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Speaker 1: This is Bloomberg Daybreak Asia for this Wednesday, February one

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Speaker 1: in Hong Kong, Tuesday, January thirty one in New York

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Speaker 1: and coming up this hour, US stocks rise on optimism

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Speaker 1: over cooling inflation ahead of the FITS rate decision tomorrow.

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Speaker 1: Snap says it will experience its first ever decline in

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Speaker 1: quarterly revenue, and Indian billionaire Guatama Donnie pulls off at

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Speaker 1: two and a half billion dollar equity sale for his

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Speaker 1: flagship company India and US deepen Defense and Tech ties.

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Speaker 1: US has no plans for F sixteens to Ukraine, US

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Speaker 1: losing naval edge to China, and end of Pacific new

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Speaker 1: grant to New York for the Hudson Tunnel project. I'm

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Speaker 1: at Baxter with Global News. A surprise club moves on

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Speaker 1: to the final of the Caraball Cup. On Dan Schwartzman,

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Speaker 1: I'll have that story mark coming up in Bloomberg's boards.

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Speaker 1: That's all straight ahead on Bloomberg Daybreak Asia on Bloomberg

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Speaker 1: eleven three on New York, Bloomberg, Washington, d C, Bloomberg

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Speaker 1: one or six one Boston, Bloomberg nine sixty, San Francisco,

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Speaker 1: Sirius XM one nineteen and around the world on Bloomberg

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Speaker 1: Radio dot com and via the Bloomberg Business app. Good morning,

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Speaker 1: I'm Dead Prisoner, and I'm Brian Curtis. Here are the

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Speaker 1: stories we're following today. Advanced micro Devices giving a better

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Speaker 1: than feared sales forecast for the first quarter. More from

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Speaker 1: Bloomberg's Charlie Pellett. A m D is the second largest

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Speaker 1: maker of computer processors, and gains in the lucrative server

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Speaker 1: market helped make up for a collapse in demand for

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Speaker 1: PC chips. A m D said revenue will be as

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Speaker 1: much as five point six billion dollars in the period. Analysts,

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Speaker 1: on average had predicted five point five six billion, with

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Speaker 1: estimates coming in as low as five billion, though a

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Speaker 1: less severe drop than expected. The outlook represents the company's

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Speaker 1: first year over year quarterly sales decline since ending a

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Speaker 1: growth street that elevated a m D into the upper

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Speaker 1: ranks of the chip industry in New York. Charlie Pellett,

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Speaker 1: Bloomberg Daybreak, Asian. All right, Charlie, thank you well. We

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Speaker 1: also heard after the bell from the social media company Snap.

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Speaker 1: It is forecasting its first ever decline in quarterly revenue

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Speaker 1: somewhere in the vicinity of two to ten. Snap said

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Speaker 1: it's due to changes primarily for the company's direct response

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Speaker 1: AD business, and Bloomberg's men Deep Singh tells us this

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Speaker 1: could be a sign of things to come. Their user

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Speaker 1: growth continues to be steady. The problem is that ad

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Speaker 1: pricing had been is so strong right now for pretty

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Speaker 1: much all these companies. So how wouldn't be surprised if

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Speaker 1: you see a similar print from Meta or Alphabet day

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Speaker 1: after tomorrow. So we're seeing Snap shares down as much

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Speaker 1: as six in the late U S session. By the way,

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Speaker 1: this stock has lost nearly two thirds of its value

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Speaker 1: in the twelve months through tuesday's close. Well, tomorrow we

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Speaker 1: get our first FED rate decision of the year. Bloomberg's

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Speaker 1: Michael McKee has a preview for the Fed and Chairman

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Speaker 1: j Powell. The task boils down to raise rates, signal

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Speaker 1: no policy pivot yet, and hope the markets believe them.

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Speaker 1: Investors generally think the Central Bank will raise rates a

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Speaker 1: quarter percentage point now and again in March, but then

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Speaker 1: stop by November. Futures markets say they'll be cutting rates.

