1 00:00:02,480 --> 00:00:07,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:09,680 --> 00:00:12,800 Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. 3 00:00:12,920 --> 00:00:15,400 Speaker 2: You can join Brian Curtis and myself for the stories, 4 00:00:15,440 --> 00:00:18,520 Speaker 2: making news and moving markets in the APAC region. You 5 00:00:18,600 --> 00:00:21,439 Speaker 2: can subscribe to the show anywhere you get your podcast 6 00:00:21,520 --> 00:00:24,919 Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the 7 00:00:24,920 --> 00:00:26,080 Speaker 2: Bloomberg Business app. 8 00:00:26,400 --> 00:00:28,920 Speaker 3: Let's get to our guest. It's Melissa Auto, head of 9 00:00:29,080 --> 00:00:34,040 Speaker 3: TMT Research SMP Global Visible Alpha. Melissa, thank you for 10 00:00:34,159 --> 00:00:37,240 Speaker 3: joining us. Well, markets are showing that they're pretty jittery 11 00:00:37,320 --> 00:00:40,839 Speaker 3: here at the moment. We did have jobless claims rising 12 00:00:40,880 --> 00:00:44,080 Speaker 3: fourteen thousand to two hundred and forty nine thousand. That 13 00:00:44,200 --> 00:00:46,360 Speaker 3: in itself is probably not enough, and maybe even the 14 00:00:46,360 --> 00:00:50,120 Speaker 3: manufacturing numbers not enough. It seems like it might be 15 00:00:50,200 --> 00:00:53,360 Speaker 3: more thinking that these are examples that the FED could 16 00:00:53,360 --> 00:00:56,280 Speaker 3: be falling behind the curve on cutting interest rates. 17 00:00:56,360 --> 00:00:57,920 Speaker 4: How do you see the balance of risk here? 18 00:01:00,000 --> 00:01:00,319 Speaker 5: Thank you. 19 00:01:00,560 --> 00:01:05,200 Speaker 1: Indeed, it's been a tumultuous earning season so far, particularly 20 00:01:05,240 --> 00:01:08,520 Speaker 1: for the megacat tech stocks. I mean, tonight we saw 21 00:01:09,240 --> 00:01:13,600 Speaker 1: really a tale of two cities. But even for Apple, 22 00:01:14,080 --> 00:01:16,600 Speaker 1: who put up you know, an inline quarter gave a 23 00:01:16,640 --> 00:01:20,759 Speaker 1: decent outlook, both in line with expectations, with the stock flat. 24 00:01:21,280 --> 00:01:26,240 Speaker 1: Then Amazon stocked down over five percent revenue and operating profit, 25 00:01:26,640 --> 00:01:31,760 Speaker 1: beating expectations in the quarter, but that guidance a little 26 00:01:31,760 --> 00:01:35,400 Speaker 1: bit light of expectations took the stock down. You know, 27 00:01:35,440 --> 00:01:38,680 Speaker 1: I think in terms of where the FED comes out 28 00:01:38,720 --> 00:01:42,080 Speaker 1: on this, it's a close call. SMP Global Market Intelligence 29 00:01:42,640 --> 00:01:45,800 Speaker 1: had been calling for a December rate cut, but you know, 30 00:01:46,720 --> 00:01:50,360 Speaker 1: looking at the data, you know acknowledges that you know, 31 00:01:50,400 --> 00:01:54,000 Speaker 1: maybe September is starting to look a little bit like 32 00:01:54,080 --> 00:01:56,640 Speaker 1: it's coming on the table. Hard to call at this point. 33 00:01:56,960 --> 00:01:58,560 Speaker 2: So when you look at the themes here, I mean, 34 00:01:58,600 --> 00:02:01,840 Speaker 2: what jumps off the pages are official intelligence? How do 35 00:02:01,920 --> 00:02:04,120 Speaker 2: you see this bet right now? I mean, is it 36 00:02:04,960 --> 00:02:07,520 Speaker 2: something where we can expect more air to come out 37 00:02:07,600 --> 00:02:09,880 Speaker 2: of a I don't want to call it a bubble necessarily, 38 00:02:09,919 --> 00:02:12,840 Speaker 2: but a pocket enthusiasm. 39 00:02:13,360 --> 00:02:17,480 Speaker 1: It's a long term secular trend, and I think a 40 00:02:17,560 --> 00:02:20,760 Speaker 1: lot of the growth we saw it really come into 41 00:02:20,919 --> 00:02:27,520 Speaker 1: earnings revisions pretty aggressively because what happened earlier this year 42 00:02:27,960 --> 00:02:31,440 Speaker 1: was cloud service providers started to really ratchet up their capex. 43 00:02:31,639 --> 00:02:36,840 Speaker 1: That capex ultimately led to earnings revisions at Nvidia, and 44 00:02:37,240 --> 00:02:39,600 Speaker 1: investors started to say, well, who else is going to 45 00:02:39,639 --> 00:02:43,480 Speaker 1: benefit from generative AI? Where else? Maybe where may we 46 00:02:43,560 --> 00:02:47,720 Speaker 1: see these sorts of earnings revisions and especially to the 47 00:02:47,760 --> 00:02:51,160 Speaker 1: magnitude that we've seen it in Vidia. And so I 48 00:02:51,200 --> 00:02:54,760 Speaker 1: think those revisions started to get put into the market, 49 00:02:54,880 --> 00:02:58,280 Speaker 1: started to come into some of these megacap stocks, and 50 00:02:58,360 --> 00:03:00,680 Speaker 1: I think, what's starting to happen. But now as we're 51 00:03:00,680 --> 00:03:05,160 Speaker 1: seeing a normalization of those expectations, as the realities of 52 00:03:05,240 --> 00:03:07,000 Speaker 1: what the market is actually going to do, what it's 53 00:03:07,040 --> 00:03:09,040 Speaker 1: going to deliver, is starting to come to fruition. 54 00:03:10,000 --> 00:03:12,280 Speaker 3: Yeah, when you think about it, the valuations are pretty 55 00:03:12,320 --> 00:03:15,760 Speaker 3: high on these companies, and the hopium is pretty high too. 56 00:03:15,880 --> 00:03:17,680 Speaker 4: That's tied to AI, as Doug. 57 00:03:17,560 --> 00:03:20,120 Speaker 3: Mentioned, And then you know, you look at some of 58 00:03:20,160 --> 00:03:22,920 Speaker 3: these statements like out of Amazon, the earnings actually wasn't 59 00:03:22,960 --> 00:03:25,839 Speaker 3: so bad, but Amazon is saying that profits will take 60 00:03:25,880 --> 00:03:28,960 Speaker 3: a back seat for now too heavy spending on AI. 61 00:03:29,160 --> 00:03:32,360 Speaker 3: So you also have spending levels that investors are fretting with, 62 00:03:32,400 --> 00:03:33,880 Speaker 3: and you add it all up and it's just kind 63 00:03:33,919 --> 00:03:35,320 Speaker 3: of like, well, let's trim here. 64 00:03:36,880 --> 00:03:42,800 Speaker 1: Yeah, I think that's a fair assessment. We've seen capex 65 00:03:42,920 --> 00:03:47,080 Speaker 1: ratcheting up across the board for all of the megacap 66 00:03:47,120 --> 00:03:53,000 Speaker 1: stocks you particularly in the cloud service providers. Meta was 67 00:03:53,080 --> 00:03:57,680 Speaker 1: probably the rare example that didn't exceed expectations in terms 68 00:03:57,720 --> 00:04:02,200 Speaker 1: of their CAPEX, but speaking, they're still spending a lot, 69 00:04:02,600 --> 00:04:05,400 Speaker 1: and the overall space is spending a lot. So I 70 00:04:05,440 --> 00:04:10,200 Speaker 1: think the one beneficiary of this is probably in Nvidia. 