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Speaker 1: This is Bloomberg Daybreak Asia for this Friday, February third

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Speaker 1: in Hong Kong, Thursday February two in New York and

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Speaker 1: coming up today. US equities rally as the market anticipates

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Speaker 1: the FEDS tightening cycle maybe nearing its peak. Apple, Amazon,

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Speaker 1: and Alphabet shares all slump that mixed earnings results, and

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Speaker 1: the ECB and BOE hike rates by a half point

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Speaker 1: to combat inflation. Jijian playing to meet with Anthony Blincoln,

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Speaker 1: and Beijing China moves to blunt new US alliances regarding

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Speaker 1: chips supply. Partisan politics roars are new in the house.

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Speaker 1: I'm at Baxter with Global News a P s G

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Speaker 1: Stars expecting to miss a key matchup due to an injury.

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Speaker 1: Dan schwarts been I'll have that story more coming up

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Speaker 1: in Bloomberg Sports. That's all straight ahead on Bloomberg Daybreak

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Speaker 1: Asia on Bloomberg eleven three on New York, Bloomberg Washington,

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Speaker 1: d C, Bloomberg one O six one, Boston, Bloomberg nine sixties,

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Speaker 1: sent frances Go Sirius XM one nineteen and around the

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Speaker 1: world on Bloomberg Radio dot Com and via The Bloomberg Business. Apple,

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Speaker 1: Good morning, I'm dead prisoner and I'm Brian Curtis. Here

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Speaker 1: are the stories we're following today. We begin with Apple,

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Speaker 1: the company reporting a steeper sales decline in its holiday

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Speaker 1: period than Wall Street feared. The story from Bloomberg's Charlie Pellett.

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Speaker 1: It shows the toll of an economic slowdown and lingering

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Speaker 1: supply snags on what was long one of the tech

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Speaker 1: industry's most resilient companies. Apple said revenue in the fiscal

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Speaker 1: first quarter dropped five and a half percent to one

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Speaker 1: hundred seventeen point two billion dollars. Now that was well

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Speaker 1: short of the average Wall Street estimate of one twenty

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Speaker 1: one point one billion. The iPhone and Mac were particular

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Speaker 1: weak spots for Apple during the quarter, dragged down by

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Speaker 1: a broader slump afflicting mobile devices and computers. COVID nineteen

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Speaker 1: restrictions in China added to Apple's woes, making it harder

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Speaker 1: to shipping off of the most popular versions of the

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Speaker 1: iPhone in New York. Charlie Pellette Bloomberg Daybreak Asia. Initially

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Speaker 1: is stock traded down about four percent, but when Tim

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Speaker 1: Cook talked about demand coming back in China, the stock

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Speaker 1: parrotage losses. It's still down one percent. Yeah, we also

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Speaker 1: heard from Amazon after the bell, though shares weaker by

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Speaker 1: about one point three percent right now, Mixed results after

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Speaker 1: the closing bell, and we have the story from tom Busby. Well,

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Speaker 1: even though holiday sales on Amazon's e commerce site rose

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Speaker 1: nine to one nine billion dollars in revenue, profits were

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Speaker 1: weaker than anticipated. Last quarter sales growth slowed at Amazon

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Speaker 1: Web Services, that's its cash cow cloud computing division. Another

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Speaker 1: big concern for investors. Projections for lackluster revenue in the

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Speaker 1: current quarter. That's on worries that tight fisted consumers may

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Speaker 1: pull back on their spending amid a lot of economic uncertainty.

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Speaker 1: Shares of Amazon down sharply, and after hours trading tom

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Speaker 1: Busby Bloomberg Daybreak Asia Tom Google parent Alphabet reported lackluster

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Speaker 1: earnings after the closing bell, and we get that story

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Speaker 1: from Bloomberg's and Kate's. Fourth quarter earnings at Alphabet came

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Speaker 1: in below forecasts and revenue missed the mark. Alphabet announced

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Speaker 1: last month that it's cutting twelve thousand jobs. Now, the

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Speaker 1: owner of Google says it needs less office space, Alphabet

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Speaker 1: is looking for ways to save money. Alphabet also says

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Speaker 1: revenue from its biggest sources. Add revenue from Google searches

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Speaker 1: and YouTube views slowed last quarter amid economic uncertainty in

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Speaker 1: Washington and Kate's Bloomberg day Break Asia. All right, and

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Speaker 1: thank you. Well, as we know, it's been a very

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Speaker 1: busy week for central banks. We had the Fed yesterday.