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Speaker 1: That's not a good look for Powell and company, who

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Speaker 1: worry inflation isn't beaten yet and with China reopening could

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Speaker 1: flare again. So expect the FED statement and Powell in

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Speaker 1: his news conference to recognize the outlook has improved, but

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Speaker 1: push back on any thought that means a change in policy. Yet.

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Speaker 1: Michael McKay Bloomberg Daybreak Asia, Well, the Indian billionaire Guatama

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Speaker 1: Donny has pulled off a closely watched equity sale for

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Speaker 1: his flagship company. It was valued at two and a

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Speaker 1: half billion dollars. This offering, by A Donny Enterprises was

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Speaker 1: India's largest follow on share sale. It was fully subscribed

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Speaker 1: on the final day of bidding thanks to some last

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Speaker 1: minute to man from institutional investors. It offered a bit

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Speaker 1: of relief for Adanni after his empire was rocked earlier

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Speaker 1: by allegations of fraud from the short seller Hindenburg Research.

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Speaker 1: Now we are hearing members of the Adani group were

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Speaker 1: asked to regularly brief global and domestic investors to ease

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Speaker 1: the concerns raised in the Hindenburg report. Even so, Bloomberg's

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Speaker 1: PR sun Jay tells US investors are still concerned. The

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Speaker 1: suggests definitely not over because one simple research which alleged

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Speaker 1: corruption money laundering has taken issues to just men from

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Speaker 1: the top would stopped the just list and he is.

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Speaker 1: It is also wiped off around over seventy million dollars

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Speaker 1: of Adani conglomerate, the port to Power conglomerate. So the

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Speaker 1: fact that this offering was fully subscribed removes, I guess

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Speaker 1: you could say one overhang for India's three point two

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Speaker 1: trillion dollar stock market. Now, the benchmark sensex eke sed

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Speaker 1: out gains over the past two days. That was after

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Speaker 1: tumbling though last week when those allegation of fraud first surfaced.

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Speaker 1: Right well, a new rivalry dug could be emerging between

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Speaker 1: the world's richest and second richest persons. As Bloomberg's Denise

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Speaker 1: Pellogreeni reports, a company associated with Bernard Arno has struck

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Speaker 1: a deal with a competitor to Elon Musk and Tesla.

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Speaker 1: Electric vehicle maker Lotus Technology has agreed to merge with

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Speaker 1: L Catterton Asia acquisition. You might not have heard of

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Speaker 1: either of these companies, but their backers are huge. Lotus

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Speaker 1: Tech is owned by China auto giant jang Gili and

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Speaker 1: as several all electric vehicles supposed to come on the market.

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Speaker 1: Catterton merged with the private equity operations of our nose

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Speaker 1: LVMH in sixteen. Now through this new spec deal between

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Speaker 1: Lotus Tech and Caterton, Lotus goes public and Gelie is

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Speaker 1: expected to remain a major shareholder. Denise Pelllygreeni Bloomberg Day

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Speaker 1: Break Asia. Well, one of the interesting things we've been

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Speaker 1: seeing from the earnings, Dug has been probably what we

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Speaker 1: should see a lot of companies going in a lot

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Speaker 1: of different directions in terms of a unifying theme. It's

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Speaker 1: a great question to put to our guests. The only

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Speaker 1: thing I would say is these plunging prices in memory

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Speaker 1: chips making it very tough for some of the chip makers.

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Speaker 1: Ski is the latest most definitely. And before I let

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Speaker 1: you go, I want to bring up the issue around

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Speaker 1: Caterpillar because the company is seeing weaker demand in China

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Speaker 1: and rising cost as well. Now cats benchmark for China

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Speaker 1: demand is the excavator market. But I'm wondering whether or

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Speaker 1: not that's the best metric, Brian, whether the recovery in

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Speaker 1: China is going to be about construction rather than another

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Speaker 1: segment of the economy. Yeah, it's a very good point.