71 00:04:10,480 --> 00:04:13,680 Speaker 1: At the end of the day, that is probably not 72 00:04:13,760 --> 00:04:14,640 Speaker 1: going to slow down. 73 00:04:15,560 --> 00:04:17,839 Speaker 2: So when you look at the content that's being created 74 00:04:17,880 --> 00:04:22,279 Speaker 2: by companies in the media space using technology, telecom providers 75 00:04:22,480 --> 00:04:24,800 Speaker 2: as well, that may benefit a little bit from this. 76 00:04:25,680 --> 00:04:28,200 Speaker 2: I'm wondering about the degree to which there's going to 77 00:04:28,200 --> 00:04:30,880 Speaker 2: be pressure on AD sales going forward. And maybe you 78 00:04:30,880 --> 00:04:32,679 Speaker 2: can take us back to what we learned this week 79 00:04:32,680 --> 00:04:35,279 Speaker 2: from Meta platforms. What do you see when you look 80 00:04:35,320 --> 00:04:36,919 Speaker 2: at the AD spending business. 81 00:04:38,560 --> 00:04:44,400 Speaker 1: Yeah, ads are It's it's an interesting backdrop because we 82 00:04:44,480 --> 00:04:48,520 Speaker 1: saw softness in YouTube. Those numbers came in lower than expectations. 83 00:04:48,960 --> 00:04:51,479 Speaker 1: Netflix is saying that their ADS business is off to 84 00:04:51,520 --> 00:04:55,240 Speaker 1: a slow start, but then Meta actually had a pretty 85 00:04:55,240 --> 00:04:58,039 Speaker 1: good quarter. They're actually doing pretty well, and I think 86 00:04:58,080 --> 00:05:02,840 Speaker 1: it you know, there is they are very different business models. 87 00:05:02,839 --> 00:05:08,600 Speaker 1: So the businesses that are aligning and adhering to certain 88 00:05:08,680 --> 00:05:12,520 Speaker 1: aspects of what a customer wants, they're curating it. They're 89 00:05:12,600 --> 00:05:16,800 Speaker 1: leveraging their AI in a way that's aligning ads in 90 00:05:16,839 --> 00:05:21,560 Speaker 1: a way that's creating better curation. Seems to be resonating, 91 00:05:21,600 --> 00:05:23,240 Speaker 1: you know, we're seeing that in the numbers. 92 00:05:24,880 --> 00:05:26,719 Speaker 3: So I want to swing it around to the jobs 93 00:05:26,800 --> 00:05:29,760 Speaker 3: data because we've seen a lot of volatility here. 94 00:05:29,760 --> 00:05:30,960 Speaker 4: I mean, it might very well. 95 00:05:30,800 --> 00:05:34,039 Speaker 3: See volatility the upside if you get a solid number. 96 00:05:34,480 --> 00:05:36,960 Speaker 3: One of the first questions I asked yesterday after the 97 00:05:36,960 --> 00:05:39,719 Speaker 3: FED meeting to our multiple guests on the program was 98 00:05:40,400 --> 00:05:43,800 Speaker 3: didn't jer own Pals sound pretty positive to me? That 99 00:05:43,920 --> 00:05:47,360 Speaker 3: was a key thing. He was like, this economy is humming. 100 00:05:47,440 --> 00:05:50,840 Speaker 3: It is not anywhere close to falling off the table. 101 00:05:51,080 --> 00:05:54,400 Speaker 3: And now we get some disappointing news and investors react 102 00:05:54,400 --> 00:05:56,400 Speaker 3: as though it is falling off the table. So what 103 00:05:56,440 --> 00:06:00,000 Speaker 3: are you expecting with jobs? 104 00:05:59,800 --> 00:06:02,320 Speaker 1: It's hard to call it this at this point, you know, 105 00:06:02,360 --> 00:06:06,960 Speaker 1: I think there is some seasonality and we will just 106 00:06:07,040 --> 00:06:10,080 Speaker 1: really need to look at the sequential data as it 107 00:06:10,120 --> 00:06:14,720 Speaker 1: comes out and hear the further commentary that he gives, 108 00:06:14,800 --> 00:06:17,360 Speaker 1: you know, and I think, you know, it'll be it'll 109 00:06:17,400 --> 00:06:22,159 Speaker 1: be interesting to see how they position over the next 110 00:06:22,160 --> 00:06:28,200 Speaker 1: couple of weeks and what sort of additional feedback we get. 111 00:06:28,360 --> 00:06:31,640 Speaker 1: But yeah, I mean, it wasn't a bright spot today 112 00:06:31,720 --> 00:06:34,880 Speaker 1: for sure, and it certainly spooked the market clearly. 113 00:06:34,880 --> 00:06:36,800 Speaker 2: When you look at the Intel news after the bell 114 00:06:36,920 --> 00:06:40,680 Speaker 2: fifteen thousand workers, that's fifteen percent of Intel's global workforce. 115 00:06:41,040 --> 00:06:43,920 Speaker 2: What do you think of a company like Intel in 116 00:06:43,960 --> 00:06:47,760 Speaker 2: an environment where semiconductors have really been kind of at 117 00:06:47,400 --> 00:06:54,640 Speaker 2: the front end of this trade in artificial intelligence, Intel 118 00:06:54,760 --> 00:06:55,000 Speaker 2: is in. 119 00:06:54,960 --> 00:06:59,680 Speaker 1: An unusual position. They have probably not innovated in the 120 00:06:59,720 --> 00:07:02,039 Speaker 1: same way or invested in the same way that we've 121 00:07:02,080 --> 00:07:05,279 Speaker 1: seen at the at the megacap companies, and may have 122 00:07:05,600 --> 00:07:09,400 Speaker 1: fallen behind in a couple of key areas, and we're 123 00:07:09,440 --> 00:07:13,120 Speaker 1: seeing that come to roosts, particularly in the quarter today. 124 00:07:13,560 --> 00:07:15,000 Speaker 1: You know, one of the other things that I'll go 125 00:07:15,040 --> 00:07:19,240 Speaker 1: back to your earlier question about the jobs number and 126 00:07:19,640 --> 00:07:22,560 Speaker 1: about the consumer. You know, one of the things that 127 00:07:22,640 --> 00:07:26,560 Speaker 1: Tim Cook did call out is how consumers are just 128 00:07:26,840 --> 00:07:30,800 Speaker 1: incredibly deal sensitive. You know that they are really looking 129 00:07:31,560 --> 00:07:36,000 Speaker 1: at promotions, They're very price sensitive, They're avoiding some of 130 00:07:36,080 --> 00:07:39,200 Speaker 1: the higher ticket items. There is some indications of that, 131 00:07:39,920 --> 00:07:42,600 Speaker 1: so there does seem to be some sensitivity at the 132 00:07:42,640 --> 00:07:43,560 Speaker 1: consumer level. 