Previewing Fed Minutes and Chinese Company Sanctions

on the tech sector. Joe Biden and warsaws as Ukraine will never fall and that Vladimir Putin has lost standing in the world. Poutin backs away from arms control agreement, reports that Shijianping plans to visit Moscow in coming months. I'm at Baxter with Global News. That's all straight Ahead on Bloomberg Daybreak Asia, the business news you need to start your day in 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 Brian Curtis. Here are the stories we're following today. Traders will be looking to Wednesday's FED minutes for clues on the Central Bank's rate hiking path, Let's get that story from Bloomberg's Michael McKee. The surprise is gone now that the presidents of the Cleveland and Saint Louis fedbanks have said they saw a case for a half percentage point

increase at the February first meeting. If there were a significant number of others who felt the same way, that could influence views of the Fed's next move, given the strong data we've seen since then. Moreover, at his post meeting news conference, FED Chair j Powell teased a discussion on the path forward for rates that we'd learn about when the minutes were released. What might have been said about how high rates will need to go, how fast,

and for how long. A lot of that will depend on how FED officials felt about the prospects for inflation. Another discussion to watch in the minutes, Michael McKee, Bloomberg Daybreak Asia. So onto the big retailers. We begin with Walmart. The company reported sales and profit above expectations for the last quarter. Shoppers appeared to flock to those stores during the holiday season to take advantage of Walmart's low prices. Even so, the retail giant warned of tougher times ahead.

Walmart is now forecasting a second straight decline in annual profit. Here, as the company's chief financial officer, John David Rainey, you're seeing that our value proposition and certainly resonating with consumers right now. But there's a lot of macro uncertainty again as we look across the consumers across the globe, but certainly here in the US, balance sheets are getting thinner.

You're seeing savings rates decline, and we really haven't been in a position where we've seen the FED tighten at this rate. And so as we look forward and give guidance for the full year, we're adopting a cautious outlook and we want to make sure that we're responsive to whatever environment that we're going to find ourselves at. John David Rainey, there, the CFO of Walmart. The news wasn't a lot better for Home Depot, the home improvement retailers

now forecasting a profit decline for the full year. The companies cited certainty tied to those higher interest rates now. Home Depot said that could keep Americans from moving and renovating their homes. Bryan Companies in China and around the world have been warned that they will be punished by the US if they keep doing business with Russia. That

story from Bloomberg's and Kates. The Treasury Department says the cost of violating the Biden administration's sanctions against Moscow will be steep, and that corporations and banks risk being cut off from the US at its partner's financial systems. A year after Vladimir Putin invaded Ukraine, the sanctions have had a devastating impact on Russia's gas exports and imports of high tech goods, but they have yet to seriously diminish

Putin's ability to wage war. In Washington and Kate's Bloomberg Daybreak Asia, the big tech firms in China appear to be on the verge of a price war. We have that story from Bloomberg's Von Men. China's internet and e commerce firms are beaving up efforts to outdo each other. Media reports suggested jad dot Com was planning a one point five billion dollars subsidy campaign to compete against Ping

Dual Door. Elsewhere, net Ees and miHoYo are upping their battle against gaming leader ten Cent as competition rises, concerns over margins grow, and equity investors have taken notice. JDM Pingdodo fell ten to eleven percent in New York and Ali Baba was down nearly five percent. The selling helped push the NASDA Golden Dragon China Index down two point nine percent in Hong Kong. I'm Ivan Mann Bloomberg Daybreak Asia.

