Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. You can join Brian Curtis and myself for the stories, making news and moving markets in the APAC region. You can subscribe to the show anywhere you get your podcast and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app well.

Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. You can join Brian Curtis and myself for the stories, making news and moving markets in the APAC region. You can subscribe to the show anywhere you get your podcast and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app well.

The Federal Reserve held its benchmark FED Funds rate steady and a range between five and a quarter to five and a half percent. The decision was unanimous. Officials also maintained their outlook for three twenty five basis point cuts this year. After the decision, Chair J. Powell said that the Fed would require more evidence of a retreat in inflation.

The Federal Reserve held its benchmark FED Funds rate steady and a range between five and a quarter to five and a half percent. The decision was unanimous. Officials also maintained their outlook for three twenty five basis point cuts this year. After the decision, Chair J. Powell said that the Fed would require more evidence of a retreat in inflation.

The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably down toward two percent. Of course, we're committed to both sides of our dual mandate, and an unexpected weakening in the labor market could also warrant a policy response.

The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably down toward two percent. Of course, we're committed to both sides of our dual mandate, and an unexpected weakening in the labor market could also warrant a policy response.

So that again is three rate cuts this year, but for twenty twenty five, the Fed is now forecasting just three rate cuts instead of the previous forecast of four. Joining us now to shed some light on all of this is Lydia Bassour, who's a senior economist at EY, to talk a little bit more in detail here on the FED. Lydia, I heard someone say the other day that j. Pwell has this uncanny ability to not create any news, and I think today was probably an example. It's steady as she goes sort of thing. But I think we can say that one of the points that Powell made effectively, I think was that, look, the FED did not overreact to the seven months of quick disinflation last year, and it's not overreacting now to the slightly hot two months January and February of hot inflation data this year. It so we the poke holes in that, is it?

So that again is three rate cuts this year, but for twenty twenty five, the Fed is now forecasting just three rate cuts instead of the previous forecast of four. Joining us now to shed some light on all of this is Lydia Bassour, who's a senior economist at EY, to talk a little bit more in detail here on the FED. Lydia, I heard someone say the other day that j. Pwell has this uncanny ability to not create any news, and I think today was probably an example. It's steady as she goes sort of thing. But I think we can say that one of the points that Powell made effectively, I think was that, look, the FED did not overreact to the seven months of quick disinflation last year, and it's not overreacting now to the slightly hot two months January and February of hot inflation data this year. It so we the poke holes in that, is it?

Yeah, So that's right.

Yeah, So that's right.

What we say today is I think a FED that really stayed the course and and really, you know, the FED narrative hasn't really changed. The FED is expecting inflation to continue to move lower, and it's still believing that you know, sometime this year they will be you know, in a position to start lowering interest rate. But as you said, they want to gain greater confidence that inflation is moving sustainable towards two percent, and that means we need more good inflation data in the coming months to start that is in process. In our view, we think that you know, they're likely to be in that position in June, in.

What we say today is I think a FED that really stayed the course and and really, you know, the FED narrative hasn't really changed. The FED is expecting inflation to continue to move lower, and it's still believing that you know, sometime this year they will be you know, in a position to start lowering interest rate. But as you said, they want to gain greater confidence that inflation is moving sustainable towards two percent, and that means we need more good inflation data in the coming months to start that is in process. In our view, we think that you know, they're likely to be in that position in June, in.

The middle of the year.

The middle of the year.

We think that by June they can start theseing process and we do expect to see you know, three rate cuts.

We think that by June they can start theseing process and we do expect to see you know, three rate cuts.

Later this year.

Later this year.

Is it possible that we're living in a world where the FED will tolerate inflation just above that two percent target?

Is it possible that we're living in a world where the FED will tolerate inflation just above that two percent target?

Yeah, there is, you know, there are some there are some factors in the economy, in this post pandemic economy that are pointing to uh, you know, some inflation things somewhat you know, higher than than the inflation target.

Yeah, there is, you know, there are some there are some factors in the economy, in this post pandemic economy that are pointing to uh, you know, some inflation things somewhat you know, higher than than the inflation target.

We've seen some structural changes in the economy.

We've seen some structural changes in the economy.

There are also you know, demographic changes, the energy transition to side a few and and the slow down in globalization, and and all of these factors do suggest that, you know, inflation could be hovering slightly above the two person target. Now the FED is still committed to bring inflation back to target. And and I think what was even you know, more important in in the new set of of economic projections on the dot plot. Is the fact that the FED is now I think, really embracing this idea that we can continue to see the tend economic growth with inflation coming back lower thanks to favorable supply side conditions which have normalized significantly, but also pick up in productivity growth.

There are also you know, demographic changes, the energy transition to side a few and and the slow down in globalization, and and all of these factors do suggest that, you know, inflation could be hovering slightly above the two person target. Now the FED is still committed to bring inflation back to target. And and I think what was even you know, more important in in the new set of of economic projections on the dot plot. Is the fact that the FED is now I think, really embracing this idea that we can continue to see the tend economic growth with inflation coming back lower thanks to favorable supply side conditions which have normalized significantly, but also pick up in productivity growth.