133 00:07:44,720 --> 00:07:47,160 Speaker 3: All right, Melissa, thanks so much for joining us. Back 134 00:07:47,160 --> 00:07:50,400 Speaker 3: to Intel for a moment the previous question. At stock 135 00:07:50,520 --> 00:07:52,360 Speaker 3: is now down more than fifty. 136 00:07:51,960 --> 00:07:53,320 Speaker 4: Percent year to date. 137 00:07:54,000 --> 00:07:57,160 Speaker 3: It's a really interesting story because trying to reshore in 138 00:07:57,160 --> 00:08:00,640 Speaker 3: the United States and that elevates the cost level for sure, 139 00:08:00,640 --> 00:08:02,400 Speaker 3: and now all of a sudden they're having to try 140 00:08:02,400 --> 00:08:05,040 Speaker 3: to really cut costs. So it's one that we'll be 141 00:08:05,080 --> 00:08:08,600 Speaker 3: watching closely. Melissa Otto has been with us here. She's 142 00:08:08,640 --> 00:08:12,320 Speaker 3: with S and P Global Visible Alpha. This is Bloomberg. 143 00:08:18,800 --> 00:08:21,840 Speaker 3: We're joined by Mark German, now Bloomberg Chief correspondent on 144 00:08:21,840 --> 00:08:26,480 Speaker 3: Global Technology, for a closer look at Apple earnings. So 145 00:08:26,520 --> 00:08:30,800 Speaker 3: we focus on China because this is Bloomberg Daybreak Asia. 146 00:08:31,360 --> 00:08:33,480 Speaker 3: We had revenue down six and a half percent to 147 00:08:33,520 --> 00:08:36,800 Speaker 3: fourteen point seven billion in the third quarter. That was 148 00:08:36,840 --> 00:08:40,520 Speaker 3: short of the fifteen point three billion, So in all, 149 00:08:41,120 --> 00:08:43,480 Speaker 3: it sounds like a lot, but it's not very much 150 00:08:43,559 --> 00:08:46,720 Speaker 3: when you compare it to overall sales of eighty five 151 00:08:46,800 --> 00:08:52,160 Speaker 3: point eight billion, almost a rounding error. Things are looking 152 00:08:52,200 --> 00:08:54,720 Speaker 3: pretty good for Apple. Is that fair to say or 153 00:08:54,800 --> 00:08:56,120 Speaker 3: is China a major drag? 154 00:08:57,480 --> 00:09:00,280 Speaker 5: I mean, obviously the third quarter that's finished, and you know, 155 00:09:00,520 --> 00:09:03,000 Speaker 5: the results we got today are a picture in time 156 00:09:03,080 --> 00:09:05,600 Speaker 5: of how Apple is doing financially. So if you look 157 00:09:05,640 --> 00:09:08,600 Speaker 5: at that ninety day period, I think they did really good. 158 00:09:09,480 --> 00:09:12,800 Speaker 5: China side. That is still a billion dollar annual decline, 159 00:09:12,920 --> 00:09:15,040 Speaker 5: it's a little bit better than they did in the 160 00:09:15,080 --> 00:09:16,800 Speaker 5: first half of the year in China, so you are 161 00:09:16,840 --> 00:09:20,480 Speaker 5: seeing some improvement there. The iPhone did decline about one percent. 162 00:09:20,880 --> 00:09:23,680 Speaker 5: Could have been worse, certainly should have and could have 163 00:09:23,720 --> 00:09:26,320 Speaker 5: been better. The one thing they didn't talk about was 164 00:09:26,400 --> 00:09:29,600 Speaker 5: guidance for the fourth quarter in terms of the iPhone. 165 00:09:29,640 --> 00:09:31,240 Speaker 5: The new iPhone is going to go on sale at 166 00:09:31,280 --> 00:09:33,440 Speaker 5: the tail end of Q four, sometime in the second 167 00:09:33,480 --> 00:09:36,480 Speaker 5: half of September, and they didn't say if the iPhone 168 00:09:36,520 --> 00:09:40,000 Speaker 5: revenue is going to accelerate, decelerate, be in line. So 169 00:09:40,120 --> 00:09:43,440 Speaker 5: that makes me think that it's going to basically be 170 00:09:43,520 --> 00:09:46,040 Speaker 5: stagnant on an annual basis, which of course is not 171 00:09:46,080 --> 00:09:48,200 Speaker 5: the end of the world. But here they are hyping 172 00:09:48,240 --> 00:09:50,760 Speaker 5: Apple intelligence and how this is going to drive iPhone 173 00:09:50,760 --> 00:09:54,080 Speaker 5: sales and a new supercycle and such but I don't 174 00:09:54,080 --> 00:09:57,200 Speaker 5: believe that is going to happen. My other takeaway is 175 00:09:57,240 --> 00:10:00,920 Speaker 5: not much talk about the Vision pro. This just launched internationally. 176 00:10:01,160 --> 00:10:03,520 Speaker 5: This is their first new product category in a decade. 177 00:10:04,520 --> 00:10:08,800 Speaker 5: Way overpriced, It's a cumbersome product. It takes a lot 178 00:10:08,800 --> 00:10:11,959 Speaker 5: of energy to actually use it. I was actually using 179 00:10:11,960 --> 00:10:14,839 Speaker 5: it last night. It was kind of painful, and that's 180 00:10:14,960 --> 00:10:17,560 Speaker 5: something that they need to address. Where is the innovation, 181 00:10:17,679 --> 00:10:19,960 Speaker 5: Where is the future of this company? Because I certainly 182 00:10:19,960 --> 00:10:22,640 Speaker 5: think they're lagging an AI and I certainly think that 183 00:10:22,720 --> 00:10:25,400 Speaker 5: their first take at VR is simply not it. 184 00:10:25,840 --> 00:10:27,880 Speaker 2: Do you think there's a danger that Apple is overly 185 00:10:27,920 --> 00:10:31,240 Speaker 2: optimistic about it's future in China, particularly when you look 186 00:10:31,280 --> 00:10:34,320 Speaker 2: at the competition there, and you also look at the 187 00:10:34,360 --> 00:10:38,440 Speaker 2: fact that Apple Intelligence will not be available in China 188 00:10:38,480 --> 00:10:41,680 Speaker 2: at least immediately. Are they is cook overly optimistic? 189 00:10:42,960 --> 00:10:46,000 Speaker 5: I think that there's what they say publicly and there's 190 00:10:46,000 --> 00:10:50,000 Speaker 5: what they feel in their private time right at the office, 191 00:10:50,400 --> 00:10:53,040 Speaker 5: And I think there is quite a bit big of 192 00:10:53,080 --> 00:10:53,680 Speaker 5: a difference. 