This is Bloomberg day Break Asia for this Wednesday, June twenty first in Hong Kong, Tuesday June twentieth in New York and coming up today.
US equities decline as the market looks ahead to FED share Jay Powell's testimony on Capitol Hill.
Rivian adopts Tesla's electric vehicle charging ports into its existing EV models.
And Jack Maw's longest serving lieutenants return to power at Ali Baba to oversee a tough restructuring.
The search continues for the submersible that went down diving on the Titanic. Hunter Biden will plead guilty to two tax crimes and to be blanket and Chinese officials meet yet again. On Ben Schwartzman, I'll have your news coming up.
That's all straight ahead on Bloomberg day Break Asia, the business news you need to start your day, and just one fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App, and everywhere you get your podcasts.
Good morning, I'm Doug Prisner and I'm Brian Curtis. Here are the stories we're following today.
Chair J.
Powell will deliver the FED semi Annual Monetary Policy Report to the House tomorrow. Bloomberg's Michael McKee has a preview.
In the House, the Fed chairman will have the opportunity to clarify what some feel was a confusing message on the path for interest rates. What would lead central bankers to raise rates again something their own forecasts suggests will happen. Does inflation have to rise, does unemployment or does it just have to remain flat? What is the ultimate end rate? And how soon after that might they begin the rate
cuts they foresee for twenty twenty four. There will also be questions about the impact of March's bank failures and on possible regulatory changes for the industry. Michael McKee, Bloomberg Daybreak.
Asia Powell will also testify before the US Senate the following day.
On Thursday, after.
The bell, we heard from FedEx. The company gave a profit outlook for twenty twenty four below analyst estimates. FedEx has been dealing with a drop in packaged demand, and that's kind of a reversal from two years of surging demand from online shopping during the pandemic. We heard earlier from Bloomberg's Lee Cascou.
There's a lot of uncertainty out there. You know, there's still a risk of a US recession. There's still we don't really know what's going on with China. You know, are they going to increase stimulus. Is that going to you know, help that economy. Cutex is pretty big in China, so you know, that's been a kind of a drag on their results, kind of the slow reopening of China in the related Asian market.
That is Bloomberg's League class cow. By the way, FedEx also reported for the fourth quarter revenue of twenty one point nine billion, missing the mark the street was looking for twenty two point seven billion. FedEx will try to continue and improve margins with its accelerated cost cutting plan
that was announced back in December. The company is hoping to save about four billion dollars by fiscal twenty twenty five and shares in FedEx right now the ticker fd I see the stock down about two percent of the late US trading.
Brian Rivian has agreed to incorporate Tesla's electric vehicle charging ports into its existing EV models. We're hearing that the new agreement will give Rivian drivers access to more than twelve thousand Tesla superchargers right across the United States and Canada beginning from next year. More from Bloomberg's Ed Ludlow.
And it was really interesting because it's probably a bitter pill for Rivian to swallow. You know, they wanted to be their own person, their own electric vehicle startup. They're actually building out their own CCS charging network, which they say they're committed to. But the news is that from next year, Rivian owners can use the Tesla charging network with an adaptor, and then from twenty twenty five they'll start building their vehicles modified to reflect that Tesla standard.
Rivian's announcement follows similar moves by Ford and General Motors. The availability and reliability of charging infrastructure is seen as a critical factor for broader EV adoption. Standard could give consumers greater confidence as they consider a plug in purchase.
Tesla's charging network has a reputation for reliability that ranks the highest in a recent jd Power survey of EV drivers, and as mentioned, Tesla stock was up more than five percent today and Rivian stock was up five and a half percent well.
Speaking of Tesla, talks between the company and the Government of India on a new EV plant may gain momentum. Prime Minister Narenvvermodi is visiting the US and we hear an important meeting maybe on the agenda this evening here in New York. We have more from Bloomberg's Tom Busby.
