Transcripts For BLOOMBERG Bloomberg 20240703

Foot, but they have pulled off session highs, even ahead of those big tech earnings out of china. Keeping an eye on what were seeing on asia fx, the threat of tariffs on china, along with potentially higher inflation. Not a good makes for asian currencies. In japanese bonds, the seller from yesterday continues, we had the boj reducing purchases in the five to 10eurozone, now strategists say it would not be surprising if it does the same in the three to fiveeuro zone, the twoyear is hitting the highest since 2009, the 10year since 2012. Lets take a closer look at chinese tackett, Tencent Music beat on earnings, that is explaining some of the surge, but optimism is well on what were seeing potentially on their earnings scorecard from tencent and alibaba. To help justify these lofty valuations. Flip the board again. Lets look at how tencents stock price has been faring since midjanuary bottom. Despite that rebound, were seeing the consensus price target has not budged much. It is lower than what we saw in january. Reflecting a bit of analyst caution toward some of these chinese tech stocks. Paul for more on those big china tech earnings, lets bring in bloombergs asia equities reporter, Charlotte Yang. I want to pick up on what avril was pointing out when it comes to tencent, we have got some lofty valuations, Revenue Growth is expected to slow down, what are we expecting today particularly in terms of Share Buyback . Investors eyes are on chinas most valuable Tech Companies great with tencent, investors are watching whether there will be signs of like turnaround in its gaming business. Earlier in april, it was this unexpected gaming blockbuster that boosted its share price. Another thing investors are closely watching is whether it is tencents commitment to shareholders returns. Data Analysis Shows tencent accelerated its stock buyback in the first quarter, since january, they have lifted daily repurchase of Share Buybacks to over one billion hong kong dollars. The Company Earlier this year said they will commit to over 100 billion hong kong dollars of buybacks this year. So far, they have bought about a quarter of that but back then, the market was doing so bad. It was below Intrinsic Value but now it is on the rebound. Investors wonder after 40 rebound whether the company is still committed to that pace of stock buyback. Paul the tencent rebound, same thing with alibaba, it is part of a broader story. We have msci china up 27 yeartodate, how convincing is that rally . The street consensus is that china stocks, the worst is behind, but our colleague spoke to a number of big funds, particularly of fidelity international, the consensus is they see the recent rally is a rotational play on evaluations, where the chinese earnings season hasnt yet delivered. And it definitely with china Tech Companies reporting this week, including jd. Com and baidu, will provide more signs on that front. In general, investors really need china earnings to deliver to convince them that this is more of a structural story, rather than just technical opportunities. So far for the constituents of the msci china that have reported as of yesterday, 30 of them have shown net profit before exceptional items. There are many with powder Still Standing on the sidelines. Paul asia equities reporter Charlotte Yang there. You can turn to your bloomberg for more on those china tech earnings. Go to tliv. And you can get commentary and analysis from bloombergs expert editors. We are going to get more on markets, including china right now with rajeev de mello, global macro Portfolio Manager at gama Asset Management. Thanks so much for joining us. I want to pick up on what charlotte was talking about, in terms of tech earnings, we have seen chinese tech stocks putting in an impressive rally, but is the good news priced in at this point . Is the earnings story that convincing . Rajeev thank you for having me. It is part of a broader topic in terms of chinas recovery. And then measures which have been taken over the past six months now to turn around an economy which is slowing down at the end of last year, boosting it, and supporting markets with purchases by the home team, the National Team earlier this year in february. Getting those animal spirits back into the Chinese Market is probably part of the policymakers intentions. And they have a window to do this, in terms of getting the Chinese Market stabilized on an upward trajectory, before u. S. Elections get too close. And the noise around protectionism and china bashing gets too strong. Paul we will have a sense of how that plane is going later this week. We will get Industrial Production and retail sales. The expectation is we will see a modest rebound. What are your expectations . Do you think these policies are working . Is the chinese economy starting to turn a corner . Rajeev he won data did show an improvement. We need to see confirmation for the second quarter. It is likely we will see some weakening of a strong q1, so im not too optimistic for the immediate batch of data, but whats more encouraging is the implementation of a series of policies which keep going on to support the market. Initially, that did not have impact on equity markets, now it is having, and i think it is critical for china to get that going and that includes a lot of different types of fiscal and monetary policies. Paul we have seen an environment also of shrinking credit, loan growth has been disappointing, but even against that backdrop, some of chinas financial stocks have been performing strongly. Up about 8. 