193 00:10:53,920 --> 00:10:54,120 Speaker 3: Right. 194 00:10:54,240 --> 00:10:56,640 Speaker 5: I mean, publicly, he's going to say all the right things, 195 00:10:56,880 --> 00:11:00,160 Speaker 5: They're incredibly reliant on China. He needs to say that 196 00:11:00,200 --> 00:11:03,880 Speaker 5: they have a very strong relationship with China. From a 197 00:11:03,920 --> 00:11:07,520 Speaker 5: production standpoint, still, the vast majority of products are produced 198 00:11:07,520 --> 00:11:12,040 Speaker 5: at box Con across the Greater China area. At the 199 00:11:12,080 --> 00:11:16,160 Speaker 5: same time, their actions tell a different story, opening new 200 00:11:16,160 --> 00:11:19,640 Speaker 5: retail stores in Southeast Asia, putting a lot of prominence 201 00:11:19,640 --> 00:11:24,880 Speaker 5: on moving production to Malaysia, Vietnam, and most notably India. Right, 202 00:11:25,200 --> 00:11:27,440 Speaker 5: and so, like I said, there's what they say, and 203 00:11:27,480 --> 00:11:30,520 Speaker 5: there's how they feel. And if you go by their actions, 204 00:11:30,559 --> 00:11:33,120 Speaker 5: we actually know how they feel, which is, you know, 205 00:11:33,360 --> 00:11:35,480 Speaker 5: this China thing could be running into a wall at 206 00:11:35,480 --> 00:11:35,920 Speaker 5: some point. 207 00:11:36,360 --> 00:11:38,800 Speaker 3: Yeah, they talked up Malaysia, and then when I saw that, 208 00:11:38,880 --> 00:11:41,800 Speaker 3: I thought, oh boy, you're talking about Malaysia. That's kind 209 00:11:41,840 --> 00:11:47,480 Speaker 3: of interesting. Small country. Anyway, we talked about overconfidence. The 210 00:11:47,960 --> 00:11:51,360 Speaker 3: market itself seems a bit overconfident on Apple. If you 211 00:11:51,840 --> 00:11:54,560 Speaker 3: look at profit up eight percent in this last quarter, 212 00:11:54,960 --> 00:11:57,360 Speaker 3: it's tough to match that up against a forward pe 213 00:11:57,440 --> 00:12:00,600 Speaker 3: of thirty. It means that there's a lot of hope 214 00:12:00,600 --> 00:12:03,640 Speaker 3: that Apple will sell a lot more phones because of AI. 215 00:12:03,760 --> 00:12:06,760 Speaker 3: So we need to ask you, is AI that great 216 00:12:06,960 --> 00:12:10,040 Speaker 3: in Apple intelligence that people will buy a lot of phones? 217 00:12:10,520 --> 00:12:14,040 Speaker 5: No, no, no, I've been playing with Apple intelligence. The 218 00:12:14,320 --> 00:12:17,000 Speaker 5: initial beta version for developers over the last week or so. 219 00:12:17,480 --> 00:12:20,080 Speaker 5: There's nothing that I'm seeing here that provides a compelling 220 00:12:20,160 --> 00:12:23,640 Speaker 5: reasons to update. And I truly mean that. I think 221 00:12:23,679 --> 00:12:26,200 Speaker 5: if you're going to see AI induced upgrades, that's something 222 00:12:26,240 --> 00:12:28,560 Speaker 5: that's going to happen in the second half of next 223 00:12:28,640 --> 00:12:31,160 Speaker 5: year when you have sort of the full scope of 224 00:12:31,200 --> 00:12:34,080 Speaker 5: those changes. Right based on the earnings call and the 225 00:12:34,160 --> 00:12:37,000 Speaker 5: questions that were being asked by analysts, one, I don't 226 00:12:37,000 --> 00:12:42,000 Speaker 5: believe they understand how and when Apple Intelligence is actually 227 00:12:42,120 --> 00:12:44,920 Speaker 5: rolling out, and I don't believe they've actually used it. 228 00:12:45,480 --> 00:12:47,000 Speaker 5: So maybe if you're going to get on an Apple 229 00:12:47,040 --> 00:12:50,200 Speaker 5: earnings call, you probably want to do that to me. 230 00:12:51,480 --> 00:12:54,000 Speaker 5: You have really nice writing tools, so it can rewrite 231 00:12:54,080 --> 00:12:57,000 Speaker 5: paragraphs and essays for you make things either sound more 232 00:12:57,000 --> 00:13:01,600 Speaker 5: friendly or more professional, So that's new. There's proofreading, which 233 00:13:01,600 --> 00:13:05,120 Speaker 5: we've had in Microsoft Word and Apple Zone iWork pages 234 00:13:05,160 --> 00:13:09,640 Speaker 5: for multiple decades. The best feature of Apple Intelligence is 235 00:13:09,679 --> 00:13:12,439 Speaker 5: being able to record phone calls, whether or not you're 236 00:13:12,480 --> 00:13:14,760 Speaker 5: allowed to do that, and whatever country or state you're 237 00:13:14,760 --> 00:13:16,800 Speaker 5: in as another question, and then at the end it 238 00:13:16,840 --> 00:13:18,960 Speaker 5: can pop out a summary of everything that was discussed. 239 00:13:19,000 --> 00:13:23,000 Speaker 5: So that's pretty nifty. But the other stuff is very 240 00:13:23,040 --> 00:13:24,839 Speaker 5: much par for the course, not a lot of reason 241 00:13:24,880 --> 00:13:26,160 Speaker 5: to buy a new phone if you ask me. 242 00:13:26,320 --> 00:13:28,440 Speaker 2: So, you make an interesting point where you were able 243 00:13:28,480 --> 00:13:31,880 Speaker 2: to access the beta version of Apple Intelligence. I think 244 00:13:31,920 --> 00:13:34,360 Speaker 2: a lot of the other software developers were able to 245 00:13:34,360 --> 00:13:36,520 Speaker 2: get a peek at this too. Talk to us about 246 00:13:36,559 --> 00:13:40,480 Speaker 2: the degree to which Apple is really banking on those 247 00:13:40,520 --> 00:13:46,920 Speaker 2: relationships to drive innovation in Apple Intelligence. It's the app developers, right. 248 00:13:48,360 --> 00:13:51,560 Speaker 5: They are banking heavily on this app ecosystem, in this 249 00:13:51,640 --> 00:13:55,880 Speaker 5: app paradigm, and why wouldn't they. They made twenty four 250 00:13:55,920 --> 00:13:59,480 Speaker 5: billion dollars in the third quarter, mostly due to the 251 00:13:59,480 --> 00:14:02,680 Speaker 5: App Store, and that's the services number. I have to 252 00:14:02,720 --> 00:14:05,000 Speaker 5: tell you, though, I really think the industry is shifting 253 00:14:05,000 --> 00:14:07,280 Speaker 5: away from this app paradigm where you go into an app, 254 00:14:07,320 --> 00:14:10,120 Speaker 5: you launch the app, and I think it's moving way 255 00:14:10,160 --> 00:14:13,480 Speaker 5: more towards deeply integrated AI and cloud, and I think 256 00:14:13,520 --> 00:14:15,440 Speaker 5: over time they're gonna have to move away from this paradigm. 