Yeah.

Yeah.

I think we can argue that the FED can afford to be patient. Inflation now is well below the fed's benchmark rate. I mean by a long shot, it's somewhere around the high threes at the moment, and the benchmark rate is five and a half percent. Unemployment is near record lows, and inflation is below wage increases. So if you ask people, I mean, they're not jumping up and down. They're still complaining about inflation, but the math is working for them.

I think we can argue that the FED can afford to be patient. Inflation now is well below the fed's benchmark rate. I mean by a long shot, it's somewhere around the high threes at the moment, and the benchmark rate is five and a half percent. Unemployment is near record lows, and inflation is below wage increases. So if you ask people, I mean, they're not jumping up and down. They're still complaining about inflation, but the math is working for them.

Yeah.

Yeah.

I think what was really important is the fact that, as you said, they're willing to look through the noise in the inflation data at the beginning of the year, and they did not overreact to the side surprising inflation. But if you take a step back and look at the broad inflation trend, we continue to think that we remain in a disinflationary environment, and I think that's what the FED is also looking at. We have seen a significant rebalancing in label market conditions and also slow down in wage growth.

I think what was really important is the fact that, as you said, they're willing to look through the noise in the inflation data at the beginning of the year, and they did not overreact to the side surprising inflation. But if you take a step back and look at the broad inflation trend, we continue to think that we remain in a disinflationary environment, and I think that's what the FED is also looking at. We have seen a significant rebalancing in label market conditions and also slow down in wage growth.

When we look at.

When we look at.

Pricing power, companies have have certainly seen a decrease in their pricing power and and and you know, shrinking in in profit margins as well. And then when we look at some of the inflation drivers such as you know, shelter inflation, we're also expecting to see mode inflation there. So I do think that, you know, as we move throughout the year, you're going to continue to see that broad this inflation trend in you know, playing out. And I think that this is really going to be allowing the FED to start easing and to start the easing cycle.

Pricing power, companies have have certainly seen a decrease in their pricing power and and and you know, shrinking in in profit margins as well. And then when we look at some of the inflation drivers such as you know, shelter inflation, we're also expecting to see mode inflation there. So I do think that, you know, as we move throughout the year, you're going to continue to see that broad this inflation trend in you know, playing out. And I think that this is really going to be allowing the FED to start easing and to start the easing cycle.

When we look at the macro environment, so often the calculations are based on cold, hard facts, and I'm wondering if there's an affect here that we can maybe you know, believe in, which is to say that maybe this FED is just is poised to cut, it would very much like to cut. Is that the feeling that you get there is.

When we look at the macro environment, so often the calculations are based on cold, hard facts, and I'm wondering if there's an affect here that we can maybe you know, believe in, which is to say that maybe this FED is just is poised to cut, it would very much like to cut. Is that the feeling that you get there is.

This feeling going out of this meeting that the FED wants to cut whenever it will be appropriate to do so and whenever it can do so. And I think, you know, just looking at the inflation prints, they're going to be looking at the inflation data very closely.

This feeling going out of this meeting that the FED wants to cut whenever it will be appropriate to do so and whenever it can do so. And I think, you know, just looking at the inflation prints, they're going to be looking at the inflation data very closely.

We're going to get you know, more data points.

We're going to get you know, more data points.

But I think that you know, if we see that that's you know, that cool down in those inflation prints, the FED is going to be willing to start you know, that is in process. It's really about balancing the risk between keeping rates too high for too long and and I think the FED doesn't want to be, you know, imposing unnecessary pain to the economy. So they're really cognizant of the fact that you know that the labor market could often significantly and fetch your power.

But I think that you know, if we see that that's you know, that cool down in those inflation prints, the FED is going to be willing to start you know, that is in process. It's really about balancing the risk between keeping rates too high for too long and and I think the FED doesn't want to be, you know, imposing unnecessary pain to the economy. So they're really cognizant of the fact that you know that the labor market could often significantly and fetch your power.

Did mention that as potentially triggering more rate cuts?

Did mention that as potentially triggering more rate cuts?

Yeah, but he I thought, you know, as as an investor, as somebody who covers this, I thought he sounded pretty pretty much not all that concerned about the labor market, even though you know, he was given some examples about where we're seeing pockets of weakness and he was pretty comfortable with what's happening there.

Yeah, but he I thought, you know, as as an investor, as somebody who covers this, I thought he sounded pretty pretty much not all that concerned about the labor market, even though you know, he was given some examples about where we're seeing pockets of weakness and he was pretty comfortable with what's happening there.

Yeah, the labor market has been you know, you continue to see solid job growth, We continue to see solid job growth, but at the same time, the supply side of the label market has been rebounding. We've seen the labor force participation rate, especially for primage workers, rebounding and reaching the highest level since.

