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Speaker 2: App after the bill. Today, Netflix posted its best start
Speaker 2: to the year since twenty twenty, Netflix adding nine point
Speaker 2: three three million customers in the first quarter of twenty
Speaker 2: twenty four. That's nearly double the average estimate from analysts.
Speaker 2: Despite that, Netflix shares we're down about five percent in
Speaker 2: late trading. The streamer reported a weaker than expected second
Speaker 2: quarter revenue forecast. Joining us now for some discussion of
Speaker 2: this is Gita Ranganathan, Bloomberg Intelligence US media analyst, to
Speaker 2: take a closer look. So, Gita, Netflix, Well, pretty strong rebound,
Speaker 2: I think you have to say, albeit with a few qualifications.
Speaker 2: On balance, how do you read these results?
Speaker 3: Very very strong results, without a doubt. We're seeing really
Speaker 3: good momentum when it comes to the subscribers. And the
Speaker 3: big story of course for Netflix is that they are
Speaker 3: trying to balance subscriber growth along with their financial metrics.
Speaker 3: So the most important metrics here being you know, revenue growth,
Speaker 3: and they were guiding to or they were targeting rather
Speaker 3: double digit revenue gains, which they delivered and will continue
Speaker 3: to deliver it through the rest of the year. And
Speaker 3: then of course is profitability. They're one of the only
Speaker 3: streamers right now to have very very strong profitability metrics,
Speaker 3: and you know, they actually upped their guidance when it
Speaker 3: came to operating margins. So on balance, a very very
Speaker 3: strong report card, although you did point out the slightly
Speaker 3: muted outlook, which is why we're seeing the share reaction.
Speaker 1: Gaeta, I'm trying to understand whether or not this growth
Speaker 1: is being powered by original programming or crack down on
Speaker 1: password sharing, which is it?
Speaker 4: So it really is.
Speaker 3: I think the biggest driver of this subscriber momentum that
Speaker 3: we're seeing is really the password sharing initiative. Netflix had
Speaker 3: initially identified about one hundred million global households that we're
Speaker 3: not paying for the service, and we know that they've
Speaker 3: cracked down on password sharing across all of their global markets,
Speaker 3: so this is really the biggest driver. They haven't exactly
Speaker 3: outlined how much they've captured or how much is left.
Speaker 3: But you know, just kind of given the guidance and
Speaker 3: the fact that they alluded to, you know, much slower
Speaker 3: subscriber growth in the second half of twenty twenty four
Speaker 3: versus the first half, suggests to us that, you know,
Speaker 3: the positive tailwinds from this password sharing crackdown will start
Speaker 3: to fade pretty soon.
Speaker 2: Now. Netflix shares were up seventy one percent since October, so,
Speaker 2: to be fair, a five percent pullback is probably not
Speaker 2: very likely an indictment. It was a good quarter, and
Speaker 2: you said that, but it's important to talk about the
Speaker 2: qualifications too, and Doug raised one. Perhaps another might be
Speaker 2: that it's going to the company is going to stop
Speaker 2: reporting the number of subscribers. Now, that would raise a
Speaker 2: few questions among some what do you see as the
Speaker 2: reasons for that?
Speaker 4: What are you hearing?
Speaker 3: Yeah, so, I think what they said is that there
Speaker 3: really are so many moving parts to this story. Right
Speaker 3: in the in the early days of growth, it was
Speaker 3: really just a very very kind of a plain vanilla story.
Speaker 3: You had more subscribers, you charge them whatever amount you
Speaker 3: were charging them, and you know, you kind of had
Speaker 3: this whole growth model. It's kind of become much more
Speaker 3: nuanced right now because we're kind of reaching this very
Speaker 3: mature stage in the Netflix narrative, and they are they
Speaker 3: have a lot of growth levers right Aizing is is
Speaker 3: a huge lever that is going to kind of start
Speaker 3: ramping up. They're probably going to start introducing new plans
Speaker 3: at different price points in different countries, and so it's
Speaker 3: kind of becoming harder and harder for them to parse
Speaker 3: out everything. And I think that is one of the
Speaker 3: reasons why they are suggesting that they don't want to
Speaker 3: be tied down to the subscriber metric because we know
Speaker 3: that every time Netflix reports, you know, the subscriber numbers,
Speaker 3: there is just so much volatility and so much noise
Speaker 3: surrounding that one number.
Speaker 4: Now, the lack of that number is also creating a
Speaker 4: lot of noise.
