Speaker 1: Good morning. I'm Doug Chrisner. Here are the stories we're
Speaker 1: following today, and we begin with Apple. Those shares suffered
Speaker 1: a downgrade today for the second time this week, Piper
Speaker 1: Sandler cutting Apple to neutral. The bank cited a weak
Speaker 1: macro environment in China, saying that that will damp and
Speaker 1: demand for iPhones. It was only on Tuesday that Barclays
Speaker 1: lowered its rating on Apple shares. We spoke with Jay
Speaker 1: Woods earlier. He is the chief Global strategist at Freedom
Speaker 1: Capital Markets. He gave us his outlook on Apple moving forward.
Speaker 2: Two downgrades to kick off the years, not how you
Speaker 2: want to start things. We'll see how it cycles through
Speaker 2: the earning season. Over the long term, yeah, I don't
Speaker 2: worry about Apple, but the day to day for the
Speaker 2: day traders. Yeah, he could pull back a little bit.
Speaker 2: Watch it two inner day moving averages support, but over
Speaker 2: the long term it will find another like high.
Speaker 1: He is Jay Woods from Freedom Capital Markets. Now Bloomberg
Speaker 1: Data show. Coming into this year twenty twenty four, Apple
Speaker 1: was the big tech stock with a least number of
Speaker 1: bullish recommendations. Apple is also the only tech giant to
Speaker 1: see revenue contract for the past four quarters. Apple shares
Speaker 1: today down about one point two percent.
Speaker 3: Here in New York, Paul Qualcom has announced the new
Speaker 3: chip designed for virtual reality headsets. The goal is to
Speaker 3: compete with Apple's Vision Pro mixed reality headset, and Qualcom's
Speaker 3: chip will be used by Samsung and Alphabet on products
Speaker 3: under development. Bloombergsy and King says this will help Qualcom
Speaker 3: expand their offerings.
Speaker 4: They've promised investors that they will be more than just
Speaker 4: a mobile phone chip company, and they're trying desperately for
Speaker 4: you know, in a number of areas. None of them
Speaker 4: are really taken off so far. Perhaps this is the one.
Speaker 4: We're up to version two point five right now. Usually
Speaker 4: for chip makers, version three is the one that is
Speaker 4: going to win.
Speaker 3: That is Bloomberg se and King there, Qualcomb shares closing
Speaker 3: down about one percent in New York.
Speaker 1: We go next to Ammer Sports. This company makes the
Speaker 1: Wilson Tennant racket line. Along with Solomon Ski Boots. Amor
Speaker 1: has now filed for an inch initial public offering here
Speaker 1: in the US. That story from Bloomberg's Charlie Pellett.
Speaker 5: According to a press release confirming in an earlier Bloomberg
Speaker 5: News report, amer has picked Goldman Sachs, Bank of America, JP,
Speaker 5: Morgan Chase and Morgan Stanley as book running lead managers
Speaker 5: of the share sale. Sources have said that amer is
Speaker 5: targeting an IPO of more than one billion dollars and
Speaker 5: a listing could value the firm as much as ten
Speaker 5: billion dollars. The Finland founded company is banked by China's
Speaker 5: largest athletic apparel producer and a sports products in New York,
Speaker 5: Charlie Pellett Bloomberg Radio.
Speaker 3: The Federal Reserve Bank of Saint Lewis has named its
Speaker 3: new president. We've got all from Bloomberg's Michael.
Speaker 6: McKee Alberto Mussalam. He is a PhD economist and has
Speaker 6: worked on Wall Street for a significant amount of his career,
Speaker 6: also at the IMF and also at the New York Fed.
Speaker 6: He was most recently the executive chair at the Man
Speaker 6: Group and a member of the board at Freddie Mack.
Speaker 6: He says he'll resign those two positions. He was the
Speaker 6: CEO of Evin's Asset Management, and he was a managing
Speaker 6: director and partner at Tutor Investments. Broad Wall Street background
Speaker 6: and it looks like some experience at the Fed. So
Speaker 6: he has straddled both worlds.
Speaker 3: That's Bloomberg's and Michael McKee, Muslim will take over at
Speaker 3: the Saint Louis fed on April the second, and he,
Speaker 3: of course succeeds Jim Bullott. He's now the dane of
Speaker 3: Purty University's Business School.
Speaker 1: Ten Cents spybacks have now hit a record high. That
Speaker 1: story from Bloomberg's Joanne Wong.