Yeah, the labor market has been you know, you continue to see solid job growth, We continue to see solid job growth, but at the same time, the supply side of the label market has been rebounding. We've seen the labor force participation rate, especially for primage workers, rebounding and reaching the highest level since.

The early two thousand.

The early two thousand.

So you've got that rebalancing with job openings coming down, liver them and coming down, and liver supply coming back up. And at the same time, the unemployment rate hasn't really moved up significantly. And that's why I think, you know, the FED right now is not that concern whether they're I think welcoming, is the fact that this rebalancing is leading to an easy in WAGH pressures and that's the type of dynamic that they want to see, if you know, to see more dis in patient, especially on the services side of the economy.

So you've got that rebalancing with job openings coming down, liver them and coming down, and liver supply coming back up. And at the same time, the unemployment rate hasn't really moved up significantly. And that's why I think, you know, the FED right now is not that concern whether they're I think welcoming, is the fact that this rebalancing is leading to an easy in WAGH pressures and that's the type of dynamic that they want to see, if you know, to see more dis in patient, especially on the services side of the economy.

Lyddy, and the time that we have left with you, i'd like to get your to on what happened this week with the Bank of Japan. What is your view here on what the bo J did and the way in which markets are responding.

Lyddy, and the time that we have left with you, i'd like to get your to on what happened this week with the Bank of Japan. What is your view here on what the bo J did and the way in which markets are responding.

Yeah, I mean we saw that, we.

Yeah, I mean we saw that, we.

Saw you know, the the bo J you know, exiting negative rates and and you know, removing moving away from that very accommodated accommodity extense, and I think, you know, if you look at the market reaction and and and the move, I think part of it is, you know the fact that this was maybe a bit more symbolic, you know then than really the signal that we are heading into a tightening cycle. I think economic conditions in Japan remain quite fragile, and the BOG really wants to see the anchor and inflation expectations. So they're not going to be embarking on on a you know, on a on an aggressive tightening cycle. I think they're they're going to be willing to kind of keep some accommodation and many hye policy you know, on financial condition essentially lose so that the economy can continue to recover.

Saw you know, the the bo J you know, exiting negative rates and and you know, removing moving away from that very accommodated accommodity extense, and I think, you know, if you look at the market reaction and and and the move, I think part of it is, you know the fact that this was maybe a bit more symbolic, you know then than really the signal that we are heading into a tightening cycle. I think economic conditions in Japan remain quite fragile, and the BOG really wants to see the anchor and inflation expectations. So they're not going to be embarking on on a you know, on a on an aggressive tightening cycle. I think they're they're going to be willing to kind of keep some accommodation and many hye policy you know, on financial condition essentially lose so that the economy can continue to recover.

So on Monday, we were sort of musing this week, what would be the big event this week? Would it be the FED? Would it be the bo J or Nvidia's developer conference. From your standpoint as a senior economist, what was it?

So on Monday, we were sort of musing this week, what would be the big event this week? Would it be the FED? Would it be the bo J or Nvidia's developer conference. From your standpoint as a senior economist, what was it?

Yeah, it was, Uh, we've got we've got a bit of a I think, I mean, from from an economic standpoint, I think the bo J on the FED and what we've heard, you know, from the central banks is is important, and I think there was a lot of attention today on the dot plot and whether the FED could be signaling only two rate cuts instead of three. It was a close call, and we were one that away from getting fifty basis points a rat cut from that median dot plot. But overall, I think that, you know, it was encouraging to hear that the FEDI is tanged course, and that is it's still willing to get infistrates on looking through that noise in the effiicient data.

Yeah, it was, Uh, we've got we've got a bit of a I think, I mean, from from an economic standpoint, I think the bo J on the FED and what we've heard, you know, from the central banks is is important, and I think there was a lot of attention today on the dot plot and whether the FED could be signaling only two rate cuts instead of three. It was a close call, and we were one that away from getting fifty basis points a rat cut from that median dot plot. But overall, I think that, you know, it was encouraging to hear that the FEDI is tanged course, and that is it's still willing to get infistrates on looking through that noise in the effiicient data.

Yeah.

Yeah.

I remember asking almost every guest on the show yesterday, you know, it seems like the market is okay with what we've seen in inflation, a little pickup in January February. The key question for the FED will be is the Fed okay with it? And I think they answered that question today that at least for now, they're okay with it. Lydia, thank you for joining us. Lydia Bassour, a senior economist at EY.

I remember asking almost every guest on the show yesterday, you know, it seems like the market is okay with what we've seen in inflation, a little pickup in January February. The key question for the FED will be is the Fed okay with it? And I think they answered that question today that at least for now, they're okay with it. Lydia, thank you for joining us. Lydia Bassour, a senior economist at EY.

This is Bloomberg.

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Orean Elizzit joins US CMC Market Sales Trader. So what this is as good as it gets. Come on.

Orean Elizzit joins US CMC Market Sales Trader. So what this is as good as it gets. Come on.