7 this month. Do you put that all down to the National Team . How do you explain that . Rajeev i think the National Team contributed to the initial surge in february and march. Then that was taken over putin by significant underway positions being covered. Now there is expectations, and i expect rate cuts to come in, they have been preannounced and signaled, i think they are imminent. It would make a lot of sense to china to ease on Monetary Policy and support this recovery. Especially at this time, before the trade war with the u. S. Goes to another level early next year. Paul if the pboc does provide some rate cuts, is probably going to come at the expense of a weakening yuan. How do policymakers get the balance right . Rajeev thats always been their challenge. When one looks at the yuan, over the last 10 months, it has been broadly stable against the dollar. Policymakers in china are very sensitive to any movements in the yuan against the dollar because it conveys confidence. But when one looks at the tradeweighted basket, which is the official policy measure, looking at how chinas currency is evolving against a basket of its trading partners, the currency is not doing too badly at all. It has appreciated quite a bit. So i dont think they should worry too much about the currency. Even if it does weaken a bit, its volatility have been very low, and it could weaken without hurting confidence. A rate cut, even if it does create weakness in the currency, i dont think its a bad thing for china. Paul rajeev de mello of gama Asset Management is going to be sticking around. We will look ahead to the upcoming u. S. Cpi numbers later. I want to get some breaking news across the terminal. At the moment, were hearing news that uber is planning to buy heros foodpanda taiwan business, the price being 950 million. That use crossing the bloomberg terminal now. Uber to buy delivery heros foodpanda taiwan business for 950 million. The transaction is targeted to close in the first half of 2025. They entered an agreement for uber to purchase 300 million newly issued ordinary shares of delivery hero. That use just crossing upgrade uber to buy the food panda taiwan business for 950 million. We will take a deep dive into indias markets. The Family Office will join us to talk about preferred stock same sector plays. Lesserknown entrepreneurs are joining the ranks of indias ultra wealthy. We will tell you some more about these under the radar billionaires later this hour. This is bloomberg. Rate structure may be higher and we can talk about that but the reality is its in decent shape. A thousand things can go wrong tomorrow but right now is in pretty good shape. Paul bank of america Ceo Brian Moynihan having the strength of the u. S. Consumer. Thats despite high Interest Rates. However there are going signs of pressure on household finances. The new York Fed Survey says u. S. Consumer expectations for inflation rose last month. And prices are excited to jump at an annual rate of 3. 3 over the next year. That is the highest reading since november. That mirrors recent findings from the university of michigan showing year ahead Inflation Expectations in early may a sixmonth high. Rajeev de mello, global macro Portfolio Manager at gama Asset Management, still here with us. He think that the fed is likely to cut rates in july. Rajeev, that is an increasingly lonely position, doesnt give the fed time to gather more data, what is your base case here . Rajeev inflation, there are many signs it is moderating. The fed doesnt have too much time or too many meetings until the end of the year to get rates down. And real rights, that means the actual nominal rate that we all know mine is inflation, has been going up because inflation, even though it is sticky, has been coming down. So the fed needs to send a signal somehow that it is starting a path of rate cuts. And it probably cant do that in september. Which might be better in terms of timing because of its proximity to u. S. Elections, which is highly contested and will be heating up, so it will be difficult for the fed to move just the meeting before elections. And then it has two meetings after that. Thats why i continue to think that july is a better time for the fed to start using. Easing. Paul that would suggest inflation is going to come down. What