Mody slated to meet with Tesla's CEO Elon Musk as India tries to lure the automaker to produce its electric cars there. This meeting, which could also include upwards of two dozen high profile participants, comes after Tesla and India revived talks to build an assembly plant there in May,
following a year long standoff. Asia's third largest economy now trying to position itself as an alternate destination for Teesch and other companies that want to limit their exposure to China or at least diversify their sourcing of autoparts and production. Tom buzzby Bloomberg day Break Asia.
Ali Baba shares fell after it announced an unexpected shakeup at the top. Bloomberg's Yvon Mann has more from Hong Kong.
Ali Baba's US traded shares fell four and a half percent in New York. The company's surprise investors with this move, Eddie Wu and Joseph Say will replace Daniel Jong as CEO and executive chairman, respectively. Both Wu and Hi are longtime confidants of co founder Jack ma. John's unexpected departure comes after Ali Baba announced a six way restructuring. He will still remain as the head of the cloud business
to potentially sharpen opportunities in AI. Ali Baba hopes a Newbury shuffle will help guide the company through a tough restructuring in Hong Kong. I'm yvon Mann Bloomberg Day Break Asia.
It's quite interesting that Ali Baba traded down so much more in the New York session that it did in Hong Kong yesterday. This news was out early in the day yesterday and Ali Baba was only down one and a half percent. But I suppose when you look at this story, Doug, it just any sort of trouble at the top, or any sort of big moves at the top will unnerve some investors. And this is still a complicated process of separating this company into six different parts.
Yeah, and we were talking about the fact that Jack May is still involved maybe in making these decisions or helping to guide the company going forward. Kind of underscores the fact that he remains the spiritual leader of BABA. And I'm wondering, Brian, given the price action that we saw in New York and the ADRs, whether some of this has to do with a bigger macro story in China.
The disappointment we were talking about earlier with the cut in the five year loan prime rate by only ten basis points, A lot of economists were looking for something maybe in the neighborhood of fifteen doesn't sound like a big difference, but I'm thinking about the psycho logical impact and the message that consumers may be getting when they get news like this.
Yeah, I think that's I think that's an accurate comment. In fact, it's something that we heard from you. Remember our old colleague vasern Lang, who used to work at Bloomberg Intelligence now as a managing director at UBP, and he said, basically, in terms of looking at Ali Baba, it's such a China proxy that is really dragged down by the geopolitics and by China's economy. Never mind you
some of this restructuring. What's interesting is you have two very cool stories of corporates getting changed here, one from the inside out, and the other from the outside in. I'm speaking first of Ali Baba, which we've just talked about, and the other Perelli, and that's a move that was really prompted by the Italian government.
Yeah, that is a very interesting story. But to get back to Boba very quickly here, I think it's also fair to point out that the company has been facing increasing competition. I'm thinking of Pindwo Duo as one example, right, and I think that's part of the struggle here for the company to get back on track in the face of a very very different landscape than when Baba first showed up however, many years ago.
And that's the way it should be. I mean, there should be a lot of competition, and I think this move to separate into six parts will allow each company to try to become nimble and the best performer in the respective area. And Daniel Jong, the existing CEO who has had his position change, is not leaving. He's going to head up the cloud division, as we talked about earlier, and that might be the most important in that it will embrace AI. So there's a lot coming up on
this story. Now it's time for Global News. The search continues for the missing submersible, and Dan Schwartzman has more from the New York newsroom.
Dan, Yeah, it's like a bad movie, to say the least Brian. They've now shifted underwater with that search. As air efforts did not find the craft, which has five passengers on board. As say that the crew has around forty hours of oxygen left. That was pretty much as of earlier this afternoon, based on the design of the craft, which is supposed to have an oxygen supply of ninety
six hours in case of an emergency. The New York Times saying that passengers pay a quarter of a million dollars to Ocean Gate expeditions to go down to the wreck aboard the diving vessel called Titan. US Coast Guard were Admiral John Mayer says teams are using everything available in this search.
Our crews in the Coast Guard and partners across both the US government and within Canada and the private sector have been working around the clock to bring all capabilities that we have to bear on finding the submersibon locating the people.