Microsoft is promising that Call of Duty will not be collateral damage as it tries to get approval for its planned purchase of Activision Blizzard. The story from Bloomberg's Denise Pellegrini. Britain's anti trust watchdog has suggested Microsoft agree to divest Call of Duty to deflect criticism that buying its owner

Activision would stifle competition. But Call of Duty is one of the most lucrative game franchises in the world, and speaking after a European Union hearing, Microsoft president Brad Smith said, no way. We don't see a viable path to sell off the part of this company, Activision Blizzard that makes Call of Duty. Microsoft did manage to flying two more opponents of the merger today. It cut deals sharing Call of Duty with Nintendo and also in Vidia's chief force

in addition to the antitrust concerns in Europe. Here in the US, the FTC has already sued to block microsoft sixty nine billion dollars deal. Denise Pelligriny Bloomberg day Breakasia. I'm Brian Curtis, along with Doug Krisner and Rashad Salamat will join us in a few moments. Now it's time for Global News. The US President Joe Biden marking the one year anniversary of Russia's invasion in Ukraine by saying that Vladimir Putin will never find victory. Ed Baxter has

Global News in the nine sixty news room. Ed. Yeah, that's exactly right, Brian Biden, in fact, saying, rather than gating power and control, Putin's lost power and global standing, President Putinsk front it was something today that you didn't think was possible a year ago. The democracy of the world. I've grown stronger, not weaker, But the autocrat to the world have grown weaker, not stronger. And a message to

NATO there should be no doubt our support. Free grain will not waiver, NATO will not be divided, and we will not tire. Now, Biden, aiming for the Russian people, saying the US and Europe do not seek to destroy or control Russia. But freedom. There is no sweeter word than freedom. There's no nobler goal than freedom. There's no higher aspiration than freedom, and that the US will not

allow a Russian victory in Ukraine. Bloomberg's Amory horndern in Warsaw says, a unifying message for NATO was followed a message to the Polish people as well as these neighbor neighboring countries around Ukraine was about this ironclad commitment to Article five. This is something that would be very much so welcomed by the Polish people. Yeah, and NATO countries defending each other if under attack. Now, Earlier in the day,

Vladimir Putin pulled out participation in the nuclear agreement. He threatened that there would be a response if the US were to get long range missiles. We've seen throughout the prior twelve months a little bit of hesitation from the West, whether it was high Mars or another advance on a

military system. Now, Putin did say he would abide by weapons limits, and the US is providing Ukraine long range GPS guided bomb made by Boeing that is capable of hitting targets forty five minutes away, and in the same train of thought, China's President Hijunpeng is preparing to visit Moscow for a summit with Vladimir Putin and coming months. Wall Street Journals saying probably in late spring or early summer.

The story says that she will push for multi party talks on peace in Ukraine and to reiterate what it calls no nuclear weapons be used, and China's foreign ministers urging the world to stop drawing parallels between Ukraine and Taiwan. The statement urges countries to stop fueling the fire and stop shifting blame to China and stop touting Ukraine today Taiwan tomorrow. In the US, the Supreme Court Justice is expressing awareness about opening Internet companies to lawsuits coming from

harmful user posts. The issue is whether Section two thirty would be weakened, potentially opening the floodgates two lawsuits. 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. This is Bloomberg Daybreakcasia, Brian Curtis and Rashad Salamat, and our guest is Schoo,

financial advisor and managing director at UBS. So the short end of the yield curve back to the yearly highs of four point seven two percent, the long end not quite buying in yet to the idea that yields to a race to the upside. The high there was four and a quarter and we're at three ninety five. But the stock market feels like it's cracking now do you agree with that? Well, you know, we always thought that the rally this year it's not as sustainable, um, because

inflation is not completely under control. Uh. I mean, it's still far from the said target two percent. So the latest UH data suggesting is too early to expect as pivot from the said and raped may stay higher for longer. So um, you know. And it was great that the speed of the rally of the year was was very fast, but it's probably going to slow down a bit until we have inflation more under control. This is it isn't as year, But I mean the point being, do we

have to now wait? Really full a semblance of perhaps calm well could be the other way round, of course, until the FIRMC minutes. Yes, I mean, I think it's we're always invested. I mean we're not going to wait any you know, connected on the sidelines, but you know, until we have that or data, until inflation is more under control. Uh, you know, we have our portfolio pretty well that vertified um and and kind of just see what will happen with inflation, if that's going to eventually

be eventually going to modoring. It would feel almost like this is a great time for some equity investors in that when interest rates are close to zero, you know, everybody can get into business, and you know, you can be a disruptor pretty easily because the cost of capital is is nothing. Now it's much more difficult. So if you're a company that has an entrenched position, is this a good time? Yes, I mean, this is definitely a