One and gentlemen, thanks for having me. Yeah, it was a bit of a how to say nothing burger overnight, and I think the market was expecting a little more. Even though there was a poppin equity markets, That dot revision was pretty much cast aside, I think, and really the main focus is on those macro macro indicators, so yeah, I look, they do still have somewhat of a balancing actor. Do commend the Fed in the way they've navigated, you know, around obviously you know, trying to increase you know, growth, but obviously maintain the market. And obviously the dollar remaining stronger, So pretty positive all round. I think we are higher for longer looking at some of those forecasted GDP and also inflation figures, so not too much to report. The dot plot remains fairly steady in terms of its projections. But yeah, it would be interesting to see a surprise and see how the markets reacting.

One and gentlemen, thanks for having me. Yeah, it was a bit of a how to say nothing burger overnight, and I think the market was expecting a little more. Even though there was a poppin equity markets, That dot revision was pretty much cast aside, I think, and really the main focus is on those macro macro indicators, so yeah, I look, they do still have somewhat of a balancing actor. Do commend the Fed in the way they've navigated, you know, around obviously you know, trying to increase you know, growth, but obviously maintain the market. And obviously the dollar remaining stronger, So pretty positive all round. I think we are higher for longer looking at some of those forecasted GDP and also inflation figures, so not too much to report. The dot plot remains fairly steady in terms of its projections. But yeah, it would be interesting to see a surprise and see how the markets reacting.

Yeah, Powell's tone seemed kind of dubvish, and I'm wondering whether or not the market may be overlooking a risk. I know what the Fed is saying. Now, Yeah, we're expecting three rate cuts this year, but is it possible that we only get two twenty five basis point cuts?

Yeah, Powell's tone seemed kind of dubvish, and I'm wondering whether or not the market may be overlooking a risk. I know what the Fed is saying. Now, Yeah, we're expecting three rate cuts this year, but is it possible that we only get two twenty five basis point cuts?

That was something that was I think right to the media was discussed, and I don't think it's completely out, you know, completely you know, not an issue. I think the inflation rate is still fairly manageable, so I can't really see it being pushed, you know, you know, sort of cut back at all if.

That was something that was I think right to the media was discussed, and I don't think it's completely out, you know, completely you know, not an issue. I think the inflation rate is still fairly manageable, so I can't really see it being pushed, you know, you know, sort of cut back at all if.

We were to see too.

We were to see too.

I guess the question remains, do they accept do they look to accelerate in twenty twenty five? Should should inflation tail off as as sort of expected. No, it's probably my initial you know, sort of gut feeling, gentlemen. But you know, let's see, let's see how this thing plays out.

I guess the question remains, do they accept do they look to accelerate in twenty twenty five? Should should inflation tail off as as sort of expected. No, it's probably my initial you know, sort of gut feeling, gentlemen. But you know, let's see, let's see how this thing plays out.

Yeah, markets are so buoyant, you know, we continue to keep discounting. Well, we've got a soft landing and things are looking pretty good.

Yeah, markets are so buoyant, you know, we continue to keep discounting. Well, we've got a soft landing and things are looking pretty good.

You know.

You know.

You think you'd think that you'd get an adjustment in that and then you'd need some really big news or you know, to generate these kinds of gains. I mean some of these some of these gains are pretty pretty astronomical now, and I wonder whether or not Oriental Liza thinks that perhaps we're getting overheated.

You think you'd think that you'd get an adjustment in that and then you'd need some really big news or you know, to generate these kinds of gains. I mean some of these some of these gains are pretty pretty astronomical now, and I wonder whether or not Oriental Liza thinks that perhaps we're getting overheated.

Yeah, that is that is a major concern for me, and something I've spoken about previously on other discussions. I think we are getting a little bit toppy at the moment in terms of some of those markets. My my major concern, gents, is that we the lack of breadth of market is probably maybe more of a factor where you're so concentrated in the so called magnificent magnificent seven stocks that we if we do see any sort of set off, can the broader market sort of prop up or sustain that continued growth? Naturally, profit taking will take place within some of the institutions where those fun flows then go to with obviously bond yields you know, coming off a little bit, and those you know, risk free returns not as handsome how they have been in previously. But I do think we need, yes, maybe a somewhat slight correction in terms of price section.

Yeah, that is that is a major concern for me, and something I've spoken about previously on other discussions. I think we are getting a little bit toppy at the moment in terms of some of those markets. My my major concern, gents, is that we the lack of breadth of market is probably maybe more of a factor where you're so concentrated in the so called magnificent magnificent seven stocks that we if we do see any sort of set off, can the broader market sort of prop up or sustain that continued growth? Naturally, profit taking will take place within some of the institutions where those fun flows then go to with obviously bond yields you know, coming off a little bit, and those you know, risk free returns not as handsome how they have been in previously. But I do think we need, yes, maybe a somewhat slight correction in terms of price section.

