Fed Minutes, March CPI and Mixed Messages

supports the China Taiwan status quo. Houghton personally ordered the arrest of the Wall Street Journal reporter Brazil's Lula travels to China. I'm d Baxter with Global News. That's all straight ahead on Bloomberg Daybreak Asia, the business news you need to start your day, and just one fifteen minute podcast available on Apples, Spotify, the Bloomberg Business app and everywhere you get your podcasts. Good Morning, I'm Dead Prisoner and I'm Bryan Curtiz Hero the stories we're following today.

We start out with minutes of the last FED meeting. All committee members agreed to a twenty five basis point rate hike last month. For more, here's Bloomberg's Michael McKee. Although the banking system remained quite strong and resilient, that's a quote. Banks were likely to tighten credit conditions, and that would weigh on growth, on hiring, and on inflation. The problem where policymakers was quote the extent of these

effects was uncertain. Participants saw risks to the economy to the downside, and they saw the risks of inflation waited to the upside. Given that uncertainty and the stickiness of inflation, all participates ultimately decided they should raise the target range by a quarter percentage point. The minute show that the FED is now projecting a mild recession starting later this year. So we know the next meeting is in early May, and not all members even now are sending the same

message regarding future rate hikes. Today we heard from the head of the Richmond FED, Tom Barkin. He was policymakers still have more work to do detain prices. His remarks came even after that CPI print showed inflation did remain well above the Fed's too pretent target. Here is Barkin speaking earlier on CNBC. It was pretty much as expected. You know, I put particular focus on the core, which is still running a little over five percent year every year.

And you know, we had some good news on energy, but there's still more to do, I think, to getting core inflation back down to where we'd like it to be. Tom Barkin there, the head of the Richmond FED. He went on to say he does see signs of cooling demand. Even so, he does remain wary of declaring victory on inflation too soon. Meantime, San Francisco FED President Mary Daly

says more FED rate hikes may not be needed. There are good reasons to think the policy may have to tighten more to bring inflation down, but there are also good reasons to think that the economy may continue to slow even without additional policy adjustments. Daily highlighted the effects of the FED having considerably ratchet it uprates over the past year, and she said at this point, inflation still has a way to come down to the feds two

percent goal. Well, Warren Buffett is expecting more US banks will likely fail. Even so, he is saying depositors should feel confident that they won't lose any of their funds. Buffett went on to say, today troubled banks aren't. If you look at the stocks, they aren't valuable investments, or at least value investments, because shareholders are likely to be wiped out even if the government does move to protect depositors.

Here's Buffett in an interview with CNBC. The owners of banks may have lost a hell of a lot of money. The people who bought the deat of the holding company may they may lose a lot of money. People they can lose a lot of money, but the depositors aren't going. So you don't need to turn a dumb decision by managers into a panicking the whole citizenry of the United States about something they don't need to be panicked about.

Berkshire Hathaway chairman and CEO Warren Buffett, Brian and something you highlighted a day or two ago, we had confirmed in that interview from Warren Buffett about his sales of TSMC, and I'm swinging this around to Asia because that's the focus of the program. Obviously, what he basically said was he didn't reevaluate the business, the management, or anything of

that sort. It was specifically because of the geopolitical tensions between China and Taiwan, and that may give comfort to some holders of TSMC stock who thought maybe it was more about direction or management, But no, it was more about the geopolitical tensions. They haven't gone away. But if you think that that simmers and doesn't cause a big problem, then you're perhaps a little encouraged. Meantime, the US shares of LVMH had a record high after the retailer reported

better first quarter results than expected. We get the story from Bloomberg's David Englas. Sales jumped as Chinese shop resplurged after emerging from a length he shut down. Revenue at the group's biggest unit, which sells fashion and leather goods, roast eighteen percent. That's almost twice the gain that analysts were expecting. Let's CFO said that a company is extremely optimistic for China. In twenty twenty three, sales jumped in

other countries as well. Japan saw a thirty four percent increase. Shares of LVMH have rebounded by more than twenty percent so far this year. After the slump in Chinese demand began to recede. Lvmhs US shares closed up three point four percent in Hong Kong I'm David Inglis bloom Brick Day Break, Asia, Doug. Let's go back to the minutes

to the FED. It was interesting that, you know, they mentioned that the banking crisis actually said that, you know, the full effects of that, that that caused them to lower their estimates on the terminal rate. And if we can add to that, it's probably important to say that the full effects of the cutback in bank lending probably haven't been felt yet. I mean, the crisis may have kind of stabilized, but the effects of the crisis haven't.