are the risks we get an upside surprise this week . And whats keeping inflation sticky in your view . Rajeev we have had many upside surprises in the beginning of this year on inflation. At every meeting, a lot of Market Participants expected inflation to come down. Only to be disappointed. I think the fed also was very disappointed. That strength in inflation has been pinned down to services, which has been higher, inflation has been higher in the service sector. Unfortunately a lot of signs point that inflation is not coming down as fast as it could have, there are secondorder effects which are there, wages remain high. Wage inflation has come down. We look at lots of measures of Wage Inflation and cost of employment, but has not declined to last. Nevertheless, fed funds where they are is still a huge gap above where inflation is, and for the fed, it is a credibility game. They want to show they are fighting against inflation but they also dont want to participate precipitate a recession. Paul obviously, investors would love to see a rate cut, but if were completely objective about this, looking at the u. S. Economy does it need this stimulus of a rate cut . Rajeev the u. S. Economy has been strong, and has been strongerthanexpected over the past few quarters, yet there are signs it is moderating somewhat. The challenge is that the softer data, the business surveys, show moderation when one looks at ism surveys or pmis, those types of business surveys, which typically tend to be a little earlier than the hard data. But they have not yet been confirmed by the harder real data, which tends to be a bit slower. But the feds job is not to look back at the past but to be ahead of the curve. So, if it is seeing signs of normalization, im not saying recession or slowdown, that does give it the room to actually start to ease policy. Which is very tight by all measures compared to the past. Paul one pronounced effective higher for longer rates has been strong u. S. Dollar. How long do you see this endearing . And how his Dollar Strength informing your decisions . Rajeev the dollar, as you mentioned, has been helped by this higher for longer rates due to this rubber inflation in the u. S. , but u. S. Growth has also been stronger, and it is all a relative story. So long as europe, china and japan were kind of on the weakish side, that gave an additional fundamental reason to be long dollars. However they are catching up. We have seen europe posting positive gdp Growth Numbers after two quarters of negative at the end of last year, so europe is turning. China is recovered in q1, and even though growth might moderate, it will be positive in q2. Japan is actively intervening to resist further strength of the dollar. So, dollar is probably coming close to the end of its strengthening cycle. But its a slow top, but its a topping process. Paul before we let you go, id like your views on japan, particularly the yen weakening again, 156. 43 right now, how is the appetite for intervention in japan . Rajeev they have done maybe three or more rounds of intervention, significant amounts of dollars, they have sold dollars to buy the yen at key levels. Cubberley taking advantage of market overextension im the first instance when we broke 160. Taking advantage of the fomc meeting, slightly dovish tone by the fomc, and japan sold more dollars. So, japan has done this intervention, now it is a question of credibility. If it doesnt slow the pace of depreciation of the yen, it will be much more difficult for japan to counter it. Japan knows very well, the policymakers, that fundamentally it has two tighten policy to counter the weakening yen. That is the message it will be sending. The next step is quantitative tightening, in terms of after so much bond buying, reversing some of that would send signals to the market which are even more sure about yen strength than just intervention. Paul and we are seeing a multi year high in touching distance for a number of japanese treasuries. Rajeev de mello, thanks so much for your insights there. Still to come, janet yellen admits china may retaliate against the Biden Administrations planned tariff increases. Our exclusive interview with the u. S. Treasury secretary. This is bloomberg. Paul treasury secretary janet yellen says china could retaliate against steps the u. S. Takes to protect its critical industries. Yellen declined to confirm bloomberg reporting that the Biden Administration is about to hike tariffs on chinese goods. But she told us exclusively about the president s thinking on trade tensions. He believes it, unacceptable as i do, to be completely dependent on china in these areas. And he wants to make sure, given that china is really not playing by the rules, in the sense they have enormous subsidies in critical areas of advanced manufacturing, has resulted in overcapacity. He wants to make sure that the stimulus thats being provided through the Inflation Reduction Act to support these