So if you were looking at opportunities right now, I mean not a trading opportunity, something that would have to be buy and hold. Let's say for the four seeable future, what would it be.

So if you were looking at opportunities right now, I mean not a trading opportunity, something that would have to be buy and hold. Let's say for the four seeable future, what would it be.

Well, I'm leaving bitcoin out of this Genso it's the hot topic of the the time, but let's go away from the obvious. I am looking at the moment in terms of a couple of market conviction calls some smaller cap stocks, both in the UK and also in the US. I think that variance in terms of the sort of variance in terms of valuations between those big cap and small cap stocks. So looking at some stocks in the rustle and obviously some in the in the lower cap indexes in the UK of value. You need to be selective though in terms of the specific stocks that you are looking at, because some are priced I had to say for a reason at the lower end of the market. So in terms of you know, sector, I'll be looking at those smaller cap indexes for value.

Well, I'm leaving bitcoin out of this Genso it's the hot topic of the the time, but let's go away from the obvious. I am looking at the moment in terms of a couple of market conviction calls some smaller cap stocks, both in the UK and also in the US. I think that variance in terms of the sort of variance in terms of valuations between those big cap and small cap stocks. So looking at some stocks in the rustle and obviously some in the in the lower cap indexes in the UK of value. You need to be selective though in terms of the specific stocks that you are looking at, because some are priced I had to say for a reason at the lower end of the market. So in terms of you know, sector, I'll be looking at those smaller cap indexes for value.

So let's talk a little bit about Japan because we had a major change there. I wouldn't describe what the FED did was a major change, but it did seem like an inflection point. Whether or not they were would be acknowledging that inflation was hot in the first part of the year and something needed to be done about it. That's not the decision they took. But in Japan we did see a well telegraphed move and then we got the move, and outside of the equity market it was a bit of a yawn.

So let's talk a little bit about Japan because we had a major change there. I wouldn't describe what the FED did was a major change, but it did seem like an inflection point. Whether or not they were would be acknowledging that inflation was hot in the first part of the year and something needed to be done about it. That's not the decision they took. But in Japan we did see a well telegraphed move and then we got the move, and outside of the equity market it was a bit of a yawn.

That seems to be the Eretrica across all markets in terms of macro announcements this week, where we were expecting a little bit more, you know from price action. Yeah, obviously naturally was very much priced in in terms of the two I guess major markets obviously being the Nike which has seen an all time high this morning, and obviously that dollar yam which has been a hot topic of discussion. Not not much sort of volatility in those two very much baked into the price. I do think it was a historical move by the Bank of Japan, but not so much impactful one. So in terms of them rising rates further to sort of tackle maybe in inflation, it is something that may be considered later in the year. I think some of the debt servicing that the boj needs to look at from their own balance sheet perspective will probably come into focus. And in terms of quantitative easy measures in terms of bond buybacks, which they mentioned they might still be interested in. Is going to take a long time for them to get back to normalization, which is a talk of the town.

That seems to be the Eretrica across all markets in terms of macro announcements this week, where we were expecting a little bit more, you know from price action. Yeah, obviously naturally was very much priced in in terms of the two I guess major markets obviously being the Nike which has seen an all time high this morning, and obviously that dollar yam which has been a hot topic of discussion. Not not much sort of volatility in those two very much baked into the price. I do think it was a historical move by the Bank of Japan, but not so much impactful one. So in terms of them rising rates further to sort of tackle maybe in inflation, it is something that may be considered later in the year. I think some of the debt servicing that the boj needs to look at from their own balance sheet perspective will probably come into focus. And in terms of quantitative easy measures in terms of bond buybacks, which they mentioned they might still be interested in. Is going to take a long time for them to get back to normalization, which is a talk of the town.

So if you had to take a position on the equity side in Japan right now, would it be in the banks or do you think that trade is pretty much played out.

So if you had to take a position on the equity side in Japan right now, would it be in the banks or do you think that trade is pretty much played out.

I think the banks. I think the price action reflected quite sort of aggressively where the banks dropped off obviously when they went to that higher interest rate. Those banks will be looking at, you know, some of their underwriting mechanics to see, you know, what sort of exposures that they do have to you know, outstanding debt. I think that we probably have to move away from the banks similar to similar to the US, take a look into some sort of the tech stocks within with it, within the NIKE. But yeah, banks might be a sort of treade with caution play at the moment given the rising interest rate environment.

I think the banks. I think the price action reflected quite sort of aggressively where the banks dropped off obviously when they went to that higher interest rate. Those banks will be looking at, you know, some of their underwriting mechanics to see, you know, what sort of exposures that they do have to you know, outstanding debt. I think that we probably have to move away from the banks similar to similar to the US, take a look into some sort of the tech stocks within with it, within the NIKE. But yeah, banks might be a sort of treade with caution play at the moment given the rising interest rate environment.