I think that's right, Brian. And if you remember what FED cher J. Powell had to say after the last decision that the effects of the banking crisis and what is likely to be a contraction and credit could result in the equivalent of a maybe twenty five or fifty basis point rate hike, right, And I thought it was very interesting the timing of the meeting coincided so closely with the banking crisis, that before the banking crisis unfolded, and we know this from the minutes, that some FED

officials were anticipating a fifty basis point rate hike in March, but all of that changed given the stress in the banking system. Yeah, and I don't know if this is right, but we're hearing more from policymakers that the stock market seems to be priced for a soft landing, not for the mild recession that we got from the FED, whereas

maybe the bond market is not. So that's something. One of our guests coming up is Anne Milletti, head of active equity at all Spring Global Investments, and so we'll be talking about that. This is Bloomberg and it's time for global news. French President Emmanuel Macron is trying to clarify his stance on Taiwan, China and the US because they were quite interesting. Let's get to head backs to He's got the details on that in the San Francisco newsroom.

D Yeah, Brian boy, you're right at you talk about a tight rope and he can't escape it either. Macron is in the Netherlands today today, flanked by Dutch Prime Minister Mark Ruta, overshadowed by his remarks last week, as you say, regarding being dragged along by the US, and has visited to China and with relations with Taiwan. Not today he confirmed he's in favor of the status quo regarding Taiwan and China, but also said that strategic autonomy and quotes is not merely a concept, but it is

becoming a reality in a must. French cabinet officials are working to clarify the statements as well. Bloomberg's Maria Todayo has spoken with France Finance Minister Bruno Lemaire. Overall, what the French President has said it is right and it has been our position for years, this idea that the European Union obviously has a close relationship with the United States. He told me this is our best friend across the world.

We spoke with President Biden before the trip, but the French president has always made it clear that the European Union needs to have its own policy when it comes to defense, with the economy and trade, and Maria says more official statements on that are due soon. Bloomberg Is exclusively reported today that Vladimir Putin personally ordered the arrest of Wall Street Journal reporter Evan Gershkovitch. Bloomberg's national security

reporter Nick Waddum says this is a game changer. I mean, this isn't something that's happened since the Cold War, and it's essentially sent a messive chill through the journalist community there. Obviously, there are very very few foreign reporters in Russia anymore. Nick says most reporters have packed up and left. South Korea's National Security Director Kem Taijo is saying that after consultations with the US, he leaves a considerable number in

quotes of the leaked intelligence documents were fabricated. He says there's no indication the US conducted eavesdropping with malicious intent. Brazil's Lula in China today, arriving meanwhile to me with President Jumping the end of the week. Lula has stated that he wants to talk piece plans for Ukraine to say he has reservations about China's peace plan and wants to talk. US Environmental Protection Agency has announced the strictest

ever rules on pollution from cars and trucks. Director Michael Reagan says the phase out of internal combustion engines will mean two thirds of all small vehicle sales and almost half will be electric by twenty thirty two. Reductions in greenhouse gas emissions mean cleaner air and less pollution. It means less sickness, and it means healthier Americans and will ensure he says, the US as leader in this kind

of green energy globally. And the cigarette maker Jewel, has been ordered to pay hundred and sixty two million dollars to multiple states who claim the products were addictive and harmful when it intentionally targeted teams and young adults. New York Attorney General Latitia James. This is the largest multi state settlement with Jewel and includes the most stringent restrictions on the company's marketing and sales to protect and to

