Speaker 9: economic growth this year may be slower than expected. That's
Speaker 9: as Korean exports weekend on slowing global demand. On inflation
Speaker 9: gains and consumer prices have eased over the past three months,
Speaker 9: but core inflation remains a concern.
Speaker 2: In Hong Kong.
Speaker 9: I'm David Ingless Bloomberg day Break Asia.
Speaker 1: I'm Brian Curtis along with Rashad Salomat. He will join
Speaker 1: us in a few moments. Doug Krisner is with me now,
Speaker 1: So Doug, really, Nvidia' is a story of the morning.
Speaker 1: I think it seems to even eclipse what's going on
Speaker 1: with the debt ceiling, at least in the market action
Speaker 1: post close rallying as much as it is the forward
Speaker 1: pe is sixty one that might have some investors chafing,
Speaker 1: but the average price target is only three hundred and
Speaker 1: five on the street and as mentioned, with this rally
Speaker 1: in after hours, stock would be up around three hundred
Speaker 1: and ninety bucks.
Speaker 2: Yeah, you know, the CEO, Jensen Huang was saying that
Speaker 2: the installed global data center infrastructure is going to go
Speaker 2: through a period of transission, a move away from general
Speaker 2: purpose computing I think, to some type of accelerated computing
Speaker 2: that is basically connected to artificial intelligence. And I was
Speaker 2: talking to Paul Sweeney about this and his view is
Speaker 2: right now, with a lot of the hype that we've
Speaker 2: been hearing around AI, this may be a part of
Speaker 2: that story as well, that maybe we are nearing some
Speaker 2: sort of peak in a lot of the enthusiasm as
Speaker 2: it relates to artificial intelligence.
Speaker 4: Who knows.
Speaker 1: Yeah, you would think that, but then you see earnings
Speaker 1: like this and you almost wonder whether or not that
Speaker 1: really jacks up a new round of positivity. China's going
Speaker 1: the other direction. I know you were talking about that
Speaker 1: a few moments ago. Seems like investors are losing faith
Speaker 1: in the recovery in China, and it's reflected in four
Speaker 1: to five different ways. If you look at the MMB
Speaker 1: well pass seven now on the weak side, the CSI
Speaker 1: three hundred giving up all of its gains this year
Speaker 1: now negative on the year. Debt is weighing on the economy,
Speaker 1: and growth is under pressure, and geopolitics is kind of
Speaker 1: the icing on the cake. So that's five right there,
Speaker 1: and there are others.
Speaker 2: Yeah, I want to add the regulatory framework which has
Speaker 2: been tweaked a little bit, and just maybe a lack
Speaker 2: of conference in the government's ability to guide growth.
Speaker 1: Yeah, you wonder why they are being so cautious. But
Speaker 1: time and again we come back to the point. They
Speaker 1: don't want to repeat what Japan did back in the eighties,
Speaker 1: and they are extremely nervous about getting investors too excited
Speaker 1: and having too much liquidity and too much easing, and
Speaker 1: so they play it very much cautiously. It's an interesting path,
Speaker 1: and of course we'll be reporting on it here this morning,
Speaker 1: all throughout the morning. All right, it's time now for
Speaker 1: Global News. Let's get to the nine to sixty newsroom
Speaker 1: in San Francisco. Ron Decentis is officially in the race
Speaker 1: for the presidency at Baxter has Global News ed.
Speaker 3: Yeah, exactly right, Brian. He has filed papers with federal regulators,
Speaker 3: running a Twitter space session with Elon Musk. Also has
Speaker 3: released a video that we will have for you shortly.
Speaker 3: Signals are that he plans to run a non traditional campaign,
Speaker 3: built for social media error and centered around the culture
Speaker 3: war debates. Bloomberg contributor Lisa Camuso Miller says, the process
Speaker 3: here is unusual.
Speaker 8: All of the elements of this don't make any sense
Speaker 8: to me. But maybe this is by design.