257 00:14:15,480 --> 00:14:18,960 Speaker 5: So they're banking on I think an an an aging idea. 258 00:14:19,840 --> 00:14:21,840 Speaker 5: It's interesting because Tim Cook said it's now in the 259 00:14:21,840 --> 00:14:24,000 Speaker 5: hands of developers, which is true, and he wants to 260 00:14:24,000 --> 00:14:27,200 Speaker 5: see what developers make with it. But in order for 261 00:14:27,240 --> 00:14:30,880 Speaker 5: developers to integrate AI and Apple Intelligence into their applications, 262 00:14:31,240 --> 00:14:34,440 Speaker 5: there have to be frameworks and developer tools available to 263 00:14:34,480 --> 00:14:37,840 Speaker 5: do so, and to date they haven't released any of 264 00:14:37,840 --> 00:14:39,160 Speaker 5: those frameworks as developers. 265 00:14:39,440 --> 00:14:41,120 Speaker 4: All right, Mark, thank you for joining us. 266 00:14:41,120 --> 00:14:45,520 Speaker 3: Mark German and Bloomberg chief correspondent on global technology. 267 00:14:50,920 --> 00:14:53,160 Speaker 2: After the bell, we heard from Amazon and the company 268 00:14:53,200 --> 00:14:56,360 Speaker 2: reported quarterly sales pretty much in line with estimates. However, 269 00:14:56,960 --> 00:14:59,960 Speaker 2: at the same time, Amazon projected profit for the current 270 00:15:00,160 --> 00:15:03,840 Speaker 2: quarter well below estimates. The message seems to be profits 271 00:15:03,880 --> 00:15:05,680 Speaker 2: are going to take a back seat while the company 272 00:15:05,680 --> 00:15:09,640 Speaker 2: spends heavily on artificial intelligence. Let's take a closer look 273 00:15:09,680 --> 00:15:12,880 Speaker 2: now with Bloomberg Spencer Soper. He is our e commerce 274 00:15:12,960 --> 00:15:15,880 Speaker 2: reporter joining us from Seattle. Good of you to join 275 00:15:15,880 --> 00:15:17,760 Speaker 2: a spencer. I'm sure it's been a busy day for you. 276 00:15:17,840 --> 00:15:22,120 Speaker 2: This seems slightly reminiscent of the best Jeff Bezos days 277 00:15:22,400 --> 00:15:24,800 Speaker 2: in the early days, right where you spend at the 278 00:15:25,200 --> 00:15:27,680 Speaker 2: expensive profits. Is that the way you see it? 279 00:15:29,280 --> 00:15:33,160 Speaker 6: Yeah, that's That's pretty much been the constant push and 280 00:15:33,240 --> 00:15:37,200 Speaker 6: pull between Amazon and the investment community. It's just now 281 00:15:37,200 --> 00:15:41,920 Speaker 6: it's happening under Jasse instead of you know, current CEO 282 00:15:42,000 --> 00:15:46,160 Speaker 6: Andy Jassey instead of founder Jeff Bezos, and Jasse made 283 00:15:46,200 --> 00:15:51,240 Speaker 6: the case to investors on the earnings call why he 284 00:15:51,360 --> 00:15:54,400 Speaker 6: thinks this is such a big opportunity and why Amazon 285 00:15:54,520 --> 00:15:56,760 Speaker 6: needs to spend now so that it could meet demand 286 00:15:57,240 --> 00:16:01,640 Speaker 6: down the road. And the CFO even said, look, this 287 00:16:01,720 --> 00:16:03,760 Speaker 6: is a this is a good indicator. You know, it's 288 00:16:03,800 --> 00:16:06,520 Speaker 6: good that we expect our business to grow this much 289 00:16:06,520 --> 00:16:08,880 Speaker 6: and that we're investing in it now. But yeah, there's 290 00:16:09,040 --> 00:16:12,880 Speaker 6: there's still just some skepticism in the investment community about 291 00:16:13,240 --> 00:16:18,360 Speaker 6: all of this artificial intelligence infrastructure investment and when it could. 292 00:16:18,200 --> 00:16:21,760 Speaker 3: Pay off, and to a degree it's already paying off, 293 00:16:21,800 --> 00:16:24,600 Speaker 3: because you did have a beat on AWS, which I 294 00:16:24,600 --> 00:16:28,240 Speaker 3: think a lot of analysts and really focusing on that issue, 295 00:16:28,440 --> 00:16:32,080 Speaker 3: maybe up more than the seventeen and change percent that 296 00:16:32,200 --> 00:16:35,640 Speaker 3: was expected, so you get it up nineteen percent, but 297 00:16:35,800 --> 00:16:37,040 Speaker 3: just that it was overshadowed. 298 00:16:38,520 --> 00:16:44,960 Speaker 6: Yeah, and you have to peel apart aws's performance from 299 00:16:46,040 --> 00:16:49,240 Speaker 6: you know, artificial intelligence investments and future growth and its 300 00:16:49,280 --> 00:16:52,520 Speaker 6: core business of just cloud computing and you know, data 301 00:16:52,560 --> 00:16:56,000 Speaker 6: centers that are accessed by via the Internet, because that's 302 00:16:56,000 --> 00:16:57,800 Speaker 6: still a very big business as well, And what they 303 00:16:57,840 --> 00:17:00,160 Speaker 6: were saying is that you know, folks that had kindkind 304 00:17:00,160 --> 00:17:03,800 Speaker 6: of hit the pause on those migrations, you know, from 305 00:17:04,040 --> 00:17:08,240 Speaker 6: from having their own data centers to to using Amazon 306 00:17:08,280 --> 00:17:11,920 Speaker 6: Web Services data centers, that that folks kind of stepped 307 00:17:12,080 --> 00:17:14,040 Speaker 6: that back up, that their customers were back in an 308 00:17:14,080 --> 00:17:17,359 Speaker 6: investment mode and and doing that after after a pause. 309 00:17:17,400 --> 00:17:19,560 Speaker 6: So that was part of the part of the AWS 310 00:17:19,680 --> 00:17:21,920 Speaker 6: B And then on the miss you have to look 311 00:17:21,960 --> 00:17:26,359 Speaker 6: at some softness and some concerns around the consumer. For 312 00:17:26,440 --> 00:17:29,920 Speaker 6: Amazon's core e commerce business. Let's not forget they make 313 00:17:30,000 --> 00:17:33,840 Speaker 6: most of their money, you know, selling things online, and 314 00:17:34,520 --> 00:17:40,400 Speaker 6: that's uh, that's showing some signs of weakness from the consumer. 