industries, and these are industries that are creating good manufacturing jobs in parts of the country that have been overlooked, or have suffered from de industrialization in the past. The president wants to protect these investments. I dont want to get ahead of the 301 review on tariffs, but this is a commitment President Biden has made, and i agree with it. I was in china just a couple of weeks ago and made clear that we would not allow chinese overcapacity to harm our emerging industries. Does the u. S. Want a trade war with china . We believe we should have a deep and productive, and that we do in most areas, trade and investment relationship. Were working to stabilize our economic relationship. We do not wish to disengage from china economically, but we do think that the Playing Field should be fair, and china engages in unfair practices like massive subsidies of industries they have decided are critical. And those are cases where we will act to protect ourselves. We have seen beijing in the past respond and has become titfortat. Could they go after tesla or American Farm products . I presume bite and that anything we do should be targeted to our concerns and not broadbased, and hopefully, we will not see a significant chinese response but thats always a possibility. Paul u. S. Treasury secretary janet yellen speaking exclusively to bloombergs annmarie hordern. Lets look at how apple suppliers are doing in china. We did get the news that apple will start selling its vision pro outside of the u. S. For the first time. This is the headset that retails at three and a half thousand dollars. Apple has been Holding Training sessions recently and flying employees from its International Stores to do training on how to demonstrate the device. Customers in germany, france, australia, singapore and china could soon get their hands on the apple vision pro. Apple suppliers rising at the moment. Also taking a look at shares of artificial intelligencerelated and game stocks in china that have been bouncing after openai launched a faster and cheaper ai model, gpt4, it also handles other linkages besides english. Take a look at Market Movers as china heads to its lunch break. More coming up in a moment. This is bloomberg. Her uncles unhappy. Im sensing an underlying issue. Its tmobile. It started when we tried to get him under a new plan. But they they unexpectedly unraveled their price lock guarantee. Which has made him, a bit. Unruly. You called yourself the uncarrier. You sing about price lock on those commercials. the price lock, the price lock. so, if you could change the price, change the name its not a lock, i know a lock. So how can we undo the damage . We could all unsubscribe and switch to xfinity. Their connection is unreal. And we could all unexperience this whole session. Okay, thats uncalled for. Glorious day on sydney harbour. A good day to look as it has been raining for two weeks solid. Jim chalmers is going to be handing down the Budget Surplus this evening and weve got the aussie dollar of 1260 six cents as we await the news that the walkup has begun and we will know precisely what the contents of the budget is. One of the centerpieces in the budget will be a policy known as future made in australia and that got interventionalists ambitions. Heres a Little Something i put together. Australia has strength is built on building stuff and shipping it out. Another idea has added value to those from materials. Spending would be thrown at green steel, solar panels and other local industries. What a future made in australia about his not replacing private investment, but attracting more of it. We need to make sure we get value form money for that. A future made in australia as a flag ship policy. In many ways it was born out of necessity. The u. S. Says the Inflation Reduction Act has the green transformation act. Canada and france are giving billions of tax credits. Intervention is having a moment and australia does not want to be left behind. A recipient of a Million Dollar loan has been alpha which produces high purity oxides, Critical Minerals that are keyed to the energy transition. Was dominated by china. Skeptics will require more than National Policies and cheap loans. It is critical for a student to build a socalled alternative supply chain for Critical Minerals. But to replace chinas dominance is impossible. Chinas power is not just in technologies. With extreme sadness i confirm that we will build cars in australia. It was a decade ago subsidies were pulled, causing them to encourage it. What secrets are being held back. How much will be allotted this year, one thing economist are waiting to see is how much of the spending is it going to be and whether it will be inflationary, whether it hinders the fight. The government has said we already know legislative tax cuts and targeted relief measures and how much of it will be inflationary. There is a close high on spending and whether it adds to inflation. What