Speaker 7: Maybe this is a way.
Speaker 8: To get Donald Trump back to Twitter.
Speaker 10: If you're Elon Musk.
Speaker 3: Yeah, he becomes Donald Trump's strongest contender yet, but his
Speaker 3: polling numbers are not close at this point. The santas
Speaker 3: As will model himself as drama free, although Disney execs
Speaker 3: may disagree. Death ceiling talks have wrapped up for the day.
Speaker 3: It looks as if legislators have been allowed to go
Speaker 3: home for the long weekend. Speaker McCarthy's saying that he
Speaker 3: sees time to get something done, but.
Speaker 5: To try to finish up the negotiations with the White House.
Speaker 9: There's a number of places that we are still far apart.
Speaker 3: Yeah, maybe the spending cap language has changed a bit, though. Listen,
Speaker 3: I've been very clear I will not put a bill
Speaker 3: on the floor.
Speaker 5: This spends more money next year than this year.
Speaker 3: Then this year, all right, so that's maybe last year cap,
Speaker 3: maybe this year CAP.
Speaker 4: Now.
Speaker 3: House Minority Leader Hakim Jeffreys' version is a bit more harsh,
Speaker 3: saying the GOP is doing one of two things.
Speaker 11: To either extract deep, painful cuts that will hurt the health,
Speaker 11: the safety, or the well being of everyday Americans, or
Speaker 11: crash the economy the fault on our dead and trigger
Speaker 11: a painful recession.
Speaker 3: So digging in a bit, what's really going on, Bloomberg's Kaylee.
Speaker 12: Lines, it's not the fine tuning that is being hammered
Speaker 12: out in public. It is happening behind closed doors, so
Speaker 12: we don't really have a sense of the finer points
Speaker 12: of what the deal they're working on is. But they
Speaker 12: have to have that architecture in place, right If it's
Speaker 12: going to ultimately be turned into legislative text and be
Speaker 12: something that the House and Senate can vote on, it's
Speaker 12: going to have to get specifically maybe just start laying
Speaker 12: out all their cards in public here.
Speaker 3: Yeah, so behind the scenes negotiations, a schedule to happen
Speaker 3: could be sent to the districts in the next few days,
Speaker 3: it come back the beginning of the week and vote. Meanwhile,
Speaker 3: the dance continues or doesn't. Microsoft says it's found malicious
Speaker 3: activity by a Chinese state sponsored hacking group that has
Speaker 3: stealthily gained access in a critical infrastructure organizations in Guam
Speaker 3: and elsewhere in the US. Says the likely aim was
Speaker 3: disrupt critical communications in event of a crisis. Microsoft says
Speaker 3: a group named a Bold Typhoon has been active since
Speaker 3: mid twenty twenty one, targeting organizations that span manufacturing, construction, maritime, government,
Speaker 3: information technology education. Microsoft says it is directly notified targeted
Speaker 3: or compromised customers with moderate moderate confidence. Threats are mitigated.
Speaker 3: Global News powered by more than twenty seven hundred journalists
Speaker 3: and analysts in over one hundred and twenty countries. In
Speaker 3: San Francisco, I'm Ad Baxter, and this is Bloomberg.
Speaker 1: I'm Brian Curtis in Hong Kong, along with Rashad Salamat.
Speaker 1: Our guest is Andy kapraan partner and Cocio Regent Atlantic
Speaker 1: Private Wealth. So, Andy, I know we want to talk
Speaker 1: about the debt sealing debate and also about the FED,
Speaker 1: but I got to ask you about Nvidia. Right now,
Speaker 1: Nasdaq futures are up some two hundred and fourteen points,
Speaker 1: a gain of one point six percent, no doubt heavily
Speaker 1: influenced there by the big gain after hours in Nvidia.
