This is Bloomberg day Break Asia for this Tuesday May sixteenth in Hong Kong, Monday May fifteenth in New York and coming up today.
Markets wait for clarity on whether Washington lawmakers will be able to reach a deal to avert a US default.
Microsoft sixty nine billion dollar takeover of Activision Blizzard winds. European Union approval.
Big Five meeting on death ceiling confirmed, despite mixed messages on any possible progress. Zelenski gets pledge of continued support from UK. Could China envoy visiting Russia be a good thing for a ceasefire? 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, 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 Curtiz.
Here are the stories we're following today. Traders waiting for clarity on whether Washington lawmakers will get a deal to avert a US default. Treasury Secretary Janet Yellen is sticking with her warning that the department could run out of cash as soon as June first. This is according to a letter that was written by Yellen to congressional leaders. More from Bloomberg's Kaylee lines, Jannet.
Yellen is really doubling down on what potentially the window is here, but she does have language in this letter talking about the idea of cutting it too close. She said they have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can have serious harm to businesses and consumer confidence.
Yellen's warning comes during negotiations over the debt ceiling between the White House staff and AIDS to congressional leaders. Today, how Speaker Kevin McCarthy said that the ongoing talks were yielding little progress. President Biden has announced some plans to meet with congressional leaders tomorrow.
Well Fed officials offered some differing views today on the path of rate hikes. For one, we heard from the head of the Chicago FED, Austin Goolsby. He advocated for being extra mindful on the impact of those rate hikes and the impact that they could have on credit conditions. At the same time, the head of the Atlanta FED, Raphael Bostik, was pushing back on the idea of more rate hikes this year. Here's Bostic speaking earlier on Bloomberg.
If I had to have a vote right now, I'd probably vote to hold. We got two more inflation readings, We have a jobs number, a jobs report that's got to come out. There's a lot more information we're going to have as to what's going on.
On the other hand, the head of the Minneapolis Fed, Neil cash Kari, did warn the Fed will probably tighten more this year. He said the Fed needs to finish the job to lower inflation. By the way, the next monetary policy meeting is on June thirteenth.
Bran Well hearing that the US is preparing to buy up to three million barrels of sour crude oil to begin refilling the depleted Strategy Petroleum Reserve. Let's get that story from Bloomberg's Charlie Pillett.
After selling more than two hundred million barrels from the emergency stockpile last year in part to curb high energy prices, the Energy Department plans to solicit offers to replenish the reserve, which has fallen to the lowest since nineteen eighty three. In addition to direct purchases. The agency has said part of its strategy for refilling the reserve includes a return of oil from previous exchanges and avoiding quote unnecessary sales
unrelated to supplied disruptions in New York. Charlie Pellett, Bloomberg, Daybreak Asia.
Microsoft's takeover of Activision Blizzard has won approval from the European Union. This comes just weeks after regulators in the UK blocked this sixty nine billion dollar deal on competition concerns. We have more from Bloomberg's d Ludlow.
So in the European Commission's analysis, they state that this steal would not hurt market competition. They're particularly looking at cloud based gaming, which is one to three percent of the market. The EU Anti Trust chief Market Vesta is saying that the deal is pro competitive and in the EU's judgment, it would kick start a growth period for cloud gaming.
Now the veto by UK regulators I mean this deal does still face massive obstacles. They include Microsoft winning some legal challenges not only in the US but the UK as well, and those are likely to be brian an uphill task.
Well, it brings us to China China's economy likely grew rapidly in April, but data out today might obscure a loss of momentum in the recovery. Bloomberg's Joan Wong has more from Hong Kong.
The biggest headline is likely to come from retail sales. Economists forecast that sales jumped twenty two percent in April from the previous year. That's largely due to weakness last year from the Shanghai lockdowns. China's industrial production is a also expected to have spiked. A Bloomberg poll of economists sees a gain of ten point eight percent from a year ago. That's much stronger than a three point nine percent expansion in March. Infrastructure investment probably helped, as local
governments issued special bonds to boost activity. Fixed as an investment. It's forecasts to have risen five point seven percent in the first four months of the year in Hong Kong. Joined one Bloomberg day Brigaisia Doug.
The bearish scenario is pretty well supported here.
Still.
It's what we hear a lot of on this program. Sticky inflation, weakening data now and you mentioned some of it there. Tighter bank lending standards, the dead sealing saga, and the FED trying to rebuild its reputation, which has been an ongoing struggle. The bullish argument just seems to be that well, the economy, earnings, and the market are hanging in there. That's not a real persuasive, ringing endorsement, is it.