Speaker 1: So if you look at markets outside the US and Canada,
Speaker 1: away from North America, how is this company performing right now? Globally?
Speaker 1: Where is the strength coming from?
Speaker 3: The strength is really broad based. I mean, we know
Speaker 3: that the US and Canada is a mature market. It's
Speaker 3: almost you know, seventy seventy five percent penetrated that said it.
Speaker 3: You know, if you looked at the first quarter numbers,
Speaker 3: this was one of the strongest subscriber gains in the
Speaker 3: US and Canadian markets. But you know, growth is coming
Speaker 3: from other markets as well. If you look outside of
Speaker 3: the US, we you know, Europe tends to be a
Speaker 3: very very strong market, continues to perform very well. So
Speaker 3: is Asia Pacific, which is relatively underpenetrated market. And so
Speaker 3: there's obviously a lot of optimism for a growth upside
Speaker 3: in many, many years to come.
Speaker 2: Yeah, well, I'm curious in terms of revenue drivers, how's
Speaker 2: the AD tier doing.
Speaker 3: So the AD tier, they haven't really given us a
Speaker 3: lot of color here other than to say that they
Speaker 3: are building, you.
Speaker 4: Know, the infrastructure for this business.
Speaker 3: They do have, you know, programming which will kind of
Speaker 3: serve that AD business well. And when I talk about
Speaker 3: the programming catering specifically to the AD business, it's.
Speaker 4: Really live sports.
Speaker 3: They have a deal for WWE content starting in you know,
Speaker 3: twenty twenty five. They're also kind of dipping a toe
Speaker 3: dipping their toes a little bit with live events. So
Speaker 3: they have this big boxing match between Mike Tyson and
Speaker 3: Jake Paul which is coming up in July and that
Speaker 3: kind of allows them to test, you know, the appetite
Speaker 3: the market for live sports, and we think they will
Speaker 3: become a bigger player in the live sports market. That
Speaker 3: actually helps them scale their advertising ambitions, I think pretty significantly.
Speaker 3: And what we are kind of projecting at Blueberg Intelligence
Speaker 3: is that advertising will be roughly ten to fifteen percent
Speaker 3: of their business. This is a forty five billion dollar
Speaker 3: business in twenty twenty five, the total business, that is,
Speaker 3: and we think advertising will be about ten to fifteen
Speaker 3: percent of that.
Speaker 1: Geta what do we know about what Netflix intends to
Speaker 1: spend on new content going forward? Do they have the
Speaker 1: pockets to continue driving on the content side, Oh.
Speaker 4: They absolutely do.
Speaker 3: So they've taken actually a pretty disciplined approach. So for
Speaker 3: this year they reaffirmed their content budget of about seventeen
Speaker 3: billion dollars. Going forward, we think it'll go up by
Speaker 3: about you know, ten to fifteen percent. It probably will
Speaker 3: reach about twenty billion dollars or so in the next
Speaker 3: two years time. But again that's well within you know,
Speaker 3: the range, and they are definitely taking a very disciplined
Speaker 3: approach again not just with their original content, but also
Speaker 3: they're going in more for licensed content, which tends to
Speaker 3: be much more effective and economical.
Speaker 2: So we see that Netflix is number one. I think
Speaker 2: Amazon Prime is number two. Right, how are we shaking
Speaker 2: out When we look at all of the big streamers.
Speaker 3: Netflix clearly wins, not just in terms of subscriber numbers.
Speaker 3: Obviously they have two hundred and seventy million subscribers. They
Speaker 3: are the biggest streaming service across the world. But then again,
Speaker 3: it's not just that, it's also you know, engagement, and
Speaker 3: that is the one key metric that they kept on
Speaker 3: talking about over and over again in you know, the
Speaker 3: earnings call in their earnings newsletter today, because they do
Speaker 3: have they said they have roughly half a billion people
Speaker 3: across the globe tuning in every night into Netflix about
Speaker 3: two two and a half hours. And so as they
Speaker 3: have that engagement, that kind of then speaks to so
Speaker 3: much more monetization capabilities, right, so they can increase prices,
Speaker 3: They have a captive audience that they can.
Speaker 4: Sell to advertisers.
Speaker 3: So really kind of improves the growth outlook for the
Speaker 3: company on so many different fronts.
Speaker 2: KEETERA. Irong Andathan Bloomberg, Intelligence US media analyst, joining us
Speaker 2: in our Studios is Harold Vanderlinda, who's head of age
Speaker 2: specific equity strategy at HSBC. Perhaps a big sell off
Speaker 2: is underway. We've got higher for long grown rates, investors
Speaker 2: setting the bar pretty high, and a strong dollar. You
Speaker 2: see it that way or do you see things as
Speaker 2: maybe more like half full.