Speaker 1: Nvidia is really a beast of its own. I'm not
Speaker 1: sure that there's there's a lot of read through for
Speaker 1: everybody out there, but do you think that that stands
Speaker 1: a chance of kind of reducing up some of the
Speaker 1: megacaps which actually hadn't done all that well in the
Speaker 1: past three weeks or so.
Speaker 10: I think I think this is really a very company
Speaker 10: specific story about a company that has a lead in
Speaker 10: a very important new technology lead that's very hard to catch.
Speaker 10: Up with and I think if you're looking at the
Speaker 10: market action uh this uh this evening, what you're seeing
Speaker 10: is benefits for for tech broadly, for certain semiconductors in particular.
Speaker 10: But it's really but it really is about companies with
Speaker 10: some kind of a leading edge, whether it's whether it's
Speaker 10: in the design of these chips or in the manufacturing
Speaker 10: of them.
Speaker 13: Well, absolutely, And you know it's always trying to get good,
Speaker 13: to try and get the sect lead, isn't that you know?
Speaker 4: Is that what you do?
Speaker 13: Is that what you look at andy when you already
Speaker 13: perhaps advising clients, so creating a poolfolio.
Speaker 10: Sure, so when when I when I look at companies
Speaker 10: with the leading edge, there's a given a take on
Speaker 10: the leading edge of a really important change like AI
Speaker 10: or chips for mining bitcoin and cryptocurrencies. You tend to
Speaker 10: have an early leader. You tend to have to pay
Speaker 10: a lot for that early leader, and it's very hard
Speaker 10: to maintain that edge because you suddenly have a target
Speaker 10: on your back. I think with the semiconductions in particular,
Speaker 10: the lead times in developing new manufacturing techniques are so long.
Speaker 10: It really creates a lot of cushion for those early
Speaker 10: leaders and I think that's what we're seeing today with
Speaker 10: stocks like Nvidia.
Speaker 1: Yeah, to broaden it out though, I mean, it's one
Speaker 1: thing for Microsoft and Alphabet and Nvidia clearly as providers
Speaker 1: of artificial intelligence to the marketplace, But what about the recipients.
Speaker 1: I mean, the way to get a read through right
Speaker 1: across the markets is whether or not almost everybody benefits
Speaker 1: from this, and if so, how do you put that
Speaker 1: into the equation.
Speaker 10: That's that's actually a really interesting point. I think one
Speaker 10: of the ways that we're going to have to see
Speaker 10: how AI really changes the world is how does it
Speaker 10: become a productivity enhancing tool as opposed to just a
Speaker 10: cool toy to write a customized novella of your very own.
Speaker 13: All right, and we told Nvidia, let's talk a little
Speaker 13: bit about overall and what's going on market wise and
Speaker 13: what the biggest question apart from, of course, the FED
Speaker 13: is from the clients that you have.
Speaker 10: Sure so, by far away, the most common question I
Speaker 10: am getting is what is going on with the debt
Speaker 10: ceiling and how can we protect ourselves against it. I
Speaker 10: think the challenge with the debt ceiling, and I think
Speaker 10: in this round of the debt ceiling in particular is
Speaker 10: we're having a moment in time when it's almost like
Speaker 10: the Boy the Cried Wolf. We've seen this movie too
Speaker 10: many times before. The market has been reluctant to respond
Speaker 10: to it until just the past few days. And I
Speaker 10: think the reason why we're starting to see our response
Speaker 10: is we're cutting it to If you look at Janet
Speaker 10: Yellen's announcements about the Treasury running out of funds as
Speaker 10: soon as Junior first, which is barely a week away,
Speaker 10: is really sharp point that, no, we don't have a
Speaker 10: lot of time to get a deal done. We do
Speaker 10: have to get one done. And now investors are starting
Speaker 10: to consider what does this actually mean? Will the will
Speaker 10: the Treasury default on a bond payment, will they announce
Speaker 10: ind social Security checks? It's starting to boggles people's minds,
Speaker 10: and it is the fear of the uncertain that that
Speaker 10: really prompts a lot of investor behavior. I think, I
Speaker 10: think this is only the beginning of a lot of
Speaker 10: volatility unless we get a deal very quickly.