315 00:17:40,440 --> 00:17:43,959 Speaker 6: People are trading down, buying cheaper things, and so that 316 00:17:44,040 --> 00:17:46,480 Speaker 6: is affecting their outlook and profitability. 317 00:17:46,640 --> 00:17:49,240 Speaker 2: I go back to Bezos again, one of his great sayings, 318 00:17:49,359 --> 00:17:52,200 Speaker 2: your margin is my opportunity. How are the margins holding 319 00:17:52,280 --> 00:17:55,159 Speaker 2: up for Amazon right now? On the retail side. The 320 00:17:55,200 --> 00:17:58,360 Speaker 2: online retail business that they're. 321 00:17:58,160 --> 00:18:01,600 Speaker 6: Saying is is doing is doing hey, and the danger 322 00:18:02,359 --> 00:18:05,440 Speaker 6: so they're they're making they're they're making improvements in efficiency, 323 00:18:05,920 --> 00:18:08,720 Speaker 6: which is helping the margins. But then when you have 324 00:18:08,760 --> 00:18:12,000 Speaker 6: people trading down and buying cheaper goods. Generally, a cheaper 325 00:18:12,040 --> 00:18:14,600 Speaker 6: product that the same size as a more expensive product 326 00:18:14,640 --> 00:18:17,360 Speaker 6: is still cost the cost the same amount to put 327 00:18:17,359 --> 00:18:18,840 Speaker 6: it in a box and get it to your house, 328 00:18:19,280 --> 00:18:22,879 Speaker 6: you know. So so that's the that's the margin pressure there, 329 00:18:23,240 --> 00:18:26,639 Speaker 6: that's kind of offsetting the progress they're making on on 330 00:18:26,680 --> 00:18:30,120 Speaker 6: improving efficiency. So there there's some push and pull there 331 00:18:30,320 --> 00:18:32,879 Speaker 6: as as well. And I think investors are probably just 332 00:18:32,880 --> 00:18:37,080 Speaker 6: worried that the consumer sentiment that that that could last. 333 00:18:37,400 --> 00:18:39,919 Speaker 6: And Amazon even hinted at that, saying it's it's just 334 00:18:40,000 --> 00:18:43,560 Speaker 6: very difficult to forecast right now, and they mentioned just 335 00:18:43,600 --> 00:18:46,480 Speaker 6: a lot of what they described as distractions with like 336 00:18:46,640 --> 00:18:50,280 Speaker 6: the election in the US and UH and the Summer Olympics. 337 00:18:50,680 --> 00:18:54,359 Speaker 3: On e commerce, a lot of competition from Ali Express 338 00:18:54,480 --> 00:18:56,600 Speaker 3: and some of the other Chinese players like Shean. 339 00:18:58,760 --> 00:19:02,320 Speaker 6: Yeah, you're definitely seeing step the competition, you know, domestically 340 00:19:02,359 --> 00:19:05,760 Speaker 6: from the likes of Walmart, it has a better e 341 00:19:05,800 --> 00:19:10,200 Speaker 6: commerce game and is offering Amazon like subscriptions. And then yeah, 342 00:19:10,200 --> 00:19:13,320 Speaker 6: you're also seeing this factory direct model from companies like 343 00:19:13,359 --> 00:19:16,720 Speaker 6: Timu and she In that's really making inroads because it's 344 00:19:16,720 --> 00:19:20,280 Speaker 6: a it can be a quite staggering price difference. If 345 00:19:20,320 --> 00:19:22,680 Speaker 6: you find just some kind of generic product on Amazon 346 00:19:23,000 --> 00:19:26,080 Speaker 6: and then cross reference and find the same thing on Timu, 347 00:19:26,160 --> 00:19:27,840 Speaker 6: you might you might wait a few more days to 348 00:19:27,840 --> 00:19:30,040 Speaker 6: get it, but you can save a lot of money. 349 00:19:30,040 --> 00:19:32,280 Speaker 6: I mean, the difference can be like fifty seventy five 350 00:19:32,359 --> 00:19:33,840 Speaker 6: percent in price. 351 00:19:34,119 --> 00:19:36,000 Speaker 2: Hey, Spencer, thank you so much for making time to 352 00:19:36,080 --> 00:19:38,919 Speaker 2: chat with us about Amazon. Spencer Sober there Bloomberg e 353 00:19:39,080 --> 00:19:43,560 Speaker 2: commerce reporter joining us from Seattle here on Daybreak Asia. 354 00:19:48,920 --> 00:19:49,040 Speaker 5: Well. 355 00:19:49,119 --> 00:19:51,760 Speaker 3: Joining us now on the program is Mark Matthews, head 356 00:19:51,760 --> 00:19:56,600 Speaker 3: of Asia Research at Julius Bear to talk about markets, Mark, 357 00:19:57,119 --> 00:19:59,040 Speaker 3: the markets are pretty jittery here. 358 00:19:58,920 --> 00:19:59,520 Speaker 4: At the moment. 359 00:19:59,840 --> 00:20:03,080 Speaker 3: More we've seen some pretty big sell offs on stocks. 360 00:20:03,119 --> 00:20:06,560 Speaker 3: You see that as tied to valuation more or to 361 00:20:06,800 --> 00:20:10,280 Speaker 3: maybe now fears that growth is slowing, not only in 362 00:20:10,320 --> 00:20:11,440 Speaker 3: the US but elsewhere. 363 00:20:12,440 --> 00:20:15,120 Speaker 7: Brian, I think it's very much the first one, and 364 00:20:15,160 --> 00:20:19,639 Speaker 7: it's very much concentrated in the technology sector, and a 365 00:20:19,680 --> 00:20:23,919 Speaker 7: big story has emerged around the investments that big technology 366 00:20:23,920 --> 00:20:26,840 Speaker 7: companies are making to get ready for the new AI world. 367 00:20:27,600 --> 00:20:29,720 Speaker 7: And I think they're kind of darned if they do 368 00:20:29,760 --> 00:20:32,080 Speaker 7: and darned if they don't, because On the one hand, 369 00:20:32,800 --> 00:20:35,520 Speaker 7: if they don't make these investments in AI, they'll be 370 00:20:35,880 --> 00:20:39,359 Speaker 7: seen as failing to innovate and on their way to 371 00:20:39,400 --> 00:20:42,800 Speaker 7: becoming like a Kodak or a Blockbuster. On the other hand, 372 00:20:42,800 --> 00:20:45,000 Speaker 7: if they do make these big investments, then they'll be 373 00:20:45,080 --> 00:20:48,359 Speaker 7: seen as putting capital at risk for something that's a 374 00:20:48,359 --> 00:20:52,919 Speaker 7: big unknown, and that I think is what's causing the volatility. 375 00:20:52,920 --> 00:20:56,000 Speaker 7: If you exclude technology, the rest of the market, in 376 00:20:56,040 --> 00:20:57,280 Speaker 7: my mind, is pretty solid. 377 00:20:57,640 --> 00:21:00,199 Speaker 2: Yeah, it held up remarkably well, and I'm wondering if 378 00:21:00,280 --> 00:21:03,000 Speaker 2: this narrative having to do with the FED being behind 379 00:21:03,080 --> 00:21:06,360 Speaker 2: the curve potentially is a little overblown. Would you say 380 00:21:06,359 --> 00:21:07,080 Speaker 2: that's possible. 