Speaker 7: In Hong Kong, ten Cent boughtbacker record one point three
Speaker 7: billion dollars of shares in December. The pace of the
Speaker 7: buybacks accelerated further this month after Beajing surprised investors with
Speaker 7: a raft of new regulations and triggered a broad tech
Speaker 7: sell off. Daily repurchases more than doubled since the new
Speaker 7: roles were announced on December twenty second. The controversial regulations
Speaker 7: include caps on in game spending and a ban on
Speaker 7: rewards for frequent lock ins. These rules brought back fears
Speaker 7: that China was reverting to a tech crackdown similar to
Speaker 7: that and twenty twenty one in Hong Kong joined Wong
Speaker 7: Bloomberg Radio.
Speaker 1: Let's move to Global news next, and we begin with
Speaker 1: the Islamic state taking responsibility for those deadly bombings in Iran.
Speaker 1: Dan Schwartzman's here, Denny.
Speaker 8: Thanks Doug, You're right. Islamic State claiming responsibility for Wednesday's
Speaker 8: bombing in Iran that killed at least eighty four and
Speaker 8: wounded two hundred and twenty others. The blast occurring near
Speaker 8: the grave of Iranian Revolutionary Guard commander Cassam Solimani, who
Speaker 8: was killed in a US drone strike in Iraq back
Speaker 8: in twenty twenty. According to the state run Islamic Republic
Speaker 8: News agency, one bomb was planted in a suitcase, the
Speaker 8: other in a car, with the two detonating fifteen minutes apart.
Speaker 8: Secretary of State Anthony Blincoln will be traveling to the
Speaker 8: Middle East for a fourth time since Hamas's October seventh
Speaker 8: attack on Israel as a US looks to keep the
Speaker 8: war from spiraling into a regional conflict. Blncoln will visit
Speaker 8: eight countries, including Israel, Saudi Arabia, Egypt, and Turkey. Blincoln
Speaker 8: is looking to facilitate more aid getting to Palestinians in Gaza,
Speaker 8: while also conferring with Israel on the next phase of
Speaker 8: their war versus Hamas. Police say a seventeen year old
Speaker 8: shot and killed a sixth grader and wounded five others
Speaker 8: in an Iowa school shooting. That story from Bloomberg's Charlie Pellett.
Speaker 5: Students had to barricade in offices, many fled in panic.
Speaker 5: The suspect is a student at the school in Perry.
Speaker 5: Authority say he died of what investigators believe was a
Speaker 5: self inflicted gunshot wound. At least one of the victims
Speaker 5: was a school administrator. Perry has about eight thousand residents
Speaker 5: and is about forty miles northwest of Des Moines, on
Speaker 5: the edge of the state capitals metropolitan area. Charlie Pellett,
Speaker 5: Bloomberg Radio.
Speaker 8: Thanks Charlie. New York City Mayor Eric Adams announcing the
Speaker 8: city is suing seventeen bus companies for a total of
Speaker 8: seven hundred and eight million dollars. Adams says the companies
Speaker 8: have violated state law by not helping to pay the
Speaker 8: cost to care for the migrants after bussing them from Techis.
Speaker 8: So far, almost thirty four thousand migrants have been bussed
Speaker 8: from Texas to New York. A report from House Democrats
Speaker 8: says that former President Donald Trump ow owns hotels owned
Speaker 8: hotels received at least seven point eight million dollars in
Speaker 8: payments from more than twenty countries, including China and Saudi Arabia,
Speaker 8: during a two year stretch of his presidency. The Democrats
Speaker 8: say that those payments violate the Constitution's Foreign m A
Speaker 8: Lumence Clause, which prohibits federal officials from accepting gifts or
Speaker 8: money from foreign governments without Congress's permission. The payments were
Speaker 8: made to Trump hotels in New York, Washington, and Las Vegas.
Speaker 8: Around forty six hundred soldiers, firemen, and emergency personnel are
Speaker 8: making a last ditch effort to find survivors after the
Speaker 8: New Year's Day earthquake in Japan. The seven point six
Speaker 8: magnitude quake killed at least forty eight people, with at
Speaker 8: least another fifty or more people who have yet to
Speaker 8: be accounted for. Thirty thousand residents of the region close
Speaker 8: to two hundred miles northwest of Tokyo are still without power.
Speaker 8: Global News twenty four hours a day and whenever you
Speaker 8: want it with Bloomberg News Now Schwartzman, and this is.
Speaker 1: Bloomberg Daybreak Asia. We're about ten minutes past the hour
Speaker 1: now as we bring in our guest Edward Harrison. He
Speaker 1: is Bloomberg team leader for FX and Rates for the Americas.