prevent minors from vaping. New York, California, Massachusetts, New Mexico, Colorado, Illinois, Washington, DC parties in the suit. Global News powered by more than twenty seven hundred journalists and analysts and over one hundred and twenty countries. In San Francisco, I'm at Baxter and this is bloomberg ed. Thanks very much, Sean Bryan Curtis, along with Rishads Salamat, and our guest is Anne Milletti,

head of Active Equity at all Spring Global Investments. And I wonder whether or not we're at a little bit of an inflection point here for the FED and I can kind of tell this story through the ECB. Francois Villroy, a council member there, says the ECB's work is almost done. That's our lead in our story on the comments, and I think a lot of people would put the FED

in that picture as well. However, you have one of the other ECB members, Robert Holtzmann, who told the press that a fourth consecutive fifty basis point increase in May is still warranted. Is that possible with the FED in that inflation is proving stickier than some thought. I do think it is possible that we see another twenty five I prefer we didn't get it, but I do think that the FED is so focused ultra focused on inflation, and the data that we got probably wasn't enough information

to prove that the inflation there is behind them. You know, I think the difference between the FED and the companies that our investment teams speak to is that they are all focused on data. But the FED tends to be focused on the data that's in the past, where as you know, company management teams are built on managing their business looking into the future, and so you know we're going to hear a lot more about that as companies

are reporting and what their expectations are coming forward. We already saw some cracks in the system obviously, maybe maybe you could call them bigger than cracks with you know, SVB and some of the issues that we saw with the regional banks here in the US. But I prefer that we saw a pause and see where we get to. I think there are signs that we are headed into a pretty big flowdown as it is, but I'm not

sure that we're going to get that. Yeah. The thing here also is that you mentioned that you know, looking in the past, So in some ways are company statements as important as the data way getting right now? And you know, as you say, in the past, but you know, when the next set of inflation numbers coming, we get

properly the these reflecting base effects. I do think what is important, especially when you're listening to management teams and these calls that we're having again, is not so much what they're reporting on what happened, but what they're talking about, what they're seeing currently and what they're planning for. And so many companies are just talking about the plans for the next quarter, and that's what our investment teams are listening to what are the plans? What are the expectations

for spending? That tells you a lot about their expectations for the economy. Are they pulling back on spending? Are they pushing forward? Is it not changing? That tells you a lot about their plan. It also tells you a lot about like what's their cash you know, what's their

free cash flow? What's their ability to spend? It begs the question and if you think that the earnings are important for where the stocks are at the moment, whereas the DA is important for the Fed and its job on combating inflation, and that begs the question of whether or not the stock market is slightly out of sync that maybe, as I said earlier with Doug, that the stock market is pricing in a soft dish landing and not a mild recession. I do think there is. I

do think you're right about that. When I look at the market. What's interesting about the market, And if you just kind of look at first quarter performance and you break it out between you know, growth and value, small cap and large cap, you do see some differences. Right, So it isn't that the tide lifted all ships and you had big outperformance across the board. The performance has been pretty narrow in what has outperformed and what hasn't.

You see large cap growth outperformed. You had about fourteen fourteen and a half percent around that for the first quarter. Small cap value down for the quarter, and so you kind of looked at that and you say, what are you know? What's driving that? Likelywood's drive in a lot of that is the fact that you know, you had interest rates, which we're going up, you know, at the tail end of last year, compressing multiples for growth stocks,

doing a little bit of the reverse. As the projection is now that interest rates will come down, the markets pricing that in the growth stock. This is Bloomberg Daybreak Asia, your morning brief on the story's making news from Hong Kong to Singapore and Wall Street. Look for us on your podcast feed every day on Apple, Spotify and anywhere

else you get your podcast. You can also listen live each day on Bloomberg eleven three zero in New York, Bloomberg ninety nine one in Washington, Bloomberg one oh six one in Boston, and Bloomberg nine sixty in San Francisco. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty plus. Listen coast to coast on the Bloomberg Business app, Sirius XM Channel one nineteen, the iHeartRadio app, and on Bloomberg

dot Com. I'm Brian Curtis and I'm Doug Prisoner. Join us again tomorrow for all the news unique to start your day right here on Bloomberg Daybreak Asia