381 00:21:07,920 --> 00:21:08,359 Speaker 4: I would. 382 00:21:08,400 --> 00:21:10,360 Speaker 7: I mean, the first thing I would say is there 383 00:21:10,400 --> 00:21:14,520 Speaker 7: are many recessions that were forecasts that never happened, But 384 00:21:14,560 --> 00:21:18,040 Speaker 7: there were equally as many recessions that did have forecast 385 00:21:18,200 --> 00:21:22,360 Speaker 7: did happen. They weren't forecasts, So we're notoriously bad at 386 00:21:22,359 --> 00:21:26,399 Speaker 7: predicting recessions. But to the best of my ability, I 387 00:21:26,400 --> 00:21:29,719 Speaker 7: don't see one on the horizon. We're looking at GDP 388 00:21:29,840 --> 00:21:32,639 Speaker 7: growth above two percent in the US next year. I 389 00:21:32,680 --> 00:21:36,920 Speaker 7: know there was a lot of noise around that ism 390 00:21:37,040 --> 00:21:40,720 Speaker 7: manufacturing PMI number for July that came out last night 391 00:21:40,760 --> 00:21:43,720 Speaker 7: at forty six point eight. But I just point out 392 00:21:43,760 --> 00:21:46,800 Speaker 7: that number was around forty six all of last year. 393 00:21:47,040 --> 00:21:50,960 Speaker 7: We didn't have a recession this year. Manufacturing has not 394 00:21:51,080 --> 00:21:53,480 Speaker 7: been the driver of the economy for the last few years. 395 00:21:54,000 --> 00:21:57,359 Speaker 7: It's less than ten percent of GDP, eight percent of employment. 396 00:21:59,359 --> 00:22:02,480 Speaker 7: From what I can see, the economy is still strong. 397 00:22:03,920 --> 00:22:06,440 Speaker 4: Yeah, and that's what we heard from the Fed chief yesterday. 398 00:22:06,840 --> 00:22:09,960 Speaker 3: He was actually quite strident in talking about how growth 399 00:22:10,080 --> 00:22:13,800 Speaker 3: was pretty solid. I'm imagining that you're somebody who really 400 00:22:13,880 --> 00:22:17,360 Speaker 3: likes the breadth that we've seen of late in markets. 401 00:22:17,920 --> 00:22:20,520 Speaker 3: Do you think that that is maybe questioned a little 402 00:22:20,520 --> 00:22:23,800 Speaker 3: bit here, given that the market seems to be suggesting 403 00:22:23,840 --> 00:22:25,000 Speaker 3: that growth is falling off. 404 00:22:26,080 --> 00:22:30,640 Speaker 7: Brian, We've done studies on breadth and it doesn't appear 405 00:22:30,720 --> 00:22:34,400 Speaker 7: to be a leading indicator for the end of bull markets. 406 00:22:34,640 --> 00:22:37,719 Speaker 7: And so I know it sounds counterintuitive when you have 407 00:22:38,359 --> 00:22:41,160 Speaker 7: less and less stocks driving the market higher, that should 408 00:22:41,200 --> 00:22:43,800 Speaker 7: be a signal the bull market's coming to an end. 409 00:22:45,400 --> 00:22:47,639 Speaker 7: In fact, it's not true. But now we're getting a 410 00:22:47,680 --> 00:22:52,480 Speaker 7: broadening in the stocks participating. I mean, you can't say 411 00:22:52,480 --> 00:22:55,480 Speaker 7: it's a bad thing. I think it probably is telling 412 00:22:55,520 --> 00:22:59,720 Speaker 7: you something about the economy in the sense that they're 413 00:22:59,720 --> 00:23:03,000 Speaker 7: more cyclical stocks like the home builders that are starting 414 00:23:03,040 --> 00:23:08,720 Speaker 7: to break higher. So the S and P did tremendously 415 00:23:08,760 --> 00:23:14,359 Speaker 7: well up until July. In fact, in the last thirty years, 416 00:23:14,400 --> 00:23:19,439 Speaker 7: there were only three years that did better until in 417 00:23:19,440 --> 00:23:21,960 Speaker 7: the middle of July. And what I noticed is that 418 00:23:22,240 --> 00:23:25,760 Speaker 7: each of those three years then had a pullback throughout 419 00:23:25,760 --> 00:23:29,520 Speaker 7: the remainder of July at August. One of them, actually 420 00:23:29,600 --> 00:23:32,719 Speaker 7: the pullback lasted up until October, and then they rallied 421 00:23:32,760 --> 00:23:36,040 Speaker 7: into the end of the year. So we think that 422 00:23:36,400 --> 00:23:38,440 Speaker 7: we're in a bull market, but of course they don't 423 00:23:38,440 --> 00:23:41,000 Speaker 7: go up in a straight line. We are in the 424 00:23:41,040 --> 00:23:42,000 Speaker 7: midst of a correction. 425 00:23:42,119 --> 00:23:42,399 Speaker 4: Now. 426 00:23:43,720 --> 00:23:47,800 Speaker 7: I would be surprised if the correction's over. Hard to 427 00:23:47,800 --> 00:23:49,800 Speaker 7: predict these things, but I'd be surprised. 428 00:23:49,880 --> 00:23:52,000 Speaker 2: I'm wondering if you could say the same thing about 429 00:23:52,000 --> 00:23:54,760 Speaker 2: the Japanese equity market. We're seeing the nie K take 430 00:23:54,800 --> 00:23:56,680 Speaker 2: it on the chin today. We're down about four point 431 00:23:56,720 --> 00:23:59,199 Speaker 2: eight percent at the moment I ran the chart for 432 00:23:59,280 --> 00:24:02,639 Speaker 2: the end against the greenback. For the last four trading 433 00:24:02,720 --> 00:24:06,600 Speaker 2: days in New York, we're down about three percent. Or 434 00:24:06,640 --> 00:24:09,600 Speaker 2: so against the dollar. What's happening here? I mean, is 435 00:24:09,640 --> 00:24:13,040 Speaker 2: this a delayed reaction, something that was inevitable when the 436 00:24:13,040 --> 00:24:14,359 Speaker 2: boj began to tighten. 