good time to be very selective. And you're absolutely right with you know, rates or at zero, anybody can get into business. But uh, you know, and that's why we're very very selective with equity opportunities um and, Uh, you know, we still prefer defensive, value oriented stocks, but of course there's always opportunities in in uh, you know, consumer stables and healthcare still just a bigger trend for those those type of sectors are good and in including very selective

technology stocks as well. Tell me here as well, you know you under preferred to should say if you at least prefer the financial technology. No, financials shortly should be doing better than what they are, given that we have at least now interest rates as opposed to zero and tech because well we've got to beaten down so much last year, right, Yeah, absolutely, I think our concern with financials is the recession risks. I mean, of course a lot of people took that off the table, a lot

of investors. But if unemployment rate rises, earnings will take a hit. And additionally, thanks apodit rates are rising, which could criminate interest income growth. So we are careful on financials and also still very careful on technology because you know, if that is going to continue to raise rates, even if it's at a slower pace, there's a greater potential for a drag for growth sectors, and that includes technology

as well. What do you make of the price wars now in Chinese technology companies, particularly internet and e commerce firms. It seems like a new wrinkle that now all of a sudden. We have to worry about their their margins. And this has nothing to do with regulation, right absolutely. UM, I think with China it's you know, the prize wars are inevitable. I mean, it's going, it's going to happen. But and but we're still very positive in China despite

the reason equity setback. We do feel like you know, with the reason reopening in China. You know, we're very preferred on emerging market equities. UH, specifically within Chinese equities, we like direct beneficiaries of reopening and not include sectors such as pharmaceuticals, medical equipment, and transportation. Um. Internet is good. There is a prize war. Um, there's gonna be winners and losers. So it's just you have to be I mean, investors have to be very selective. You're going to get

into Internet. But we still for more of the direct reopening beneficiaries and China is still our most preferred Asia strategy right now. Tell me something though, you mean you do with a lot of the high net worth individuals in US, Hong Kong and China here as well, can you tell me how that mood has changed in recent months, especially since the reopening and number two, What is the biggest the most common question they're asking you. Yes, I mean,

this is really a good question. I mean, I think high net worth investors are definitely more optimistic this year. I mean, last year was mostly every you know, a lot more conservative, a lot of more cash management. Investors are afraid to put cash awarp because they were just so much uncertainty. But this year especially seen inflation, even though it's still high, the moderate a bit, seeing that the economy is still intact in China's reopening, that that

provided more certainty than before. So investors are more optimistic in in putting a little bit more cash to work, but still very very cautious because there's still a lot of uncertainty out there. And in terms of you know, just investors top question on their mind, it's still you know, the lag effect of the ray heikes. You know, the investors are very worried about if there's going to if this is going to drag out, if a recession could still happen. So I think, you know, there's that optimism,

but there's also a lot of caution as well. But overall, there's more cash put to work this year than than the day last year, we've burned off a lot of the froth. I suppose in some of the equity markets. Interesting that the DAO is now negative for the year. The Nasdaq is still up about ten percent. Do you expect I mean, if you're looking now at say the next six months or so, is the dividing line whether or not we go into recession or not or what's

the main dividing line? Um. I think it's whether we go into recession. And I think the biggest dividing line it would be, you know, the said policy if said is going to continue to high rates, because a lot of the rally was driven this year because there's that optimism that ray hikes are going to slow down or it's going to stop, and but now you know, it's

kind of reality hits that it didn't. Inflation still not under control and said it is very likely and actually stress the fact that they are going to hips are essential. So there's I mean that greer potential draft for growth sectors. So yeah, you know that we have most of the concern.

This is Bloomberg Daybreak, Gasia, your morning brief on this story is 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 podcasts. You can also listen live each day on Bloomberg eleven three zero in New York, Bloomberg ninety nine one and wash Ington, Bloomberg one oh sixty one in Boston, and Bloomberg nine sixty in San Francisco. Our flagship New York

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