Speaker 5: No, I think you're nailing the Sorry, you're hitting the
Speaker 5: nail of that. We've gone from a scenario where by
Speaker 5: in the beginning of the year we were talking about
Speaker 5: maybe four, five, six, seven, I think even the one
Speaker 5: point in terms of people that seven rate cuts. Now
Speaker 5: what we then saw what inflation was coming down, it
Speaker 5: flattened out, and now it's actually ticking up a little
Speaker 5: bit and the market is really reshifting that right, So
Speaker 5: it's saying there might be no rate cut at all,
Speaker 5: and some people are talking about rate hike. Now that
Speaker 5: has that changes the macro environment for Asian equities completely, right.
Speaker 5: So we have a stronger dollar, we have higher bond
Speaker 5: yields and all of these things, and that just doesn't
Speaker 5: help Asian equity. So yeah, that's where that pressure is
Speaker 5: coming from.
Speaker 1: But if I look at the fact that this is
Speaker 1: maybe an illustration of very strong American growth. Demand may
Speaker 1: still be a part of the story. And if you're
Speaker 1: an exporter anywhere in the APAC region, the outlook for
Speaker 1: business is going to be pretty good, is it not.
Speaker 5: Yeah, I mean that's a nice thing of equities, right,
Speaker 5: there's always something somewhere happening. So, yeah, you're right exports.
Speaker 5: But if you look at the totality of Asia, or
Speaker 5: for example, at the Chinese market, the vast majority of
Speaker 5: companies are domestic oriented companies, so they they won't be
Speaker 5: impacted so much by the strong US. They just have
Speaker 5: to deal with the domestic issues. But the ones that
Speaker 5: are exporters, and most of the Asian exporters are really
Speaker 5: in Korea, Japan, and Taiwan, they benefit on they benefit
Speaker 5: on the demand side and on the currency side because
Speaker 5: their currency is getting weaker and in so far they
Speaker 5: produce something in Korea, Japan or Taiwan, it means that
Speaker 5: they have a little bit of currency till winds as
Speaker 5: well helps.
Speaker 2: And we're getting chirked around a little bit with some
Speaker 2: of the data. Like I was having a look at
Speaker 2: the Philadelphia Fed Factory Index. You know, it topped estimates.
Speaker 2: In fact in a very big way. The index all
Speaker 2: the way up at fifteen point five, the survey only two,
Speaker 2: but then price is paid, we're at twenty three versus
Speaker 2: three point seven before. So I mean, how do you
Speaker 2: actually digest this kind of data? Makes sense of it?
Speaker 5: Yeah, there's a lot of data coming at us, But
Speaker 5: I think the overriding picture is simply of just unexpected
Speaker 5: and credible strength in the US economy.
Speaker 2: And that leads to higher prices.
Speaker 5: That leads to higher prices and these sort of things.
Speaker 5: Then in addition to that, you have oil prices potentially
Speaker 5: being a bit volatile. That I mean, the Middle East
Speaker 5: has got all sorts of issues there, so that could
Speaker 5: lead to oil prices. So all of these things could
Speaker 5: fuel into higher prices. Now if you you can also
Speaker 5: find good reasons to believe that actually these inflation numbers
Speaker 5: will come off again and these sort of things. So
Speaker 5: we'll have to see how it goes. But that means
Speaker 5: that the market is just very uncertain on what the
Speaker 5: path of inflation is and therefore what the path of
Speaker 5: interest rates is. That creates that volatility in the stock market.
Speaker 1: One of the things that I'm noting now is that
Speaker 1: Japanese inflation for the month of March came in at
Speaker 1: a monthly reading of two point seven percent. That was
Speaker 1: a little bit below the consensus. I think that Street
Speaker 1: was looking at two eight. But we know that Japanese
Speaker 1: currency has been under pressure, still trading around a thirty
Speaker 1: four year low against the greenback. What choices do policymakers
Speaker 1: in Japan have, whether it's the Ministry of Finance can
Speaker 1: dering intervention in the foreign exchange or the BOJ.