Speaker 1: He joins us from here in New York, ed thanks
Speaker 1: for being with us. I think we have to begin
Speaker 1: with the employment report that we're going to get tomorrow
Speaker 1: morning in the US, the numbers for December. I was
Speaker 1: struck by the fact that Bloomberg Economics is saying the
Speaker 1: data will likely show strength only in concentrated pockets of
Speaker 1: the US labor market and perhaps reveal some weak underlying fundamentals.
Speaker 1: Is that a pretty accurate assessment, do you think?
Speaker 9: Yeah?
Speaker 10: I think that what we've seen is a weakening in
Speaker 10: the labor market, but ever so slightly, it hasn't been
Speaker 10: broad based enough to know on an individual print level
Speaker 10: what these specific reports are going to say, meaning that
Speaker 10: you know this it could go either way in terms
Speaker 10: of this particular report. We haven't had a interior raise
Speaker 10: enough in the broader labor market to be able to
Speaker 10: say with any certainty, and so that leaves the bond
Speaker 10: market in particular on tenor hooks about what could possibly
Speaker 10: come out tomorrow.
Speaker 3: Yeah, the job is myket holding up quite well? What
Speaker 3: are the implications here for FED policy going forward.
Speaker 10: I think that what we're seeing with regard to growth
Speaker 10: two point five percent is the GDP now figure for
Speaker 10: Q four is an excess of where they would feel
Speaker 10: they would want to cut. And so you know, if
Speaker 10: this job's report isn't it isn't very negative, then I
Speaker 10: think it means for the FED that they're going to
Speaker 10: be on hold for a longer period of time. The
Speaker 10: bond market has March as the first cut. There's a
Speaker 10: sixty two percent chance according to the swaps market, but
Speaker 10: really that's very aggressive relative to you know, the state
Speaker 10: of the economy at this point, and so I think
Speaker 10: the Fed is probably looking to cut later than that
Speaker 10: unless we see this number.
Speaker 9: Undershoot expectations.
Speaker 1: So yesterday we were looking at the minutes of the
Speaker 1: last FED meeting, and I think one of the takeaways
Speaker 1: higher for longer, maybe the market to kind of lost
Speaker 1: track of that, at least temporarily, when you look at
Speaker 1: the fact that perhaps some of these higher rates have
Speaker 1: the total impact has yet to be fully felt. What
Speaker 1: does that mean for momentum as we move into twenty
Speaker 1: twenty four.
Speaker 10: I think that you know, the Fed, it means for
Speaker 10: the FED in particular that we're going to be on hold,
Speaker 10: and therefore they're looking for the momentum of the economy
Speaker 10: to slow.
Speaker 9: Two point five percent.
Speaker 10: Which is what we see for the data that we
Speaker 10: have currently through Q four, that's too fast. They think
Speaker 10: that it's going to slow from there. We had about
Speaker 10: five percent in Q three. We're at about two to
Speaker 10: two and a half percent.
Speaker 9: For Q four.
Speaker 10: They think it's going to slow if it goes below
Speaker 10: say one point eight percent, which is the level that
Speaker 10: the FED thinks is, you know, the the the economic
Speaker 10: potential for the economy, then as long as inflation comes down,
Speaker 10: we could actually get some rate cuts. But until we
Speaker 10: get to those levels, it's gonna be very They're gonna
Speaker 10: be on hold. And so the economic momentum is waning,
Speaker 10: but it may not wane enough for the Fed to
Speaker 10: act very aggressively.
Speaker 3: Yeah, what are the signals around inflation at the moment
Speaker 3: and hitting that target.
Speaker 10: Pend Yeah, the signals are that we have goods inflation
Speaker 10: going down. We have the overall the normal overall level
Speaker 10: of inflation going down as a result of that, as
Speaker 10: well as energy and food, but core services is not
Speaker 10: coming down to the same level. We're in a three
Speaker 10: ish almost four percent level for the super core services number,
Speaker 10: and that's way too high for the Fed. We need
Speaker 10: to see that number come down by a lot for
Speaker 10: the FED to feel comfortable that inflation is coming back
Speaker 10: to trend very quickly.
Speaker 1: So there were many calls last year that we were
Speaker 1: going to see a recession manifest in Q four. Obviously
Speaker 1: that didn't happen. The narrative that the market has been
Speaker 1: operating under right now has to do with the soft landing.
Speaker 1: Have we completely dodged the possibility of a recession? Do
Speaker 1: you think ed?
