US Feels Heat From China EV Push

This is Bloomberg day Break Asia for this Monday, June nineteenth in Hong Kong, Sunday June eighteenth in New York and coming up today.

The US feels the heat from China's push on electric vehicles.

Intel will build a new manufacturing plant in Israel to diversify more production outside of Asia.

Perelli will discuss the move by the Italian government to strip Sinochem's influence on Perelli's board.

B Lincoln and Sheen meet Possible With Shichimpeg still up in the air, William Barr says the case against Trump is strong and that the former president is a fundamentally flawed person. Kishaa pulling down. 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 Apple, Spotify, the Bloomberg Business App, and everywhere you get your podcasts.

Good morning, I'm Brian Curtiz.

And I'm Doug Krisner. Here are the stories we're following today.

Transportation Secretary Pete Boodaget says the US must take steps to cut into China's advantage in batteries that are used to power electric vehicles. Is Bridget. Speaking in Japan at the G seven Transport Ministers meeting, he said the US needs to do more.

Refining capacity on many of the key raw materials needed for EV battery components. It's very concentrated in China, and

Meantime, Ford share Bill Ford Junior told CNNA and the US is not quite ready to compete with China in the production of electric vehicles, and he said his company is taking an all hands on deck approach to prepare. This includes Ford building a battery plant in Michigan. Bloomberg NEIF says Chinese firms now account for more than half of the EV battery market and it says that those firms satisfy as much as ninety percent of demand for some battery materials.

Intel is building a new manufacturing plant in Israel, as the chip maker continues to diversify out of East Asia. We have more from Bloomberg's Thannis Pellegrini.

Intel has agreed in principle to build a chip plant outside Tel Aviv that could be up and running within four years. Prime Minister Nuttnya, who calls a twenty five billion dollar deal the largest foreign investment in Israel, but we're also hearing that number may include a previously announced ten billion dollar investment. Intel may qualify for a big grant for the plant, and it's all part of Intel's push to diversify beyond Asia and restore technological leadership after

Boeing says it's preparing to accelerate production of the seven thirty seven jets soon. That's according to Standal, who heads Boeing's commercial airplane business. It comes as the planmaker said it's making some progress and addressing a production defect in

This is going to be the first opportunity for markets in Asia to react to some hawkish remarks last Friday from FED Governor Chris Waller, he said it's not clear the US banking strains will lead to significantly tighter lending conditions in the States, and he pushed back on the argument from some critics that the FED should consider recent bank troubles when deciding monetary policy.

The Fed's job is to use monetary policy to achieve its dual mandate, and right now that means raising rates to fight inflation. It is the job of bank leaders to deal with interest rate risk. I do not support altering the stance of monetary policy over worries of ineffectual management at a few banks.

That is FED Governor Chris Waller. He went on to say the FED has a separate range of targeted tools to address financial stability, and he said tighter credit conditions so far are a continuation of some prior trends. Meantime, Waller went on to say more policy tightening will likely be required by the FED. He said core inflation prices are not moving and that Brian, he said, is a concerning trend.

Well.

Italian tire maker Pirelli is moving ahead on a plan by the Italian government to limit Sinokem's influence on Pirelli. Let's get the story from Bloomberg's Joan Wong In Hong Kong.

Parelli has called a board meeting to account for the government's new measures on Friday. Italy used as gold empower rights to strip Sinocamp's access to strategically important data. Sinocam owns more than a third of Pirelli and as a tire maker's biggest shareholder. The government has cited concern about data collected by sensors and the company's tires. It said that the data could feed into artificial intelligence models, making

I'm Brian Curtis along with Rashad Salama and Doug Christner. So, Doug, one of the things I'm interested in probing with guests on the program today is what's the big driver at the moment? Is it really still the FED, given that the FED is sort of close to the ending of its campaign. Is it more of the economy?

Is it?

Is it the impact on earnings or maybe even something else.

I like China.

So we've got David Kotok coming up in a few moments and we can chat with him over that.

Yeah, when it comes to China, Brian Bloomberg Economics is saying that more stimulus is needed to put the recovery back on track. We were talking earlier about the high probability that China's big commercial banks will almost certainly cut their prime lending rates this week. And when it comes to EVS, I know we've been talking a lot about that today. Last week China did launch that green cars

Yeah, it's interesting that the lead has been taken there by Tesla, and that seems to be holding sway even in China. Whether or not that stays is an interesting question. And in terms of this stimulus, so I think we're still waiting to see whether they lean more on broad stimulus or targeted to me. And we still don't have all the details of what may be coming, and it'll be interesting to see how important the economy is on whether or not China's behavior on.

The global stage changes.

I think, as Ed mentioned in our news, it'll be really important to see whether Anthony blink and visiting China actually gets a meeting with Shijinping, or whether or not that is somehow withheld because China still disapproves of US outlooks.

Yeah, for the moment. I mean, if you look at the fact that the conversation between Blinkin and Chin Yung, his Chinese counterpart, those talks lasted seven and a half hours, much longer than planned. So maybe that's going to inject a little bit of positivity in markets today.

Yeah, I think most investors would hope. So now it's time for global news. Both the US and China say the first meeting between the two foreign secretaries was candid at Baxter has Global News from the nine to sixty newsroom in San Francisco.

Yeah, thank you, just following what you guys have set up for me. Secretary of State Blincoln meetings with Foreign Minister Chan Goong. The meeting lasted seven and a half hours. Bloomberg's Ian Marlow and Beijing says more meetings to come.

We're looking to see how he's received by the Chinese side, whether there will be any fireworks their fiery rhetoric.

In some of these meetings.

Here there's meetings with Chin Kong, the Chinese foreign minister today, and there's the possibility of a meeting with Shi Jimping.