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Speaker 1: A Dug I think many are expecting a consumer lead

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Speaker 1: rebound in China this year, and it's hard to imagine

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Speaker 1: a direct line from that to Caterpillar unless unless you

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Speaker 1: think that confident consumers would be really good for the

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Speaker 1: property market, and that of course would be positive for

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Speaker 1: Caterpillar in its relationship with the developers. Something that we

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Speaker 1: can talk about with our guests. Coming up in a

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Speaker 1: few moments, we will be talking with Dave Sakara, chief

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Speaker 1: US market strategist at morning Star. Now it's time for

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Speaker 1: Global News. Well, India and the United States are deepening

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Speaker 1: their defense and tech ties and there's a big push

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Speaker 1: for partnerships. Here. Ed back to with Global News in

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Speaker 1: the newsman San Francisco ed, Yeah, exactly right, Brian. The

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Speaker 1: deals will include advanced defense and computing technology. This is

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Speaker 1: the Biden administration is seeking to move New Delhi away

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Speaker 1: from Russia and to hurry up efforts to counter China's

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Speaker 1: advances as well. The plan will be known as the

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Speaker 1: U S India Initiative on Critical and Emerging Technologies. US

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Speaker 1: National Security Advisor Jake Sullivan says today that Beijing's aggressive

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Speaker 1: military moves and economic practices have had a proud profound

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Speaker 1: impact on the thinking in Delhi and other capitals around

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Speaker 1: the world. He says that China Russia factors are real.

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Speaker 1: US President Joe Biden says the US has no plans

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Speaker 1: to send F sixteen warplanes to Ukraine. Bloomberg's and Marie

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Speaker 1: Hordern says the U S is not alone. It's not

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Speaker 1: just the U S that is saying no one fighter

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Speaker 1: jets is the United Kingdom and it's Germany. But Ukraine

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Speaker 1: has been pushing for them, with the Deputy Farm Minister

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Speaker 1: taking to Twitter saying without these fighter jets, we cannot

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Speaker 1: secure our skies. And Anne Marie says of history as

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Speaker 1: a teacher, this is not the final answer, though no

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Speaker 1: has turned to yes on a number of occasions, witnessed

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Speaker 1: the Abrams tanks issue and eur Asia group Fonder and

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Speaker 1: President Ian Bremer says attitudes may change as the one

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Speaker 1: year anniversary of the Russian invasion years. He says, take

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Speaker 1: those tanks, as the Ukrainians have been effective on the ground,

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Speaker 1: and as the Russians have escalated, perhaps less than some

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Speaker 1: have feared. Um, there's there's just been incrementally greater willingness

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Speaker 1: to support Ukraine. Yah Bremer says a more aid, more

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Speaker 1: success breeds more aids, so that maybe the path that

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Speaker 1: it takes you. As a government accountability office, as US

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Speaker 1: warships are saying fewer days at sea since it says

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Speaker 1: more breaking down more frequently than expected and taking longer

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Speaker 1: to repair, it says this is of concern as a

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Speaker 1: Pentagon struggles to catch up with China's larger naval fleet.

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Speaker 1: US President Joe Biden in New York City today as

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Speaker 1: his rail week tour continues. He's formally announcing a two

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Speaker 1: ninety two million dollars in grants to improve the long

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Speaker 1: awaited Hudson Tunnel project. Problem anywhere along the line means

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Speaker 1: the lays up and down the East Coast for folks

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Speaker 1: trying to get to work, businesses trying to ship goods,

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Speaker 1: travelers trying to get to see their families. Yeah. Biden

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Speaker 1: says this will improve reliability for the two hundred thousand

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Speaker 1: weekday passengers traveling to and from Manhattan on Amtrak and

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Speaker 1: New Jersey Transit, and the U. S Secretary of State

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Speaker 1: Anthony B. Lincoln has visited the West Bank for discussions

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Speaker 1: with Palestinian President Mak mood A bus Now Lincoln says

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Speaker 1: the rising tensions in the area have to be cooled off,

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Speaker 1: and then the United States committed to working towards art

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Speaker 1: enduring goal of ensuring that Palestinians and Israelis enjoy equal

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Speaker 1: measures freedom, security, opportunity, justice, indignity. Blanken repeated that there

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Speaker 1: are two arrangement best for the Middle East going forward.