Speaker 9: No?
Speaker 10: I think that actually what we need to see is
Speaker 10: is we need to see the market say that actually,
Speaker 10: no recession is coming for the recession to actually come
Speaker 10: to fruition, because you know, this has been the recession
Speaker 10: that has been watched and anticipated like no other, and
Speaker 10: only now are people saying, Okay, we've given up, the
Speaker 10: recession is not going to come. That's actually the sign
Speaker 10: that you know, we could get a recession, because you
Speaker 10: need to have that surprise for these kinds of things
Speaker 10: to happen.
Speaker 3: We've got the US dollar continuing to strengthen five days
Speaker 3: in a row now doesn't really seem to be buying
Speaker 3: into this narrative coming from other parts of the market
Speaker 3: that we're going to get a whole heap of rite
Speaker 3: cuts in twenty twenty four.
Speaker 10: No, I think that really what's happened is is we
Speaker 10: went to access on rates up to five percent. Then
Speaker 10: we backed away from that very aggressively at the end
Speaker 10: of last year, too aggressively in fact, and now the
Speaker 10: market is in a quandary as to what does it
Speaker 10: really mean. This particular jobs number is going to be
Speaker 10: very important in terms of.
Speaker 9: That because we've seen the rates market.
Speaker 10: Sell off somewhat and the dollar has followed that path higher.
Speaker 10: And when we see this number, if the number is
Speaker 10: actually better than expected, we could see a very nasty
Speaker 10: backup and yields in the treasury market tomorrow. So this
Speaker 10: is a very important number. It's going to tell us
Speaker 10: whether or not there is any possibility that the Fed
Speaker 10: can cut as early as March, which is what's priced in,
Speaker 10: And if we don't see some softness in the labor market,
Speaker 10: then it tells us that the Fed's not going to
Speaker 10: cut as early, and we could see a very aggressive
Speaker 10: reaction as a result of that.
Speaker 1: So we're talking about an economy that's losing a bit
Speaker 1: of a moment momentum, and that recession is possibly still
Speaker 1: in the cards. I'm wondering what that means about the
Speaker 1: equity market. I mean, at the end of last year
Speaker 1: we saw some very very powerful gains. Toward the last
Speaker 1: week of twenty three and the first trading week of
Speaker 1: the new year, things have been a little rocky, But
Speaker 1: I think you would have to say that the equity
Speaker 1: market has held up reasonably well. Do we need to
Speaker 1: see a repricing of risk assets right now?
Speaker 10: Well, you know, it is interesting that were you were
Speaker 10: just talking about Apple right before I came on. I
Speaker 10: was looking at the PE ratio for Apple, which is
Speaker 10: about twelve point four percent at the end of twenty eighteen.
Speaker 10: It rocketed up to over thirty percent in twenty twenty,
Speaker 10: and it stands now at about thirty thirty times. So
Speaker 10: we're looking at thirty times earnings for Apple, which is
Speaker 10: not growing tremendously well, versus twelve times at the end
Speaker 10: of twenty eighteen.
Speaker 9: Which was five years ago.
Speaker 10: So in the last five years, even though interest rates
Speaker 10: have gone up somehow, Apple, the same company, which is
Speaker 10: valued much more highly, has a PE ratio much higher.
Speaker 10: That tells you that the Magnificent seven, those stocks like Apple,
Speaker 10: they're richly valued, and unless the economy continues to chug along,
Speaker 10: you could see some air pockets in the equity market.
Speaker 3: Yeah, and as we've been reporting, we had to pop
Speaker 3: a sandllite cutting it's writing to neutral on Apple. Well,
Speaker 3: we got about thirty seconds remaining. What can we expect
Speaker 3: in terms of earnings in twenty twenty for do you
Speaker 3: think I.
Speaker 10: Think that the market is pricing in a very high
Speaker 10: level of earnings going up, and likely we're not going
Speaker 10: to meet that. Unless the economy powers forward, You're not
Speaker 10: going to be able to see the FED cutting and
Speaker 10: getting the number of cuts that we have in there
Speaker 10: and the earnings at the same time.
Speaker 9: One of those two has to give.
Speaker 1: We'll leave it there with Ed Harrison, and it's always
Speaker 1: a pleasure. Thank you so much for being with us
Speaker 1: in Happy New year. Ed Harrison Bloomberg team leader for
Speaker 1: FX and Rates for the Americas, joining us here on
Speaker 1: day Breakasia. This is Bloomberg day Break Asia, your morning
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