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Speaker 1: Today the European Central Bank lifted its key rate fifty

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Speaker 1: basis points a half point. Right, so the deposit rate

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Speaker 1: now at two and a half percent, the highest level

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Speaker 1: we've seen since two thousand and eight. Here's Christine Laguard

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Speaker 1: warning of a similar move next month. It should be

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Speaker 1: fifty this time around. It should be it intended to

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Speaker 1: be fifty in March. Now you will say, well, yes,

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Speaker 1: but what about after March? Does that mean that you

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Speaker 1: have reached the pinnacle or the peak? No, no, no, no,

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Speaker 1: we know that we have ground to cover. We know

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Speaker 1: that we are not done. Yes, Madame Legarde said, the

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Speaker 1: ECBs inflation outlook is improving given that drop in energy prices. Now,

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Speaker 1: the ecb is Governing Council gave more details on plans

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Speaker 1: to shrink that five trillion euro bond portfolio a monthly

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Speaker 1: cap of fifteen billion euros and maturing debt will now

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Speaker 1: be allowed to expire between March and June. In the meantime,

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Speaker 1: the Bank of England policymakers voted to raise the benchmark

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Speaker 1: lending right there to four percent. That's the highest we've

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Speaker 1: seen again since two thousand and eight, the majority saying

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Speaker 1: that strong pay growth and an ongoing shortage of workers

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Speaker 1: were driving price pressures in the economy. However, the b

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Speaker 1: always latest forecast show that inflation is likely to fall

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Speaker 1: sharply this year, down to around four percent, and that's

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Speaker 1: down from a level percent last October. Those findings suggested

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Speaker 1: policymakers may not need to raise rates much more. Today.

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Speaker 1: BOE Governor Andrew Bailey struck an optimistic yet cautious tone.

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Speaker 1: We are kind of react to the information and the

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Speaker 1: evidence that we see. We're not on We're not We

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Speaker 1: haven't pre announced an intention because we have reached a

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Speaker 1: point and as I've said for I think we have

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Speaker 1: started to turn a corner that's encouraging. There's a long

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Speaker 1: way to go and there are a lot of risks.

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Speaker 1: Bailey also pointed out that the bank's projections were inherently

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Speaker 1: uncertain because of volatile energy and commodity markets. Still, the

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Speaker 1: BOE dropped guidance that it was willing to respond forcefully

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Speaker 1: to inflation if needed. That could be a sign that

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Speaker 1: the Bank of England maybe near the end of its

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Speaker 1: rate height cycle. And Doug I was struck by the

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Speaker 1: incredible drop in the tenure UK guilt thirty basis points

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Speaker 1: lower and the tenure German bun down twenty basis point. Yeah,

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Speaker 1: it seems like the market is really expecting us to

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Speaker 1: move beyond this tightening regime that we've been in globally,

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Speaker 1: whether it's the FED, whether it's the E c B

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Speaker 1: or the b o E. And maybe it's spells optimism

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Speaker 1: for risk assets, but you wouldn't know it with the

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Speaker 1: earnings that we had after the bell, we talked about Apple, Amazon,

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Speaker 1: and Alphabet. We didn't touch on Qualcom. That stock got

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Speaker 1: hit a little bit in the late session after a

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Speaker 1: pretty lackluster quarterly sales forecast, And it kind of intersects

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Speaker 1: with the Apple story, Brian, because it's suggests UH sales

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Speaker 1: in terms of mobile handsets. I mean, we're going to

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Speaker 1: continue to see a drag well into the year. Well,

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Speaker 1: there's those individual stories, but then there's the big macro overhang,

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Speaker 1: and whether you're buying stocks or handicapping China or trying

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Speaker 1: to analyze the FED, you can look beyond the next

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Speaker 1: six months, but you still have to go through them,

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Speaker 1: and we're going to see a lot of volatility, and

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Speaker 1: I think that is is something that there's just no

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Speaker 1: way to escape. Yeah, and a big question mark on

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Speaker 1: the reopening story in China. It's not just Apple talking

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Speaker 1: about navigating its way through that. But look at star

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Speaker 1: our Bucks. I mean weakness there that contributed to a

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Speaker 1: big drop in sales. Yeah, and Kennedy Goose the story

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Speaker 1: I'll tell later that stock down in New York and

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Speaker 1: it spoke of weakness in China. It's time for global news.

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Speaker 1: A lot of movement around the issues facing the U. S.

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Speaker 1: China relationship, from chips to military bases. And Baxter has

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Speaker 1: Global News in the nine sixty newsroom in San Francisco. Ed. Yeah, Brian,

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Speaker 1: it's a big basket. And let's add surveillance balloon. The

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Speaker 1: Pentagon says it is tracking a suspected Chinese high altitude

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Speaker 1: surveillance balloon. The Pentagon says for several days it has

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Speaker 1: made its way over the northern US. The Pentagon says

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Speaker 1: it has decided not to shoot it down at this point,

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Speaker 1: and but it will not say where it is now,

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Speaker 1: so a surveillance balloon. Meanwhile, on his trip to Beijing,

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Speaker 1: Anthony Blincoln, the Secretary of State, expected to meet with

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Speaker 1: President hijimping the f TC the ft story. Says it

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Speaker 1: would be making him the first U. S Secretary of

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Speaker 1: State to sit down with she in the nearly six years.