about relief in the previous budget on Energy Prices . Guest very unlikely. The government is flat and talking about targeted measures. It will help inflation if they bring a subsidy. Rental assistance was already there. Maybe they can extend it. There has not been much in the government said it is temporary. To services in arroyo, how enduring is it . Are they going to keep going . We are expecting the government to focus for the next Financial Year and the government flagged that, and estimates are worse than the december forecast. The budget will be stimulatory even though in this Financial Year, they are showing softness, spending more. That is the question. Mark economics reporter there. Lets look at top geopolitical stories. The u. S. Trade group is pushing for higher levies on cooking oil. A flood of oil is weakening demand for crop based ingredients and Sustainable Aviation fuel. The group that represents processors wants levies higher than the current 15. 5 . South korean and chinese diplomats held their first talks about in six years. A chinese minister told his korean counterpart of both sides should oppose protectionism. A summit in japan will happen later this month. A Crypto Mining company has been ordered off of a property near a base that houses missiles. The proximity of operations is a Significant National security risk. The company must sell real estate from back in 2022. Plenty more ahead, this is bloomberg. Sandals jamaica sale is now on with rates from 199 per person per night. Visit sandals. Com or call 1800sandals welcome back to bloomberg. The in focus cpi rose three point 8 . Inflation remains above target. Our next guest believes in the might not match the cuts. Lets bring in cio of creedence, a wealth advisor. Thank you for joining us. I want to start with your outlook. What is the path ahead . Outlook for the year, markets, there is some noise calling them frothy. Earnings multiple and earnings growth. Multiple, there is no arguments that they do not look cheap. There are levers that look positive. Gross, consumption, home sales, they build up to the economy, there is strength around this. There is a debate about consumption. That is more of a tailwind. With consumption coming up to pace we should see good Growth Numbers. Paul infrastructure is strong but when you are advising wealthy clients how is interest . Ok, so Interest Rates are divergent. After inclusion we expect a lot of movement which has happens. Youve seen 14 billion coming in which is the first time we have turned net positive and we got included in the indexes. Private equity side of the market is particularly the flavor of the bull market. The question is how long does its day, and a lot of interest on the upside of the market. Paul in terms of Venture Capital what are they looking at outside of infrastructure . Guest so Venture Capital started with fintech. People are investing in the new india. Defense is catching up and we had an article where russia is importing defense from india. People are moving on to more innovative industry. Consumption is taking up a lot of space because the way it is structured. We have to grow at 18 . Consumer discretionary, new innovative side is taking lot of consensus and focus. Paul in terms of your own business, are you finding there is more competition . The pie is getting bigger. This is not the equity markets. India is 3 of gdp and our focus in the equity market, even if it doubles, the market side is doubling in four or five years so the pie is big. Enough space for lots to make meaningful difference. Competition, lots of healthy competition. Paul are you having trouble attracting talent . Guest yes and no. India is a talent base so there is a lot of guys who are now looking at innovative careers so there is a lot of educational talent. Unfortunately some part gets migrated to other countries. That is kind of from the ground and just a lot of young talents challenging the traditional way of doing things. That is interesting in a country like india. Paul there is a wealthy Indian Diaspora including australia. Do you have strategies to capture business . Guest i think keep it simple is a whole lot of people are looking at indian market from stable governments. Stable markets and regulations. I think the model is keep it simple. The market has a lot of ideations, interesting ideas which are listed, which brought in the horizon of market. Betting on good ideations is what we recommend to investors. We shall them get into structured products. Keep it simple. Keep it simple. Paul does that mean youre finding the Regulatory Environment easy to operate in . Guest im finding it more stable and the budget was an example. There are no changes. The finance minister signaled that we are stable and that was a complaint that lots and visors had on india. Regulatory changes, we are keeping it stable and that was like an invitation to invest in india because things are going to look more