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Speaker 1: Global News powered by more than twenty seven hundred journalists

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Speaker 1: and analysts and over one twenty countries. I'm at Baxter

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Speaker 1: in San Francisco, and this is Bloomberg. This is Bloomberg

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Speaker 1: Day Break Asia. I'm Brian Curtis along with Rishade Salam,

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Speaker 1: and our guest is Dave Sakara, chief US market strategist

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Speaker 1: at Morning Start. Dave, you probably heard Doug and I

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Speaker 1: musing there about unifying themes in the earnings. Are you

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Speaker 1: seeing anything that you can really get behind here? Well,

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Speaker 1: you know, other than a few misses like Intel, I

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Speaker 1: don't think fourth quarter earnings in the US generally have

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Speaker 1: really been, you know, that bad, although a lot of

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Speaker 1: management commentary certainly has been discussing how the economy slowed

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Speaker 1: at December and was continuing into early you know. More importantly,

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Speaker 1: I think it's just the guidance for the beginning of

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Speaker 1: generally been softer than expected due to a macro economic slowdown.

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Speaker 1: I think pretty much everyone is expecting in the US.

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Speaker 1: What I'm seeing in the markets is that, you know,

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Speaker 1: many of these stocks initially sell off following that lowered guidance,

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Speaker 1: but then we end up seeing those stocks, you know,

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Speaker 1: trade up over the course of the next trading day.

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Speaker 1: So I think that may indicate the markets already accounting

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Speaker 1: for that near term economic weakness. And I think if

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Speaker 1: you look at your Microsoft over the past couple of

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Speaker 1: days since their earnings, I think that's that's a prime example.

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Speaker 1: So I think this does end up supporting you our

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Speaker 1: contention that we do think that the US markets are undervalued. However,

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Speaker 1: I do think there are still a couple of different

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Speaker 1: headwinds that the markets are going to have to face

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Speaker 1: over the first half of this year, you know, before

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Speaker 1: we can really continue to have a sustainable rally up

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Speaker 1: towards what we think intrinsic value for the markets are

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Speaker 1: Dave earnings at the moment supportively the rally that we've

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Speaker 1: been seeing. You know, I don't think it's so much

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Speaker 1: that the market is really looking at you know, the

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Speaker 1: earnings in the fourth quarter. I think, really people are

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Speaker 1: trying to understand the path of the economy in the

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Speaker 1: US this year. So I know, we expect, you know,

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Speaker 1: the economy is going to be pretty stagnant here at

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Speaker 1: morning Star, you know, we're looking for you know, first

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Speaker 1: quarter GDP to be down a little bit under one

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Speaker 1: percent and second quarter GDP to be down about four

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Speaker 1: tons of a percent before it starts to recover in

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Speaker 1: the second half of the year. So I think the

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Speaker 1: markets are really trying to get a gauge on, you know,

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Speaker 1: kind of the intrinsic value of the firm in light

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Speaker 1: of seeing you know, probably some short term earnings pressure

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Speaker 1: before things start getting better in the second half of

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Speaker 1: the year. And in our view, you know, we still

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Speaker 1: think after this rally, the market is about ten percent

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Speaker 1: under valued. But until I think we kind of get

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Speaker 1: through and start seeing leading economic indicators get better, you know,

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Speaker 1: this spring, I think we're probably towards the top of

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Speaker 1: a near term trading range. A moment ago, you mentioned

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Speaker 1: that there were a couple of challenges this year. I

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Speaker 1: know you've touched a little bit on them, but for

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Speaker 1: our audience, can you codify them just briefly, what all

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Speaker 1: those two major challenges. Well, for me, I think, you know,

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Speaker 1: in the first half of the year, it's the stagnant

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Speaker 1: economy and you know, potentially a recession and that's certainly

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Speaker 1: gonna weigh on near term earnings. And as you mentioned

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Speaker 1: your earlier news show, we do have the FED coming

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Speaker 1: out their interest rate decision tomorrow, so you know, we