And no, it's not at all. And I think part of the bullish scenario, Brian, is also this idea that the FED will be inclined to cut rates before the end of the year. And you and I have talked about this and how hotly debated. I think that's a fair way of putting it. It has been in the market.
Yeah, it just seems like all of a sudden now we have to start thinking about another hike again, and that maybe we'll start seeing these bets play out. In terms of the market, the S and P five hundred is flat over the last month. You'll still hear people say, well, you know, the market's doing so well, Well, it's really flat for the past month. It is up seven percent year to date. I think we need to say that's
pretty good. I mean, historically speaking, it's not bad. Maybe it's not great after the big losses last year, and it's certainly not egregious exuberance.
Is it not at all? Look at Apple, though, one of the standout performers so far this year. The stock is up thirty two percent. We had a story today on the Bloomberg terminal indicating the market cap of Apple has now surpassed that of the entire Russell two thousand
for two weeks running. So Apple a two point seven trillion, the Russell two thousand market cap at around two six Here's the thing, though, I think this may be more about some of the weakness and regional banks, because if you look at the KBW Regional Bank Index, it's down thirty percent since the beginning of the year, and many of these regional lenders are members of the Russell two thousand.
Yeah, it's a very good point, but it also is quite extraordinary that one company is bigger than two thousand small small companies that are considered, you know, essential for the US economy. So it sets up is a good day for chatting with our guests. We have Ryan Blangra coming up, managing principal and founder at Claro Advisors. Now
it's time for global news. I'm Brian Curtis, along with Doug Krisner, and we've got Ed Baxter looking at newsd ed the White House confirming that the President and top legislative leaders will meet tomorrow on the debt ceiling and will they solve everything?
Well, I was going to say this still later, but the quote, great, great philosopher, Annie tomorrow tomorrow, maybe tomorrow never comes. It's hard to tell exactly, Brian, what's going on. President Joe Biden saying everything is positive and peachy, that progress has been made, and then House Speaker Kevin McCarthy very distinctively says no progress. Bloomberg's Kaylee lines.
Here he said that there is no agreement on anything. The meetings have not been productive at all, and they're nowhere near coming to a conclusion. So quite a striking difference in tone between these two ahead of tomorrow's meeting.
And Bloomberg's Wendy Benjaminson says McCarthy does need to portray a sense of toughness for his caucus, especially the right end of it.
Now.
Bloomberg's Wendy does say that some proposals have been made.
Democrats offered some to close some tax loopholes, Republicans rejected that out of hand Republicans were rejecting or Democrats rejected, you know, the spending cuts that the Republicans have. Last time we were here, we thought the staff had worked.
This all out, And Kaylee says, McCarthy is walking a tight rope.
Several members of his party that won everything that was included in that bill in an ultimate deal. So it does raise the question of how much he can keep his caucus in line, whether his failure to do so may ultimately cost him his speakership. But of course, when we're talking about a deal that in theory would be agreed to by both McCarthy and the White House, in theory, you get enough Democrats in line that you ned just need some of the Republican Party to get it over the finish line.
So yeah, let's wait tomorrow. Tomorrow. Ukraine's President Vladimer Zelenski has gotten assurance from UK Prime Minister Rishi Sunak that there will be continuing support. They have met in London, and.
It's important for the Kremlin to also know that we're not going away.
We are here for the long term.
We remain steadfast in wanting to defend Ukraine.
We'll discuss for important and urgent support for Ukraine and security. I think not only for Ukraine, it's important for all the Europe.
Zolenski there has visited Germany, France and now the UK. Meanwhile, China's upcoming envoy to Ukraine could be a positive thing question mark well. That's according to the US State Department spokesman vend Patel.
There is a role for the PRC and frankly any country for that matter, in supporting diplomatically an outcome that is consistent with the principles of sovereignty and territorial integrity.
He says, as long as China understands how important Ukraine's sovereignty is as well. And Russia's Prime Minister Mikhail Mishustin will lead a government delegation to China next week to attend a business forum along with sanctioned tycoons as Moscow Lanes on China to help withstand international pressure regarding Ukraine. Global News powered by more than twenty seven hundred journalists and analysts in over one hundred and twenty countries. In
San Francisco, I'm at Baxter and this is Bloomberg. I'm Brian Curtis. In Hong Kong along with Rashad Salama.
This is Bloomberg Daybreak Asia and our guesst is Ryan Blanger, managing principal and founder at Claro Advisors, helping us with some clarity on the market markets. Ryan, thank you very much for joining us. Is the market getting the scenario that we described a few moments ago, the barriers scenario? Is the market getting it wrong or right?