The search area is the size of Connecticut. President Biden's son Hunter will plead guilty to two misdemeanor tax crimes. Biden will also enter into an agreement with prosecutors to avoid charges of possessing a firearm while addicted to an illegal drug. The deal comes on the heels of a five year investigation, will likely with Hunter Biden avoiding jail time.
Biden is expected to participate in a federal diversion program, which could lead to the weapons charges being dropped if he complies with certain conditions over a specific time period. Republican Senator Lindsay Graham questions the charges.
Sorry, he's had problems.
You know, I don't wish that own any family, But this has taken over four years, and to wind up with tax evation and a gun charge, there'll be a lot of questions.
Graham was speaking in South Carolina. A non bailable arrest warrant has been issued against cricket star turned former Prime Minister of Pakistan Imran Khan, an anti terrorist cord in Lahore, giving the order at the prosecutor's request as con in some of his aides are allegedly linked to violence in the country last month. Protests broke out on May ninth
after Cohn was briefly arrested on corruption allegations. Cohn has faced more than one hundred cases against him since being ousted from power last year, although he says they are
all politically motivated. More than a week after the collapse of a section of Highway I ninety five in Philadelphia, temporary of lanes will be opening this weekend, Pennsylvania Governor Josh Shapiro saying permanent repairs were to follow after the June eleventh collapse due to a tractor trailer carrying gasoline flipping over an off ramp, leading to a fire that
brought down the section of highway. More than one hundred and fifty thousand vehicles, including over fourteen thousand trucks, use that portion of I ninety five on a daily basis, Governor Shapiro, with details.
And dot's already working on that.
We're going to have three lanes nor A three lanes south. Traffic's going to be flowing while while that's happening, we'll be rebuilding the bridge from the outside in. There'll be no disruption to traffic.
There'll always be six lanes moving during that process.
Global News twenty fours a day, power by more than twenty seven hundred journalists and analysts in more than one hundred and twenty countries. I'm Dan Schwartzman. This is Bloomberg.
I'm Brian Curtis in Hong Kong alongside Rashad Salamat here in our studios. And Catherine Kaminski joins US chief research strategist and portfolio manager at Alpha Simplex Group on with us from Brookline, Massachusetts. Well, Catherine, you probably noticed that Doug and I got through our chat without even talking about the FED for a moment, which I can take as progress. It's nice to set the macroside a little bit, of course, it's one of our top stories, and the
chair will be speaking. Will he toughen up his language? Is that the sense you're getting?
I think so.
I mean, what's been interesting to us is that we've can continue to have short signals and fixed income and it feels sometimes like I'm the only one at the table saying that. And what it means is that I do really think there's going to be possibly one to two more hikes this year because let's just be honest, inflation is lower, but it's not low, so that's going to take some effort. On their point, they probably want to set expectations, so people don't get too optimistic.
I almost think that the market has kind of moved beyond it in a sense that the market just seems investors just don't seem to be that concerned whether you get another one or two rate hikes, have already had so many to get to five percentage points.
I'd agree, And I think the main focus has really been just how much the equity markets have been up, and once we started to see that there was a potential for a pause, there's just been this fervor that people have just been not wanting to miss the boat, you know, sort of a foamo trade that's sort of been very strong for the last three weeks. So it seems as if they're kind of forgetting about the FED for a little bit.
But that might change tomorrow, depends on what he says.
Well, Captain, it's got lots going to depend on what earnings are looking like, and some of called an earnings recession, and we've still got this amazing rally going on. Give us a sense of what is going on there.
Well, what's interesting to me is this rally is massive, and what's even stranger what you were just talking about with what's going on in China is that it's not a consistent rally. It's particularly definitely in the AI sector. It's more us than in other areas across the globe. And I think the thing that's been the most interesting is I think a lot of people are surprised at how.
Strong the rally's been.