You said earlier that we had too much concentration in the Magnificent seven, although I think we have to set aside Tesla and Apple because Tesla's down something like thirty five percent year to date. But obviously, you know, we have seen huge gains in particularly those Fab five or whatever you want to call it. But then with the move by the Fed today, we did see regional banks advance more than three percent, and we saw the Russell two thousand of about two percent. Is this kind of a que now for a further broadening in the market, very.

You said earlier that we had too much concentration in the Magnificent seven, although I think we have to set aside Tesla and Apple because Tesla's down something like thirty five percent year to date. But obviously, you know, we have seen huge gains in particularly those Fab five or whatever you want to call it. But then with the move by the Fed today, we did see regional banks advance more than three percent, and we saw the Russell two thousand of about two percent. Is this kind of a que now for a further broadening in the market, very.

Much potentially I've been tracking quite quite I guess acutely the KRE ETF, which is a regional bank ETF, which came after obviously the calamity. It has rebounded quite you know, sort of handsomely. Back to my earlier point about those undervalued stocks, I think they will play a part. They will be sector specific in terms of that broadening or widening of the market effect. But value can be had in some of those, you know, I guess, sort of dump stocks where the wider foundation of those particular sectors are still strong.

Much potentially I've been tracking quite quite I guess acutely the KRE ETF, which is a regional bank ETF, which came after obviously the calamity. It has rebounded quite you know, sort of handsomely. Back to my earlier point about those undervalued stocks, I think they will play a part. They will be sector specific in terms of that broadening or widening of the market effect. But value can be had in some of those, you know, I guess, sort of dump stocks where the wider foundation of those particular sectors are still strong.

I'm not going to let you off the hook on the crypto stuff. Here, give me forty five seconds. Your position on bitcoin right now? A lot of volatility, Yeah.

I'm not going to let you off the hook on the crypto stuff. Here, give me forty five seconds. Your position on bitcoin right now? A lot of volatility, Yeah.

Exactly, Yeah, that's I think that's something that's very interesting.

Exactly, Yeah, that's I think that's something that's very interesting.

And you know what is it?

And you know what is it?

Is it down to mechanics of bitcoin? Is it big talented? The upcoming harving is that going to play a part? Is it overbought? I guess is potentially one other question as well. I think that fun flow into the ETF space from an institutional standpoint, is naturally driven, you know, the price sort of higher. I think proper taking in some of the equity markets and fun flow into bitcoin is also helping it getting propped up.

Is it down to mechanics of bitcoin? Is it big talented? The upcoming harving is that going to play a part? Is it overbought? I guess is potentially one other question as well. I think that fun flow into the ETF space from an institutional standpoint, is naturally driven, you know, the price sort of higher. I think proper taking in some of the equity markets and fun flow into bitcoin is also helping it getting propped up.

Where is the downside coming from? That's probably a very good question, gentlemen.

Where is the downside coming from? That's probably a very good question, gentlemen.

Yeah, that's a little bit one which probably needs a little bit more investigating. You know, people, people you know are probably looking to get in and get out and take advantage having had their fingers but in the previous sort of up cycle. So I think there's still a website to be had in bitcoin.

Yeah, that's a little bit one which probably needs a little bit more investigating. You know, people, people you know are probably looking to get in and get out and take advantage having had their fingers but in the previous sort of up cycle. So I think there's still a website to be had in bitcoin.

Yeah, Doug Oreano is saying that he thinks some money will flow out of equities and end to crypto, and kind of what we've seen of late is both of them rallying at the same time. So only time will tell. Interesting to watch, Oreana, thanks very much for joining us. Oreana Liza CMC markets sales trader with us live here eighteen minutes past the hour.

Yeah, Doug Oreano is saying that he thinks some money will flow out of equities and end to crypto, and kind of what we've seen of late is both of them rallying at the same time. So only time will tell. Interesting to watch, Oreana, thanks very much for joining us. Oreana Liza CMC markets sales trader with us live here eighteen minutes past the hour.

This is Bloomberg.

This is Bloomberg.

Well ten Cent Holdings is planning to double its stock buyback program to nearly thirteen billion dollars and joining us in our studios here in Hong Kong is the esteemed Vlad Savov, Bloomberg Tech editor. So let me see if I got this right. We had a miss on sales, but that was kind of offset by the buyback and raising the dividend, and we also had slightly better numbers. We had a beat on operating profit and net income, but somehow the miss on sales seems to be the biggest story. I mean, the stock is up, but that's probably because of the buyback. But there's something wrong here, Flad, Is that right?

Well ten Cent Holdings is planning to double its stock buyback program to nearly thirteen billion dollars and joining us in our studios here in Hong Kong is the esteemed Vlad Savov, Bloomberg Tech editor. So let me see if I got this right. We had a miss on sales, but that was kind of offset by the buyback and raising the dividend, and we also had slightly better numbers. We had a beat on operating profit and net income, but somehow the miss on sales seems to be the biggest story. I mean, the stock is up, but that's probably because of the buyback. But there's something wrong here, Flad, Is that right?