Speaker 5: Yeah, this is difficult for them because the currency has
Speaker 5: been very, very weak. And no we have that there's
Speaker 5: this meeting in the IMF, so maybe something will be
Speaker 5: discussed there. Who knows, but yeah, the currencies are we
Speaker 5: and we've now seen also when Yellen was around that
Speaker 5: the Koreans and the Japanese have publicly stated that they
Speaker 5: feel somewhat uncomfortable with that. With that currency weakness, Well,
Speaker 5: what can they do? The problem? The ultimate problem simply
Speaker 5: is that they have an interest rate policy that is
Speaker 5: still close to zero. Now you might say, yeah, they've
Speaker 5: increased a little bit, but we're talking about minuscule changes.
Speaker 5: So interest rates in Japan remain very very low, and
Speaker 5: in so far the US is strong and interest rates
Speaker 5: remain high. Yeah, that means that you have a massive
Speaker 5: interest rate differential. And you see this with Japanese households.
Speaker 5: They're taking their money out of Japan and putting into
Speaker 5: the US because that's where they get five percent on
Speaker 5: a deposits or something like that. In Japan you get nothing.
Speaker 2: Some Japanese companies are benefiting from China growth, but you know,
Speaker 2: it's not easy to estimate China growth. We put a
Speaker 2: piece out on the terminal today that Bloomberg calculation suggests
Speaker 2: that China will contribute more to global growth in the
Speaker 2: next five years than all the G seven combined. It's
Speaker 2: a staggering number. Yeah, twenty one percent versus twenty percent. Now,
Speaker 2: we know that in the short term, China's kind of
Speaker 2: gearing up for the May Day holiday and there could
Speaker 2: be a lot of spending. How do you see China
Speaker 2: moving here in the short term now?
Speaker 5: Now, So, when the GDP numbers came out at the
Speaker 5: beginning of the year, a lot of people said for
Speaker 5: around five percent, I thought it would be much weaker.
Speaker 5: I even know people say I can't believe that particularly number. No,
Speaker 5: we now have more data, macro data coming out out
Speaker 5: of China that supports that actually the economy is chucking
Speaker 5: along reasonably a bit faster than what the market was forecasting.
Speaker 5: But we also look at earnings. Now you can say, well, earnings,
Speaker 5: you can accountants can fiddle around with that, but cash
Speaker 5: earnings what we call cash flow money that you flow
Speaker 5: in and out. There's nothing to fiddle there. And actually
Speaker 5: it's not too bad. Yeah, the earnings growth has held
Speaker 5: a reason to you. Oh, I've got about fifteen percent
Speaker 5: cash earnings about eight nine percent. That's probably in line
Speaker 5: with the macro numbers that we get. So there is
Speaker 5: growth in China and it's probably a little bit better
Speaker 5: than what people would have thought it would be three
Speaker 5: or six months ago.
Speaker 2: Harold, thanks so much for coming into our studios and
Speaker 2: sharing your insights with this. Harold Vanderlinde, had of Asia
Speaker 2: Pacific Equity Strategy at HSBC. Our guest is David Finnerty,
Speaker 2: Bloomberg Effects and rates strategist, to take a closer look
Speaker 2: at markets. So the mood has changed quite a lot
Speaker 2: here over the past couple of weeks, David, we talked
Speaker 2: about higher for higher for longer rates there in some
Speaker 2: of those comments from leading fed proponents, and also the
Speaker 2: bar seems to be pretty high now for earnings. We
Speaker 2: saw that with a lot of the after hour is
Speaker 2: selling and the dollar, ever stronger, is also kind of
Speaker 2: wreaking havoc on markets. Do you see that holding for
Speaker 2: a while that kind of mood?
Speaker 6: I think yeah. Overall, I'd say yes. I think the
Speaker 6: equity market, if you look at it now, is so
Speaker 6: much good news was baked into it then I don't
Speaker 6: think it takes a lot of bad news to just
Speaker 6: give it a nudge down. You know, the S and
Speaker 6: P look at run from forty two hundred up to
Speaker 6: fifty two basically without much of a correction. So some
Speaker 6: sort of correction is quite standard with US yields. I
Speaker 6: think the hawkishness has heavily baked in. I think to
Speaker 6: get more hawkish in the near to mean really it's
Speaker 6: all data dependent now, and you really need strong, strong
Speaker 6: data now. Having said that, we don't really have much
Speaker 6: data out next week until the USPCE, So without that,
Speaker 6: it's like, well, how do yours push higher? And actually
Speaker 6: pushing down slightly now because of Middle East tensions? So
Speaker 6: if US shields don't push much higher, that does to
Speaker 6: some degree limit what the dollar can do. Having said
Speaker 6: that the dollar does benefit in a risk off sneer,
Speaker 6: But overall, I think the moves we've seen have sort
Speaker 6: of been baked in, and I don't think exactly, you know,
Speaker 6: I think there's more risks to USU was pushing lower
Speaker 6: in the terms slightly and a bit more risk off sentiment.