I think the market's really climbed the wallworry quite nicely here, surprising a lot of investors. We've taken an opportunity to kind of reduce some market exposure given the games that we've gotten. But you know, I'm surprises anybody else with the with the performance of the market so far this year.
But I mean which rocket you tooking? But in particular, I mean equities, bonds or other assets.
Good point.
We talked a little bit about equities. How about how about the bond market.
Yeah, the bar market's performing well. I mean, the bond mass here looks pretty good. It hasn't looked as good in use decades probably. I mean, it's just a nice, nice environment for savers. You can actually earn some yield on your on your bank saving so you can great money market yield. You can sit in a bond neutral fund or buy corporate bonds and collect five percent.
Uh.
You know, a lot of investors would be you know, pretty happy with that, and they just haven't had that opportunity in a lot of years.
So to me, the.
Worst is behind us. Even if you get another rate hiker two, you know, I think it's I think it's smooth sailing and bonds moving forward.
You mentioned that you lightened up on some of your positions in the equity market. If you you know, if you're trying to get out performance now, I mean obviously you're not really getting it with four and a half percent yields in the bond market. Where would you look to try to get some alpha.
Well, we've actually had a couple of clients who have taken the games this year. You know, say you're at five or six percent, They're they're flushing all their equities into bonds. They're going to collect you know, another three percent this year and they're just gonna grab almost the double digit guaranteed returns for the rest of the year. It's an interesting scenario. Then you start market timing, which
which we of course don't really advocate. But but for someone who just doesn't want the uncertainty of the equity market, it's an interesting strategy, all right.
You know, just going back to the equities side of things. In any season show that there is in earning recession, what did you make of it?
Well, I mean, companies have been been pretty resilient to pass on, you know, a lot of these costs onto consumers. And if you look at the consumer package companies, the nine big ones in the US and in Europe, they've got pricing pricing up eleven percent with volumes down too, and so they've been able to hang on to these you know, pretty strong earnings. But how long is that gonna last? I mean, how long are people not gonna be affected by the pricing increases at various different places
they shop? And when are they're going to start trading down? We haven't really seen that. I suspect the cards spending data that will be coming out in the next couple of weeks we'll sort of start to reflect that people
are starting to fall behind. Spending will come down. You'll see the thirty day delinquencies starting to reach, you know, crop up, and I think that's when people start you know, getting a little bit nervous about their ability to continue to pay for the goods and services at these elevated prices, and then the consumers. I mean that the companies have to really adjust at that point. And I think, yeah, you know, Q three, Q four, we'll see that adjustment take place.
And so we've been wondering for a long time about when jobs might crack, when the data might seriously weaken. The Empire State manufacturing data was was very weak today, and the jobless claims was a number that was a little surprising too. Do you think that we're kind of add an inflection point on the economy cracking a bit here?
We could be?
I mean, we went back on launch, we're still you know, the job opening are still you know, higher than they excuse me, the job openings are still lower than they typically would be pre pandemic, and the layoffs are still higher, and so you typically get more layouts than we have. We've had a lot of headlines coming out with big layouts, but typically we average, you know, on the one point seven one point eight millions, and we're you know, we
just haven't really broke those levels. So I just thinks historically the look the pandemic really turned things upset out. It's hard to evaluate a lot of this data, so you know, we're just do you do your best to parse it out. But I think I do think the recession is inevitable. It's it's it's a popular belief at this point. I think our view is that rates probably are going to have to go a little bit higher, uh than what the market is forecasting.
Well, well, no doubt. From an equity perspective, it's a good idea to be defensive, and I think you got some stock ideas here as well. Meta platforms are one thing. Describing it as a very mature business, I suppose it is. You know, you don't reready think of it.
Up one hundred here to day if you want out performance.
Yeah, I know that one's you know, we we've been talking about that one for a while. That reminded me, uh you know back in the winter. That was reminding me of Apple about six or seven years ago, when it was trading at ten times learning. No one could figure out what this what the growth of the company was going to be, you know, beyond cell phones, and then the multiple just expanded and it went from ten to twenty five, and you know, I think that's probably
what's happening with Meta. You know, it's got billions of active daily users. It's a mature company that knows how to grow their business and reach an audience. And I think the market that is, you know, finally reflecting that. And so you know, it's not the probably the stafest place to hide out. I think it's a far safer places and consumer staples and other defensive companies if you just want to take cover, if you're thinking in inflation
is coming about. But we you know, we like Meta for long sum investors.
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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