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Speaker 1: B Lincoln is scheduled to be there Sunday and Monday.

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Speaker 1: Beijing meanwhile, as trying to blunt US moves to form

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Speaker 1: new alliances regarding chip manufacture and supply. This comes just

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Speaker 1: days after Japan and the Netherlands joined the US and

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Speaker 1: agreeing to restrict some high technology exports to China. The

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Speaker 1: Foreign Ministry says China will continue upholding market principles and

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Speaker 1: openness towards ties. There's some growing thought in the US

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Speaker 1: that between what's happening in Ukraine and trying to contain

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Speaker 1: China around the issue of Taiwan, that the U. S

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Speaker 1: military may be spread too thin. Republican Representative Josh Holly.

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Speaker 1: If China invaded Taiwan today, Taiwan would fall. So that's

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Speaker 1: just the that's the honest truth. We cannot both carry

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Speaker 1: the main burden in Ukraine, which we're doing currently, and

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Speaker 1: get to where we need to be to deter war

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Speaker 1: with China. But US Defense Secretary Lloyd Austin, who made

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Speaker 1: yesterday's announcement regarding the Philippines, says the US has to

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Speaker 1: prepare for ats around the globe and the speaking of that,

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Speaker 1: the US will now begin the process of building four

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Speaker 1: new military bases in the Philippines. This in the wake

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Speaker 1: of granted access the US as it will allow more

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Speaker 1: rapid support for humanitarian and climate related disasters in the

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Speaker 1: Philippines and respond to other shared challenges. So that would

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Speaker 1: be a direct reference to security in the South China

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Speaker 1: Sea and threats from China. US House Republicans are systematically

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Speaker 1: removing Democrats from important committee positions. Democrats Adam Schiff and

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Speaker 1: Erik Swalwell recently and today Representative Ilhan Omar ousted from

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Speaker 1: the Foreign Affairs Committee. Republican leadership says she's made offensive

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Speaker 1: remarks in the past. Bloomberg's Genie Schanzano she is apologized

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Speaker 1: for those does that rise to the level of removal?

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Speaker 1: These are conversations that have to be had, and unfortunately

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Speaker 1: we don't see those moving forward. So I says Beeckman,

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Speaker 1: Democrats get the House back. At some point there will

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Speaker 1: be some form of retribution. And even the former Republican

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Speaker 1: National Committee Commit Communications director Linda Kamuso Miller on Balance

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Speaker 1: of Power says this is all just a distraction. The

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Speaker 1: difficulty in Washington is that partisanship is absolutely reached an

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Speaker 1: all time high and it makes it almost impossible to

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Speaker 1: get anything done. But these kinds of UH tactics that

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Speaker 1: we're using in order to vote others off of committees

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Speaker 1: is absolutely a distraction and not the work that people

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Speaker 1: want us to do. The fair being, it will spill

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Speaker 1: over the bipartisan passage of important legislation and the FBI

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Speaker 1: seeking information regarding the cyber attack on London based I

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Speaker 1: on on trading in the UK. The cyber attacks snard

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Speaker 1: global derivatives trading, and the FBI has reached out asking

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Speaker 1: how customers were affected. Global News twenty four more than

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Speaker 1: with more than twenty seven hundred journalists and analysts and

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Speaker 1: over one hundred twenty countries. In San Francisco, I'm ed Baxter,

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Speaker 1: this is Bloomberg. This is Bloomberg, Gabrika Asia. Hi, everybody

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Speaker 1: on Bran Curtis along with Richard Salam and our guest

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Speaker 1: is Jack McIntyre, portfolio manager at Brand DeWine Global. Jack,

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Speaker 1: you've made the point that central banks are not as

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Speaker 1: important markets this year as they were last year. What. Yeah.

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Speaker 1: The reason being, Brian is you know last year it

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Speaker 1: almost didn't matter what the data was. I mean, we

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Speaker 1: were in an inflation storm. Central banks, Uh, just tighten

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Speaker 1: the incredibly aggressively. Twenty three will be a year where

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Speaker 1: that tightening works its way into the real economy. In

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Speaker 1: part I think was that was part of the reaction

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Speaker 1: you had today or yesterday in response to the FED

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Speaker 1: response to the ECB in the Bank of England. Right now,

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Speaker 1: on the surface, they were still hawkish, but you know,

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Speaker 1: the markets are more forward looking, and I think the

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Speaker 1: central banks gonna have to be more forward looking. They're

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Speaker 1: going to be more data dependent, They're gonna probably follow

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Speaker 1: the markets as opposed to the markets following the Fed.