stable from here. We on the currency side, that is a welcome change. Paul cio of prudence Family Office, thank you for joining us. Markets in india have opened, weve got positive territory in the early going. Better by a quarter of 1 . Other markets pushing into positive territory, a mixed picture. A lot of other indexes are modestly negative. Also sticking with india it is halfway through the seven Stage National elections. Voting is underway in constituencies so lets get to our reporter in mumbai. How has turnout been and do we have a sense of support for the bjp . Guest as of last night we had seats, 62 , most analysts are looking at the last four phases. It is lower than 2019. Same figure and there is a heat wave in india, so voters are not turning out. There is no one theme or message pushing out. The concern that causes a lack of a clear message, that could be a signal that there is less enthusiasm. That being said they are split on whether they will repeat, whether they will reach the 400 mark target or miss the mark. Paul of course during modis term india has been minting billionaires. Besides wellknown names there are names that we have not heard of in the ranks. I know you have been looking into them and the billionaire class. Guest india has minted more billionaires than ever in the last decade. This is the government policy and growth. A few bumps in the road, covid, indias growth has been strong and incredible spending on infrastructure. We have seen billionaires emerge. Bloomberg estimated the time the government came into power was around a billion dollars. Some real estate moguls had less than 10 million in property under their belt. They were well above 40 or 50. Because of government spending, real estate, weve seen many billionaires leverage those policies and benefit from the policies. Government spending on infrastructure has gone from 1. 6 trillion in 2014 211 trillion earlier this year. Weve the money trickle down to players such as the adani group and smaller bills with billion dollar balance sheets. Weve seen billiondollar companies, weve seen this on the consumer side. Income is grown. Weve seen a lot of companies that were not wellknown our household brands across country. We would get five who have seen their wealth boom. They have not listed their companies. They tend to hold them but there are dozens of billionaires not as wellknown as figure names and we look to five of them this morning. Paul that starting to change. Our reporter in mumbai. Lets look at some other stories in india. Media reports say 14 people have been killed and Dozens Injured after a fierce storm. Rescue operations were ongoing. 20 or 30 people could be trapped. Tragedy comes one week before votes in the national elections. Aluminum maker novellus is completing its ipo next month. They are owned by an industry controlled by an indian billionaire. Theyre seeking to raise 1. 2 Million Dollars and may target valuation. Plenty more to come, this is bloomberg. Welcome back, here are some top corporate stories. Dollar bonds are due next year. Agile will engage to evaluate its capital structure. Anglo american is updating investors today after it projected a second approach from bhp. They sweeten the offer valuing anglo at 43 billion. Anglo says the offer undervalues business. Gamestop shares soared as speculation swelled about keith gill or lauren katie. A post showed a man leaning forward with a gaming controller. Traders interpret that to mean they are coming back into action. He shot to fame by rallying day traders to squeeze gamestop. Openai is launching a cheap version of the ai model underpinning its chatbot. They bowed chatgpt forward. Openai says the updates will be available to users in the coming weeks. The startup is holding onto a market that is crowded. Lets see how are tracking on markets. A number of things we are watching. Jgbs are interesting, closing in on highs. For year yields are closing in on the number we have not seen since 2011. Began is weakening. We will hear from alibaba, tencent, sony. Watching a possible buyback. Sony might see revenue decline. A lot of game titles for playstation. Here is what is moving on Global Markets at the moment. We will be speaking, a risk off day around the asiapacific. We have india nudging into negative territory after a positive start. That is it for bloomberg. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh so, what are you thinking . Im thinking. speaking to self about our honeymoon. What about africa . Safari . Hot air balloon ride . Swim with elephants . Wait, can we afford a safari . Great question. Like everything, it takes a little planning. Or, put the money towards a downpayment. On a ranch. In montana. With horses lets take a look at those scenarios. J. P. Morgan Wealth Management has advisors in chase branches and tools, like wealth plan to keep you on track. When youre planning for it all. The answer is j. P. Morgan Wealth Management. Joumanna