Speaker 1: So when you look at the price section today, this
Speaker 1: weakness that we were seeing in equity markets in the APAC,
Speaker 1: where is that money rotating? Is it moving into the
Speaker 1: US treasury market? Is it a haven bid that we're
Speaker 1: seeing now? I'm looking accrued up nearly one point eight percent.
Speaker 1: The dollar is stronger the end, showing a little bit
Speaker 1: of strength here, not by much. Do you have a
Speaker 1: sense of how this money is moving through the market
Speaker 1: right now as we see weaker equities in the APAC?
Speaker 6: Yeah, it's tough to say. I mean it it fluctuates.
Speaker 6: Middle East was on the way here. I think I
Speaker 6: saw some central headlines coming across from some of the
Speaker 6: team saying that something may have been happening in Iran.
Speaker 6: And if that is the case, then obviously the market
Speaker 6: is very jittery when it comes to anything in the
Speaker 6: Middle East at the moment. So the safe haven flows.
Speaker 6: Is this where the money tends to go to very quickly,
Speaker 6: you know, it's like just go ask questions lates have
Speaker 6: is something going on in that area and obviously oil
Speaker 6: was reacting into it as well. Obviously that could calm
Speaker 6: down once the dust as settled, but the knee jerk
Speaker 6: reactions always just go to the safe havens until we
Speaker 6: have a clever picture of what's going on.
Speaker 2: We talked about a number of factors that could be
Speaker 2: leading to risk off sentiment. In some cases, it's way
Speaker 2: worse under the hood than it is with the headline number.
Speaker 2: For instance, the S and P down just two tents
Speaker 2: of a percent, but it was quite a little bit
Speaker 2: of selling attached to some key names that people are
Speaker 2: heavily exposed to. I wonder whether or not yields getting
Speaker 2: up on the ten year up around you know, four
Speaker 2: and a half to five percent, Whether five percent could
Speaker 2: be a real kind of inflection point, really sucking in
Speaker 2: a lot of money by acid allocators.
Speaker 6: Yeah, I think five. Obviously five is the nice round numbers,
Speaker 6: so it could draw a lot of interest. I don't
Speaker 6: think there's a five percent is the number, but I
Speaker 6: think look, anything around this level just you know, four
Speaker 6: sevens to five or anything around that is certainly of
Speaker 6: interest to people. Of course, the catches you come in
Speaker 6: something your funds and you're trying to go long duration.
Speaker 6: You've been burned so many times before that it's a
Speaker 6: bit like broken record and you're worried. Now cap tip
Speaker 6: with this rhetoric coming out of the Fed like, hey,
Speaker 6: we are considered rate hike if needed, or that possibilities
Speaker 6: on the table if the data backs up, and of
Speaker 6: course should that happen again, this is all lots of caveats,
Speaker 6: but the ideas and you will see you see whats
Speaker 6: go even higher. So I think the interesting thing becomes
Speaker 6: is you go, oh, four to seven is attractive, but
Speaker 6: you go our five's attractive, and you get the five,
Speaker 6: and you go, actually five point two is attractive. So
Speaker 6: it's a bit of a moving line in the sand.
Speaker 6: And I think it's really only when the markets see
Speaker 6: that data flip and the confident that the data's flipped,
Speaker 6: that the rate hikes off the table and the rate
Speaker 6: cuts are back in, then I think the market will
Speaker 6: jump very quickly into treasure.
Speaker 1: We had comments from the Japanese Finance minister. Suzuki was
Speaker 1: talking about the interest rate grap the differential between the
Speaker 1: US and Japan, and that's really what's been weighing on
Speaker 1: the end. Yeah, maybe there are a few other factors.
Speaker 1: Then we get this reading today on consumer inflation in Japan. Okay,
Speaker 1: excluding fresh food, we're up two point six percent. That's
Speaker 1: still above the boj's target, but it's below estimates. Is
Speaker 1: that in keeping with this idea that the Bank of
Speaker 1: Japan will continue to tighten or are they kind of
Speaker 1: in a holding pattern right now, particularly when of the
Speaker 1: data is not making a compelling case.