I mean, let's just take an example, the nastas up almost ten percent in the last two and a half weeks. I mean that's a lot. And so I think that's what's really been surprising to me. And I think people today showed that example, they're worried about taking profit. They're thinking about will this keep going or is this just fervor?
Yeah, you know. About a month ago, I noted that one of the biggest bears on Wall Street, Savita Supermanian at Bank of America, had turned positive, had turned bullish, and she said she expected the equal weight part of the S and P to rally and to take up the slack, and that the megacaps MC go sideways or they might drift around a little bit. And this is something we've actually seen happen. Now you can say it's
not a trend yet, it's just a move. Maybe it's a relief rally, but the cyclicals and the industrial or the industrials and the material and the transports have rallied seven to ten percent over the past month, and that has to be good to the bulls as saying, look, the breadth is coming, do you buy it?
I would agree that I would agree a little bit as well, because we've tended to be a little more bearish as well, and you've really seen one of the few things that were short signals was the Russell, and the Russell has definitely turned around as well.
And so I'd say that.
General optimism has spread from a simple tech story to a things might be okay and that there may be opportunities if things are on the right path going forward. I think it's a little tricky with how strong it's been. That's generally the sentiment I've heard from others.
What is the equity market telling us about the economy, And on top of that, how I mean it does seem it also depends where you look on the on the yield curve what the bond market is saying, because that different stories coming out there.
I would agree, and I mean I think we tend to kind of we were, you know, I was thinking about this today. It feels a little bit like the bond market is in somewhat of a disconnect. And it's tricky because you're also seeing a lot of rebalancing, and you're seeing people moving into money market funds, for example, because they're interested in higher yield, but yet at the same time they're buying fixed income with potential signal for
rate hikes later this year. We tend to think that the yield curve is not really pricing in, so there's a disconnect between what those higher rates might be for the curve and where the curve is today.
I just sort of get a sense of, you know, with equity markets in the US doing so well, and you know, you're looking at a Nasdaq one hundred up about thirty seven percent so far this year, you've got to say to yourself, hang on, there's got to be a gut check, that's got to be a down draft, you know, and then maybe I can buy on the dip later on. But you know, how did that make you look at em and what part of them, if anywhere?
Well, this is definitely some of the divergence we've seen from a technical perspective.
You've seen massive rallies.
In Japan, but you've seen em lagging to some degree, and particularly China.
And this really goes with the narrative.
That certain economies are just moving in very different directions more than we've seen in recent periods. And I think those signals have been moderate. But you know, nowhere in the same.
Ballpark is what you've seen in Japan or tech in the US.
So that's an interesting you know, cross you cross geographical opportunity sets, and so it's kind of an interesting time to be an equity investor in that sense.
I'm kind of sensing though that you're a bond girl or a bond woman perhaps is more proper in that some of the notes that you've got here about shorting fixed income, it seems like you're still into that that you see yields moving up and so there's still some money to be made shorting some of these some of these bonds.
Yeah, we've seen short signals across the board and fixed income, and we tend to be the only person kind of pointing out if inflation is sticky, it's.
Going to be difficult for long term cash flows.
And I think most people have this disconnect where they just say, well, hey, rates are higher, who cares? And I think for us, who are much more in a frequency that's a shorter term frequency, we're thinking higher rates negative MPV.
This is an interesting opportunity for a potential.
Steepener, and you might have some more interesting opportunities as a short.
Bond trader like you did last year.
I mean, let's just be honest, that was the best trade last year, and I think it still has some room to run.
So short the short end of sovereigns and also credit.
So credit's a little trickier.
We are not as exposed to credit just because we primarily focus in the futures markets. I think credit has been moving a little bit disjointed with what we're seeing. I think that is not something that I would have a comment on. But I filiam seeing short positioning on the long end of the curve as well, so I think that's where there could be something interesting if we have a strong steepener.
This is Bloomberg Daybreak Asia, your morning brief on the story's making news from Hong Kong to Singapore and Wall Street.
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And I'm Doug Krisner. Join us again tomorrow for all the news you need to start your day right here on Bloomberg Daybreak Asia.
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