Potentially.

Yeah.

Now, the US readout said quote, the Secretary emphasized the importance of diplomacy and maintaining open channels of communication across the full range of issues to reduce the risk of misperception and miscalculation. Secretary raised a number of issues of concern now. China has, of course emphasized the Taiwan issue. Blincoln has more meetings today, including one with Huangi, the

Has made mistakes in terms of not being tougher against China on the stealing of her intellectual property, letting spy balloons fly over our country unharrassed. Whatever he's doing today is a day late and a dollar short.

Well, we'll see now. Christy is of course running against Donald Trump for president and doesn't mince any words on him. He says, as a former federal prosecutor, the case against Trump is very strong.

We would not be here if Donald Trump had simply returned the documents the dozens of times the government asked him to return them, the times that the grand Jury served a subpoena for them.

And also on CBS has heard here on Bloomberg, former Attorney General William Barr says the case looks very solid. Barr says this one is different.

Yes, he's been the victim of unfair witch hunts in the pat asked, but that doesn't obviate the fact that he's also a fundamentally flawed person who engages in reckless conduct, and that leads to situations, calamitous situations like this.

Yeah, and what Trump has said is inconsistent.

Well, it's very.

Strong because a lot of the evidence comes from his own lawyers, and furthermore, there's evidence of him saying things that are completely incompatible with any idea that this was an innocent document dispute.

Barr says, so far, the Trump arguments just don't hold up.

They're not even now arguing that it's purely private. What they're saying is the president just has sweeping discretion to say they are even though they squarely don't fall within the definition. It's an absurd argument.

Yeah, But of course there are Trump defenders, one being Republican Congressman Jim Jordan, who says the documents were declassified.

I go on the president's word, and he said he did, and the Supreme Court said, that's what count.

Jordan says, if Trump said it, it is so. Support for Japanese Prime Minister Fumio Kishita's cabinet dropped twelve percentage points to thirty three percent of Paul take in Bamanat yesterday and the day before, disapproval rose twelve points to fifty eight percent. Global News powered by more than twenty seven hundred journalists and analysts and over one hundred twenty countries in San Francisco. I'm Ed Baxter, and this is Bloomberg.

This is Bloomberg Daybreak Asia. I'm Brian Curtis with Rashad Salomat in Hong Kong, and our guests on the show this morning is David Kotok, cio and chairman of Cumberland Advisors. So I wanted to put the question to you about what the biggest market driver is and sort of do it in this way, David, is the FED slipping in its importance as a market driver given that it's somewhere close to or at its interest rate hiking campaign?

Yeah?

Well, Brian, thank you, and thank you Rashad. It's nice to be with you. The question is indeterminate today. With Waller's very strong comments which were quoted in your opening. Chris Waller essentially said we're not done yet until we're satisfied we're going to hit a two percent target, and he's very clear focused on the PCE index, that price index, and Waller is a powerful voice among the Board of Governors.

So that's ahead of US. I put number one is the FED.

I like what you've been reporting about seven hour meetings in China. It would be nice to see positive things break out in the US China relationships.

Sorry, Chris Christy.

It's better to have a good outcome later than not to have it at all.

But I would say FED number one.

Geopolitics number two a true I mean, it's amazing how geopojects has become the alpha, almost the alpha for markets right now.

So how has that?

You know, surely you know we got the dot plots, How did you interpret those? How close is the Federal Reserve for actually finishing up here? And when they start that, you know, really perhaps not doing anything about cutting but really using these interest rates of these sort of levels has been the old normal becoming the new normal.

Well, Rich, you identified the dilemma for the investor in the United States. You look at the dot plots to send you a message. What is the real value of the dot plots? Well, to give you the sentiment. The sentiment said, nobody wanted to cut between now and the end of the year. And they were all over the place, and we had to speculate about which dot goes with which person. That's a shame, and there's not much we

You know, given that the Fed has been hiking interest rates rather steadily and the market has still performed pretty well over the last six months, I would have thought that you might think that what's more important than whether or not we get one, two or three more spread out over some time here would be the impact of the previous hikes on the economy and on companies because it seems like companies are handling five percent interest rates reasonably well, and the economy too.

It would we have never had this fast arise from zero to five percent, so we don't have guidance for the so called long and variable lags between monetary policy action today and what happens with real growth and to inflation tomorrow. This is a new place for the FED, and so I would say that they realize they need to allow time, which is why the pace of accelerating rate hikes has flattened out to some trajectory of between five and six percent for the rest of the year.

Markets wanted to pivot.

They wanted the FED to not only stop raising rates, but within a few months start to lower them, and markets have been disappointed and essentially pushing out the pivot. Push out the pivot, and I believe markets are going to find that this FED is very determined to get

In the US banking system.

So we had three banks, big shock, hundreds of billions and no contagion. Depositors got scared, businesses got scared, investors got scared.

But they didn't lose.

The people who lost were the shareholders and the debt holders in those institutions. And so that's a very powerful positive and it is offsetting the fear that took place during that sequential bank failure period.

Fifty anniversary for Comblan Advisors, the S and P fifty years ago was on one hundred and eight and the ten years yielding seven point four percent very quickly.

Your thoughts, David, Oh well, thank you very much. Rich.

The next fifty years are going to be very interesting. I intend to start on them tomorrow morning, and I hope we can discuss them in good health all of us.

Thank you for the good wishes.

This is Bloomberg Daybreak Asia, your morning brief on the stories 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 to zero in New York, Bloomberg ninety nine to one in Washington, Bloomberg one oh sixty 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 Prisner. Join us again tomorrow for all the news you need to start your day right here on Bloomberg day Break Asia