Speaker 6: I think base of the rhetoric Bank of Japan has
Speaker 6: said one thing and done the other. So, but if
Speaker 6: you're based with the rhetoric, I think at the moment
Speaker 6: they are in the holding pattern. I mean, the consensus
Speaker 6: in the markets is if they're going to hike, it
Speaker 6: looks more like October or potentially September, which sort of
Speaker 6: makes sense. You're going to wait till all the way
Speaker 6: data is fed through, which comes through in basically July August.
Speaker 6: You get all the impacts on the labor cost earnings
Speaker 6: fully fed through, and then you obviously have the call
Speaker 6: leave reports later in that in that third quarter. So
Speaker 6: I think they'll wait till then. Obviously the next week
Speaker 6: Bankageman and got in your way, there's gonna be grilled
Speaker 6: on the exchange way. I think there's gonna be no
Speaker 6: shock on that. I don't think they'll do any thing.
Speaker 6: But how he reacts to the exchange rate. People can
Speaker 6: be looking at that words of you know, well, would
Speaker 6: you consider right high and one of the governors said yes,
Speaker 6: They said, okay, that's not really what you'd be using
Speaker 6: the exchange rate policy muntly policy for. But you know
Speaker 6: they'll be looking to see what your aid as says
Speaker 6: in the comment and go from that.
Speaker 2: So, in terms of risk gone and risk off, not
Speaker 2: being too specific about one market here or one market there,
Speaker 2: we do have the dollar and yields getting kind of
Speaker 2: close to I guess levels that you know there might
Speaker 2: be some resistance to get to the other.
Speaker 4: Side of that.
Speaker 2: Is it also quite possible that if you if you
Speaker 2: got you know, all sort of beared up here, that
Speaker 2: you could get your face ripped off because the rally
Speaker 2: can come back at any time.
Speaker 6: Oh yeah, I think certainly with the dollar. Look, I've
Speaker 6: been a big dollar ball the whole year, but even
Speaker 6: now I just put a piece that will be going
Speaker 6: to shortly say that I think the neartime upsides a
Speaker 6: bit limited for the dollar, and the reason's been is,
Speaker 6: you know, ye would have the market prices only pricing
Speaker 6: thirty eight bases point cuts this year. That's not really
Speaker 6: that much and you need a lot more data to
Speaker 6: back that up, which can happen, certainly, but you need
Speaker 6: time for that and the other things to factor is
Speaker 6: also the other side of the effects equation, certainly on
Speaker 6: the euro, which is the bigger side, biggest portion of
Speaker 6: a dollar index or the bloomboat dollar index. Germany's economies
Speaker 6: starting to turn the corner, that being my data starting
Speaker 6: to improve, and I think if that starts to happen,
Speaker 6: the market sunny, it starts going, well, we were too
Speaker 6: aggressive on the FED ruck cuts this year. Are we
Speaker 6: too aggressive on the ECB rate cuts this year? Yes,
Speaker 6: tune's can be rate cut up, but after that these
Speaker 6: be is very vague. So something you go, well, why
Speaker 6: should I go from three cuts down to two? If
Speaker 6: you do, that's europositive, dollar negative. So I do think
Speaker 6: the upside it's a lot more harder for the dollar
Speaker 6: to rally in the near term. Having said that, as
Speaker 6: you alluded to, the downside is a bit limited because
Speaker 6: you're here, aren't going to tank anytime soon, and if
Speaker 6: they really did, it would because a big risk off,
Speaker 6: which is dollar positive anyway, So dollar upside is limited.
Speaker 6: I think a period of consolidation in the near term
Speaker 6: is what's going to happen.
Speaker 1: David, very quickly, before we let you go, I want
Speaker 1: to get your thoughts on the Chinese currency. We haven't
Speaker 1: talked much about what's happening in China. We're seven twenty
Speaker 1: five seventy right now. If shore you want what's your
Speaker 1: outlook here?
Speaker 6: Well, I think, obviously to fix the state around the
Speaker 6: seven to ten level. I thought they may go back
Speaker 6: in the seven or nine handle. But when the PBOC
Speaker 6: didn't do that, when it had the opportion earlier this week,
Speaker 6: then it did say, well, we can let it go
Speaker 6: weak if we wanted to. But again, though we're going
Speaker 6: to let it go very, very gradually. They're in no
Speaker 6: hurry to have to get towards the seven thirty or
Speaker 6: above seven thirty anytime soon, so I think any weakness
Speaker 6: will be a grind.
Speaker 1: Shall we say?
Speaker 2: All right, David, thank you for joining us. David Finnerty,
Speaker 2: Bloomberg EFX and Rate Strategist.
Speaker 1: This has been the Bloomberg Daybreak Asia podcast, bringing you
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