Yeah?

Yeah?

Absolutely?

Absolutely?

I Mean when you think about ten Cent, it's such a vast company, but ultimately its core business is still domestic games within China, and that's been such a disrupted sector and that's what Tencent is reflecting with its latest quarter earnings. It is the lifeblood of the company still, much like the iPhone is for Apple.

I Mean when you think about ten Cent, it's such a vast company, but ultimately its core business is still domestic games within China, and that's been such a disrupted sector and that's what Tencent is reflecting with its latest quarter earnings. It is the lifeblood of the company still, much like the iPhone is for Apple.

You can when I've watched.

You can when I've watched.

Tencent with its quarti earnings, I mean it was delivering double digit growth over the past three quarters.

Tencent with its quarti earnings, I mean it was delivering double digit growth over the past three quarters.

Is you're one of the best operationally.

Is you're one of the best operationally.

But if you want to find votes, it is the fact that it hasn't internationalized it its games business quite as much as others and investors might have hoped, and it hasn't diversified. So really, the big takeaway from Tencent's earning score last night is that discussion of how it's going to pursue high quality growth That was its tagline who was repeated a dozen times, and how it's going to diversify away from that business games in China that is not growing as much as tense would like.

But if you want to find votes, it is the fact that it hasn't internationalized it its games business quite as much as others and investors might have hoped, and it hasn't diversified. So really, the big takeaway from Tencent's earning score last night is that discussion of how it's going to pursue high quality growth That was its tagline who was repeated a dozen times, and how it's going to diversify away from that business games in China that is not growing as much as tense would like.

Where if I heard that phrase before high quality growth? H let me think I'm just kidding.

Where if I heard that phrase before high quality growth? H let me think I'm just kidding.

Right from the top.

Right from the top.

Yeah right, But I'm wondering to your point, if you can't really expand much outside the region, do you have to then drive business by creating a lot more in the way of new titles. Is that the strategy here? You just have to push out more product right well?

Yeah right, But I'm wondering to your point, if you can't really expand much outside the region, do you have to then drive business by creating a lot more in the way of new titles. Is that the strategy here? You just have to push out more product right well?

Cso James Mitchell.

Cso James Mitchell.

He said that they have free priorities and the way that Tencent views the entire sectories, he said, we need to get our own house in the word and the three priorities are.

He said that they have free priorities and the way that Tencent views the entire sectories, he said, we need to get our own house in the word and the three priorities are.

You have these long.

You have these long.

Running, kind of everlasting titles like Peacekeeper Elite, which is a local version of PUBG Mobile, and what Tencent has done is it's put new leadership in place to revitalized monetization of those. Then you have the more recent titles, the ones that have just kind of picked up stea more recently, such as Fight for the Goldos Bachelo whose Name I Love? They want to monetize that more aggressively. And then the third pillar of that is bringing in new titles such as Dungeon and Fights and Mobile.

Running, kind of everlasting titles like Peacekeeper Elite, which is a local version of PUBG Mobile, and what Tencent has done is it's put new leadership in place to revitalized monetization of those. Then you have the more recent titles, the ones that have just kind of picked up stea more recently, such as Fight for the Goldos Bachelo whose Name I Love? They want to monetize that more aggressively. And then the third pillar of that is bringing in new titles such as Dungeon and Fights and Mobile.

They talk that up.

They talk that up.

They're moving up the release date for that to the second quarter of this year in China. That is because that got approved by the Beijing government, and they said that they expect games revenue to pick up from the second quarter as well.

They're moving up the release date for that to the second quarter of this year in China. That is because that got approved by the Beijing government, and they said that they expect games revenue to pick up from the second quarter as well.

Yeah.

Yeah.

Bloomberg Intelligence analyst Robert Lee, who we've had on the program a lot, is reasonably positive on ten Cents prospects for this year that they will deliver a double digit earnings growth in twenty twenty four. We've had a number of issues with slowness in the Chinese economy and also the regulatory overhang. Do either of those two look to be getting substantially better in the coming year.

Bloomberg Intelligence analyst Robert Lee, who we've had on the program a lot, is reasonably positive on ten Cents prospects for this year that they will deliver a double digit earnings growth in twenty twenty four. We've had a number of issues with slowness in the Chinese economy and also the regulatory overhang. Do either of those two look to be getting substantially better in the coming year.

Right, Well, this was an interesting thing tents and President Martin Lao said it during the earning school. There was a question about the regulatory situation. If you're a call Brian. In December, there was an indication via a draft of new regulations about Beijing cracking down again on gaming that drag down ten cents share price significantly. Martin Leowle's comment was really definitive about this. He said, that's not a concern of ours. He said that in recent times, in recent weeks and months, the government has really signaled a much more supportive stance towards gaming. They've given much more licenses for new games effectively, I mean, he said, if those draft regulations even come to pass, so it might not even happen.