437 00:24:15,520 --> 00:24:19,480 Speaker 7: I kind of think it was inevitable because you might 438 00:24:19,520 --> 00:24:22,960 Speaker 7: be aware of that famous big Mac index that measures 439 00:24:23,040 --> 00:24:26,800 Speaker 7: the cost of a McDonald's hamburger around the world, and 440 00:24:27,280 --> 00:24:31,040 Speaker 7: all the rich countries, obviously the big macs are expensive, 441 00:24:31,080 --> 00:24:34,400 Speaker 7: and then in the poorer countries, big macs are cheap. Well, 442 00:24:34,760 --> 00:24:37,800 Speaker 7: there was one country for the last couple of years 443 00:24:37,840 --> 00:24:40,679 Speaker 7: that was just sticking out like a sore thumb because 444 00:24:40,960 --> 00:24:45,560 Speaker 7: right at the bottom, you know, with Vietnam and China, 445 00:24:46,320 --> 00:24:49,199 Speaker 7: was Japan. And it didn't make any sense that a 446 00:24:49,240 --> 00:24:52,040 Speaker 7: big max should cost the same in Tokyo as it 447 00:24:52,080 --> 00:24:55,600 Speaker 7: does in ho Chimen City because people in Japan make 448 00:24:56,160 --> 00:24:59,920 Speaker 7: ten times more than people in Vietnam. So I feel 449 00:25:00,000 --> 00:25:02,440 Speaker 7: it's inevitable. And when you look at the short positions 450 00:25:02,520 --> 00:25:05,800 Speaker 7: in the end on the CME, the last time they 451 00:25:05,800 --> 00:25:08,200 Speaker 7: were this big was in the summer of two thousand 452 00:25:08,200 --> 00:25:11,040 Speaker 7: and seven. There was in fact no change in Bank 453 00:25:11,080 --> 00:25:13,800 Speaker 7: of Japan policy in the summer of two thousand and seven, 454 00:25:14,119 --> 00:25:16,880 Speaker 7: but there was an unwind because the shorts just got 455 00:25:16,920 --> 00:25:20,520 Speaker 7: so extreme, and that became like a snowball effect, and 456 00:25:20,560 --> 00:25:22,800 Speaker 7: then dollar end started going down. In other words, the 457 00:25:22,920 --> 00:25:25,280 Speaker 7: end went up. Well, what we've had this time is 458 00:25:25,480 --> 00:25:29,800 Speaker 7: a big policy change. Nobody expected boj hiking by twenty 459 00:25:29,840 --> 00:25:35,240 Speaker 7: basis points. I'm not surprised the equity markets reacting negatively, 460 00:25:35,440 --> 00:25:38,919 Speaker 7: because even if Japanese corporates do hedge, they don't hedge 461 00:25:38,920 --> 00:25:41,760 Speaker 7: for you know, ten years. They probably hedge two or 462 00:25:41,800 --> 00:25:42,840 Speaker 7: three years forward. 463 00:25:43,000 --> 00:25:46,000 Speaker 3: But it's a bit formulaic, isn't it to yen strength? 464 00:25:46,040 --> 00:25:48,639 Speaker 3: So sell down equity, I know, And we had the 465 00:25:48,840 --> 00:25:53,200 Speaker 3: end here in early April, and you know we also 466 00:25:53,280 --> 00:25:58,760 Speaker 3: had the Nike pushing up over forty one thousand. So ultimately, 467 00:25:58,800 --> 00:26:01,720 Speaker 3: I suppose in time these things get corrected and there's 468 00:26:01,720 --> 00:26:03,840 Speaker 3: a bit of mean reversion. Whatever. Would you be a 469 00:26:03,880 --> 00:26:06,400 Speaker 3: buyer of Japanese equities here or cautious? 470 00:26:06,760 --> 00:26:07,840 Speaker 4: I would be a buyer. 471 00:26:08,720 --> 00:26:11,520 Speaker 7: I do think that, you know, we need to see 472 00:26:11,560 --> 00:26:15,640 Speaker 7: some fresh forecasts for the dollar yen. I mean most 473 00:26:15,680 --> 00:26:18,480 Speaker 7: of them are kind of around one sixty one sixty five. 474 00:26:19,160 --> 00:26:22,240 Speaker 7: We need to see the market pricing in a yen 475 00:26:22,359 --> 00:26:25,480 Speaker 7: that is no longer just going down and down. And down, 476 00:26:26,720 --> 00:26:29,440 Speaker 7: and I think that's what's that sort of understood, and 477 00:26:31,560 --> 00:26:34,480 Speaker 7: I think then the stock market can start to go higher. 478 00:26:34,480 --> 00:26:37,200 Speaker 7: But the reason that correlation exists is because around forty 479 00:26:37,200 --> 00:26:43,560 Speaker 7: percent of nick A revenues are from overseas. But I think, 480 00:26:43,760 --> 00:26:46,639 Speaker 7: you know, the Bank of Japan probably is pretty happy 481 00:26:46,680 --> 00:26:48,800 Speaker 7: with the end around where it is now. They've done 482 00:26:48,800 --> 00:26:51,000 Speaker 7: what they wanted to do. I don't see them raising 483 00:26:51,080 --> 00:26:52,879 Speaker 7: rates a whole bunch more going forward. 484 00:26:53,160 --> 00:26:55,760 Speaker 2: So let's flip it around very quickly. Last question, Mark, 485 00:26:55,760 --> 00:26:59,040 Speaker 2: I can give you about thirty seconds the dollar its strength. 486 00:26:59,119 --> 00:27:02,200 Speaker 2: I mean, is are the best days for the greenback over? 487 00:27:02,240 --> 00:27:05,240 Speaker 2: Particularly if you're talking about a FED that is poised 488 00:27:05,280 --> 00:27:06,040 Speaker 2: to cut. 489 00:27:07,600 --> 00:27:10,119 Speaker 7: Well, the opposite side of the coin is once the 490 00:27:10,200 --> 00:27:12,800 Speaker 7: FED cuts, that's the green light for all the other 491 00:27:12,840 --> 00:27:15,200 Speaker 7: central banks to cut too. All the other central banks 492 00:27:15,240 --> 00:27:17,240 Speaker 7: have been waiting for this to happen, and of course 493 00:27:17,240 --> 00:27:20,720 Speaker 7: a couple have gone before, like the Bank of Canada ECB. 494 00:27:20,960 --> 00:27:26,239 Speaker 7: And I would say that on balance, if everybody's going 495 00:27:26,280 --> 00:27:28,600 Speaker 7: to be bringing their rates down, then I don't see 496 00:27:28,640 --> 00:27:30,160 Speaker 7: why the dollars. 497 00:27:29,880 --> 00:27:31,840 Speaker 4: Should just not trade sideways. 498 00:27:32,960 --> 00:27:35,320 Speaker 3: All right, Mark, thank you for coming into our studios 499 00:27:35,359 --> 00:27:37,920 Speaker 3: in Singapore and joining us here live on the program. 500 00:27:37,920 --> 00:27:41,400 Speaker 3: Mark Matthews, head of Asia Research at Julius Bear. 501 00:27:42,200 --> 00:27:45,159 Speaker 2: This has been the Bloomberg Daybreak Asia podcast, bringing you 502 00:27:45,200 --> 00:27:48,320 Speaker 2: the stories making news and moving markets in the Asia Pacific. 503 00:27:48,840 --> 00:27:51,960 Speaker 2: Visit the Bloomberg Podcast channel on YouTube to get more 504 00:27:52,000 --> 00:27:55,600 Speaker 2: episodes of this and other shows from Bloomberg. Subscribe to 505 00:27:55,640 --> 00:27:59,399 Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen, 506 00:27:59,480 --> 00:28:02,600 Speaker 2: and he's on Bloomberg Radio, the Bloomberg Terminal, and the 507 00:28:02,600 --> 00:28:03,680 Speaker 2: Bloomberg Business app.