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Speaker 1: Jack absolutely, Because we're getting to a point where you know,

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Speaker 1: they still pools. Then the conversation really goes away from them.

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Speaker 1: Let's say they didn't think it's all about them and

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Speaker 1: do so thing rash. Yeah, I think it's it's a

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Speaker 1: good point in the sense that you know, we're getting

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Speaker 1: you know, not surprisingly, you know, we're getting closer to

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Speaker 1: that that pause, and they've got to set the narrative

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Speaker 1: that pause does not automatically mean that they're going to

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Speaker 1: be cutting rates, although the markets have kind of gotten

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Speaker 1: ahead of them from that standpoint. But you know, I

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Speaker 1: was just thinking about it. You know, as central banks

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Speaker 1: tightened today, in theory, that's not going to impact the

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Speaker 1: economies until so it was all about the tightening from

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Speaker 1: last year. Well, and I think that is a point

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Speaker 1: that you know, being the devil's advocate, rejects what you

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Speaker 1: say that central banks aren't as important this year because

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Speaker 1: their actions from last year will weigh in this year

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Speaker 1: and thus they will be more important. Well, and I

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Speaker 1: would not push back on that because I agree it

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Speaker 1: reinforces the accents that they did last year. We're important

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Speaker 1: because my my thesis is that in reasons I like

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Speaker 1: treasuries in particular, is that this lag of act from

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Speaker 1: all this tightening financial conditions is going to impact in

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Speaker 1: this case, the US economy at a time where we

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Speaker 1: already know it's slowing. We're way beyond peak inflation. Inflation

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Speaker 1: is already coming down. So it's gonna be kind of

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Speaker 1: a trifecta of slowing economy, uh putting more downward pressure

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Speaker 1: on inflation, and that that's gonna be good for bonds

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Speaker 1: and has been good for bonds this year. Perhaps the

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Speaker 1: jobs are gonna be as important has been in the

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Speaker 1: month's pass, but certainly will be. Um, you'll take on that,

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Speaker 1: and then you take also when you know this huge

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Speaker 1: rise in productivity and what it means, so you'll strategy. Yeah,

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Speaker 1: so the employment report, it's another hurdle we kind of

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Speaker 1: have to to get through. Um. You know, every cycle,

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Speaker 1: employment is a lagging indicator. I feel as though this

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Speaker 1: cycle is probably extra lagging, just because companies are struggled

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Speaker 1: to find workers. My view is if it comes in

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Speaker 1: close to expectations, and I haven't tracked anything that suggests

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Speaker 1: that it shouldn't be close to expectations, but it uh

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Speaker 1: as that just means that we're at a slow pace,

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Speaker 1: we are seeing less job growth. I think markets will

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Speaker 1: like that. So, yeah, it was very interesting today. You know,

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Speaker 1: the unit labor cost coming in week Um, again, this

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Speaker 1: gets us a little bit more towards mild recession, maybe

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Speaker 1: a soft landing. I think that's the big issue that

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Speaker 1: markets have to figure out to really get inflation down more.

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Speaker 1: Do we need the recession? Do we need a soft landing? Um?

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Speaker 1: And that unit labor cost tells us, you know, maybe

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Speaker 1: we don't need quite as harder recession to get inflation lower,

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Speaker 1: particularly because the central banks and the FED in particular

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Speaker 1: talk about that service inflation and that's really driven by labor.

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Speaker 1: I can definitely see that line of thinking. But you

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Speaker 1: wonder whether or not both the bond in the stock

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Speaker 1: markets are looking beyond what the actions are too later

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Speaker 1: in the year when conditions could be better, when you know,

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Speaker 1: you you really still have to live through the effects

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Speaker 1: of what they did last year. Um, are we reacting

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Speaker 1: too soon? Yeah, that's a tough one. That that's a

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Speaker 1: you know, this is it's part of the art of

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Speaker 1: money management versus the science trying to figure out when

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Speaker 1: exactly is sort of the lag effect and and again

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Speaker 1: it's not it shouldn't be off to the races in

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Speaker 1: terms of risk assets doing well. Uh, you know again

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Speaker 1: you look at Apples earnings, Amazon, Googles. I mean that

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Speaker 1: there's the challenge of bottom up impacting companies versus maybe

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Speaker 1: the inflationary backdrop at the forty foot level. Uh, it

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Speaker 1: is improving, but I just think the macro backdrop is improving.

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