Speaker 1: You wonder about those people buying the one month you know,
Speaker 1: I'm proud to be getting seven percent seven percent. You know,
Speaker 1: if you don't get that as annuallyzed you have thirty
Speaker 1: days and to take on all that risk, I mean,
Speaker 1: all heck could break loose.
Speaker 4: If you know, if they.
Speaker 1: Default, you wouldn't be buying a one month t bill,
Speaker 1: would you?
Speaker 10: So I say, you know, the one month's TBO presents
Speaker 10: a really interesting story. On the one hand, are really
Speaker 10: high annualized yield. On the other hand, you're really you're
Speaker 10: really diving for a very apparent risk. I think, how
Speaker 10: risky is it?
Speaker 2: Truly?
Speaker 10: When I think about the investments that are likely to
Speaker 10: perform the best in a debt ceiling scenario where there
Speaker 10: is a formal cap that, in my opinion, will be
Speaker 10: a profoundly deflationary move. We're talking about the federal government
Speaker 10: withdrawing a very substantial amount of funds from the economy,
Speaker 10: either payments that aren't getting made to contractors, payments that
Speaker 10: aren't getting made to welfare recipients or Social Security recimbients,
Speaker 10: or payments that aren't getting made to bond funds. A
Speaker 10: profoundly deflationary move that should create a deflation or response
Speaker 10: in the market, which should which is ultimately really positive
Speaker 10: for bonds. I think that's also really unlikely. So investors
Speaker 10: that are buying that very short term tabill I don't
Speaker 10: think they're taking as much risk as it perhaps sounds,
Speaker 10: and that's why it's only a very high sounding yield
Speaker 10: when you anualize it, it's it's only a few basis points.
Speaker 13: If you don't, yeah, it's actually fifty eight basis points.
Speaker 13: Actually a month, that seven percent if you're divided by twelve.
Speaker 13: Of course, now looking at this, and does that also
Speaker 13: mean you become defensive elsewhere? Do you have the most
Speaker 13: doubt portfolio possibly going as a consequence of the outside noise?
Speaker 5: Sure?
Speaker 10: So, you know in this environment where you almost expect that,
Speaker 10: then in the next few bix there is likely to
Speaker 10: be an uncommonly high level of volatility. You hunker down
Speaker 10: and you get close to your benchmark. I think the
Speaker 10: what investors are likely to do over the course the
Speaker 10: next few days, especially as the deal gets drawn out,
Speaker 10: especially if it seems less likely that a deal arrives
Speaker 10: in time, people will go back to safety, and people
Speaker 10: are likely to go back to benchmark. In my opinion,
Speaker 10: where that's likely to manifest itself is particularly in people
Speaker 10: going back to the US dollar. I think there's been
Speaker 10: an uncommon out of farishness for US dollars, some of
Speaker 10: it rightfully.
Speaker 1: So I just briefly, you've probably heard us talking about China,
Speaker 1: just some general thoughts, really quickly in thirty seconds.
Speaker 10: Sure, China is a very important economy and a very
Speaker 10: important market. I think investors should be leery of avoiding it,
Speaker 10: particularly after a really balat ale a handful of years.
Speaker 10: As it recovers, as it comes back from COVID, it's
Speaker 10: likely to be an attractive market. I think the challenge
Speaker 10: is geopolitics, and the further we get away from some
Speaker 10: of the crises in the US, particularly on the debt ceiling,
Speaker 10: the closer we can get to more certainty about our
Speaker 10: relationship with China.
Speaker 1: Andy, thank you so much for joining us here this morning. Appreciated.
Speaker 1: Andy caperan partner in Cocio Region Atlantic Private Wealth. This
Speaker 1: is Bloomberg Daybreak Asia, your morning brief on the stories
Speaker 1: making news from Hong Kong to Singapore and Wall Street.
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