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Speaker 1: fully expect they'll raise twenty five basis points and on

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Speaker 1: the markets pricing in another twenty five basis points. So

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Speaker 1: we'll be listening to FED Chair Powell following the f

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Speaker 1: OMC meeting really to try and gauge, you know, just

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Speaker 1: how hawkish he's going to really try and be, and

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Speaker 1: that certainly can impact the sentiment as well. And then

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Speaker 1: also you know, personally, I'm not too worried about it,

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Speaker 1: but we will have you know that that ceiling fight,

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Speaker 1: you know, ramping up over the next couple of months,

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Speaker 1: so that could dampen you near term sentiment in the

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Speaker 1: markets as well. Give me a sense of how geopolitics

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Speaker 1: and the continuing pressure on technology between Beijing and Washington

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Speaker 1: is playing into strategy of rule and playing into markets.

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Speaker 1: Do you think at the moment, people being a little

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Speaker 1: bit sanguine and perhaps not really dealing with this as

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Speaker 1: seriously as they would now. I mean, the market is

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Speaker 1: certainly paying attention to, you know, the geopolitical issues, and

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Speaker 1: I think, as you mentioned, we're seeing that play out,

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Speaker 1: you know, over time in the technology sector. But you know,

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Speaker 1: the technology sector was one of the worst performing you know,

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Speaker 1: last year. Now granted we thought, you know, at the

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Speaker 1: beginning of two is one of the more overvalued sectors,

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Speaker 1: but we think the tonology sector, the pendulum has swung,

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Speaker 1: you know, too far the downside. We're actually seeing that

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Speaker 1: sector being about ten percent under value today, and we

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Speaker 1: do see a lot of opportunities and I think looking

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Speaker 1: at you a m D after hours today, you know,

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Speaker 1: that was a stock that we rated, you know, four stars.

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Speaker 1: It was trading at the thirty seven percent discount to

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Speaker 1: our fair value, and we're seeing you know, just kind

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Speaker 1: of that movement upwards as those numbers are coming out

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Speaker 1: better than expected. Yeah, it's up one point five percent

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Speaker 1: after hours, and it jumped to three point seven percent

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Speaker 1: in the regular session. Caterpillar's comments about China interested me.

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Speaker 1: I mean, Caterpillar has been trading at an all time high,

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Speaker 1: not not just fifty two week high, but in all

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Speaker 1: time high. And it came down pretty sharply here just

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Speaker 1: in the last little period of time, and today was

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Speaker 1: down three and a half percent. But a lot of

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Speaker 1: that was I think investors front running the reopening of China.

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Speaker 1: Then we got the reopening, and now the CEO says

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Speaker 1: we see sluggish three. I mean, it does give you

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Speaker 1: a little bit of pause for thought when you think

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Speaker 1: about China. What are you thinking about China? Well, you know,

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Speaker 1: Caterpillar specifically is actually one of those industrial socks we

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Speaker 1: think has actually moved up, you know, too far. We

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Speaker 1: currently rate the stock, you know, two stars. You know,

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Speaker 1: it's trading at a thirty three percent premium, you know,

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Speaker 1: to our fair value. But I think, you know, thinking

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Speaker 1: about China and how that impacts, you know, the US markets.

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Speaker 1: I'm also really concerned about, you know, whether that reopening,

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Speaker 1: you know, could cause any kind of inflation to start

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Speaker 1: coming back. And I've talked to our US economics team

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Speaker 1: about that several points. And you know, at this point,

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Speaker 1: we do think the inflation in the US will continue

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Speaker 1: to keep moderating over the course of the year. We're

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Speaker 1: looking for inflation here in the US to get down

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Speaker 1: to an average two point eight percent this year and

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Speaker 1: in fact continue to subside to below two. So as

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Speaker 1: long as we're on you know that course, you know,

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Speaker 1: I don't think the China reopening is going to have

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Speaker 1: negative effects and in fact should have more positive effects

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Speaker 1: for the U S sentiment. This is Bloomberg Daybreak Asia,

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