Right, Well, this was an interesting thing tents and President Martin Lao said it during the earning school. There was a question about the regulatory situation. If you're a call Brian. In December, there was an indication via a draft of new regulations about Beijing cracking down again on gaming that drag down ten cents share price significantly. Martin Leowle's comment was really definitive about this. He said, that's not a concern of ours. He said that in recent times, in recent weeks and months, the government has really signaled a much more supportive stance towards gaming. They've given much more licenses for new games effectively, I mean, he said, if those draft regulations even come to pass, so it might not even happen.

Is his position. That's the view. And I would also say you mentioned Rob Lee.

Is his position. That's the view. And I would also say you mentioned Rob Lee.

He and I would have conversations about this, and I would be remiss not to mention the point that he makes, which is ten cent is not only moving toward quote unquote high quality growth, it's moving toward high margin businesses, more fintech, more ads. It's a better way to monetize, and maybe it's also a more sustainable way in the long run.

He and I would have conversations about this, and I would be remiss not to mention the point that he makes, which is ten cent is not only moving toward quote unquote high quality growth, it's moving toward high margin businesses, more fintech, more ads. It's a better way to monetize, and maybe it's also a more sustainable way in the long run.

Where does artificial intelligence enter into that conversation, if at all? Is it a part of the thinking here?

Where does artificial intelligence enter into that conversation, if at all? Is it a part of the thinking here?

Yeah?

Yeah?

Martin Lao said that at the moment, and for the ne itom is going to boast the ten cents add the most is helping add targeting, which I don't know how to feel about. I don't really want ad pyotogramhy that much better but in the long run AI generating content, it's also going to feed into the games pipeline, largely to create animated content.

Martin Lao said that at the moment, and for the ne itom is going to boast the ten cents add the most is helping add targeting, which I don't know how to feel about. I don't really want ad pyotogramhy that much better but in the long run AI generating content, it's also going to feed into the games pipeline, largely to create animated content.

That's what Tencent said.

That's what Tencent said.

You remember in the past when we had pees up around fifty or so for ten Cent currently forward pees fourteen and trailing pe twenty two. Those days are gone, aren't they though? With ten Cent because it had revenues at those during those years, growing so forty fifty percent as well.

You remember in the past when we had pees up around fifty or so for ten Cent currently forward pees fourteen and trailing pe twenty two. Those days are gone, aren't they though? With ten Cent because it had revenues at those during those years, growing so forty fifty percent as well.

That's right. I mean, one way to think about this.

That's right. I mean, one way to think about this.

My best analogy for Tencent is actually that it's kind of like an alcohol maker. There's a set base of people who will keep buying your products. Some of them were probably addicted. But the difference ten Cent because it's inteen, because it's in AI, it has this upside which is largely unpredictable, where it can strike gold, it can produce something like TikTok. Like I say, operationally, ten Cent showing itself to be really good. It's a vast company and there's always a potential for the company to grow through that.

My best analogy for Tencent is actually that it's kind of like an alcohol maker. There's a set base of people who will keep buying your products. Some of them were probably addicted. But the difference ten Cent because it's inteen, because it's in AI, it has this upside which is largely unpredictable, where it can strike gold, it can produce something like TikTok. Like I say, operationally, ten Cent showing itself to be really good. It's a vast company and there's always a potential for the company to grow through that.

But took into our stocks, colleague.

But took into our stocks, colleague.

They did say that the shap Rice currently has like zero premium for the potential of AI with intense, and so investors at least don't have the confidence that maybe.

They did say that the shap Rice currently has like zero premium for the potential of AI with intense, and so investors at least don't have the confidence that maybe.

I have last question I can only give you about twenty or thirty seconds to answer, is the regulatory risk. It's no longer a factor.

I have last question I can only give you about twenty or thirty seconds to answer, is the regulatory risk. It's no longer a factor.

That's what Tencent says. I'm not sure that everybody believes the company.

That's what Tencent says. I'm not sure that everybody believes the company.

All right, Glad, thanks very much. I'm glad that that Doug asked you about AI because AI doesn't come up that much with ten Cent, and when I interviewed Rob, you know, previewing the earnings, I didn't even ask him about AI and he didn't even bring it up. So it does. It is an interesting question, and it's one that you know, there is some room there for or Tencent, you know, if it does manage to expand their Tencent analysis. Here from Glad Sava, Bloomberg Tech Editor.

All right, Glad, thanks very much. I'm glad that that Doug asked you about AI because AI doesn't come up that much with ten Cent, and when I interviewed Rob, you know, previewing the earnings, I didn't even ask him about AI and he didn't even bring it up. So it does. It is an interesting question, and it's one that you know, there is some room there for or Tencent, you know, if it does manage to expand their Tencent analysis. Here from Glad Sava, Bloomberg Tech Editor.

This has been the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and always on Bloomberg Radio, the Bloomberg Terminal and the Bloomberg Business app,

This has been the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and always on Bloomberg Radio, the Bloomberg Terminal and the Bloomberg Business app,