Speaker 1: This is Bloomberg Daybreak Asia for this Friday, February third
Speaker 1: in Hong Kong, Thursday February two in New York and
Speaker 1: coming up today. US equities rally as the market anticipates
Speaker 1: the FEDS tightening cycle maybe nearing its peak. Apple, Amazon,
Speaker 1: and Alphabet shares all slump that mixed earnings results, and
Speaker 1: the ECB and BOE hike rates by a half point
Speaker 1: to combat inflation. Jijian playing to meet with Anthony Blincoln,
Speaker 1: and Beijing China moves to blunt new US alliances regarding
Speaker 1: chips supply. Partisan politics roars are new in the house.
Speaker 1: I'm at Baxter with Global News a P s G
Speaker 1: Stars expecting to miss a key matchup due to an injury.
Speaker 1: Dan schwarts been I'll have that story more coming up
Speaker 1: in Bloomberg Sports. That's all straight ahead on Bloomberg Daybreak
Speaker 1: Asia on Bloomberg eleven three on New York, Bloomberg Washington,
Speaker 1: d C, Bloomberg one O six one, Boston, Bloomberg nine sixties,
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Speaker 1: world on Bloomberg Radio dot Com and via The Bloomberg Business. Apple,
Speaker 1: Good morning, I'm dead prisoner and I'm Brian Curtis. Here
Speaker 1: are the stories we're following today. We begin with Apple,
Speaker 1: the company reporting a steeper sales decline in its holiday
Speaker 1: period than Wall Street feared. The story from Bloomberg's Charlie Pellett.
Speaker 1: It shows the toll of an economic slowdown and lingering
Speaker 1: supply snags on what was long one of the tech
Speaker 1: industry's most resilient companies. Apple said revenue in the fiscal
Speaker 1: first quarter dropped five and a half percent to one
Speaker 1: hundred seventeen point two billion dollars. Now that was well
Speaker 1: short of the average Wall Street estimate of one twenty
Speaker 1: one point one billion. The iPhone and Mac were particular
Speaker 1: weak spots for Apple during the quarter, dragged down by
Speaker 1: a broader slump afflicting mobile devices and computers. COVID nineteen
Speaker 1: restrictions in China added to Apple's woes, making it harder
Speaker 1: to shipping off of the most popular versions of the
Speaker 1: iPhone in New York. Charlie Pellette Bloomberg Daybreak Asia. Initially
Speaker 1: is stock traded down about four percent, but when Tim
Speaker 1: Cook talked about demand coming back in China, the stock
Speaker 1: parrotage losses. It's still down one percent. Yeah, we also
Speaker 1: heard from Amazon after the bell, though shares weaker by
Speaker 1: about one point three percent right now, Mixed results after
Speaker 1: the closing bell, and we have the story from tom Busby. Well,
Speaker 1: even though holiday sales on Amazon's e commerce site rose
Speaker 1: nine to one nine billion dollars in revenue, profits were
Speaker 1: weaker than anticipated. Last quarter sales growth slowed at Amazon
Speaker 1: Web Services, that's its cash cow cloud computing division. Another
Speaker 1: big concern for investors. Projections for lackluster revenue in the
Speaker 1: current quarter. That's on worries that tight fisted consumers may
Speaker 1: pull back on their spending amid a lot of economic uncertainty.
Speaker 1: Shares of Amazon down sharply, and after hours trading tom
Speaker 1: Busby Bloomberg Daybreak Asia Tom Google parent Alphabet reported lackluster
Speaker 1: earnings after the closing bell, and we get that story
Speaker 1: from Bloomberg's and Kate's. Fourth quarter earnings at Alphabet came
Speaker 1: in below forecasts and revenue missed the mark. Alphabet announced
Speaker 1: last month that it's cutting twelve thousand jobs. Now, the
Speaker 1: owner of Google says it needs less office space, Alphabet
Speaker 1: is looking for ways to save money. Alphabet also says
Speaker 1: revenue from its biggest sources. Add revenue from Google searches
Speaker 1: and YouTube views slowed last quarter amid economic uncertainty in
Speaker 1: Washington and Kate's Bloomberg day Break Asia. All right, and
Speaker 1: thank you. Well, as we know, it's been a very
Speaker 1: busy week for central banks. We had the Fed yesterday.
Speaker 1: Today the European Central Bank lifted its key rate fifty
Speaker 1: basis points a half point. Right, so the deposit rate
Speaker 1: now at two and a half percent, the highest level
Speaker 1: we've seen since two thousand and eight. Here's Christine Laguard
Speaker 1: warning of a similar move next month. It should be
Speaker 1: fifty this time around. It should be it intended to
Speaker 1: be fifty in March. Now you will say, well, yes,
Speaker 1: but what about after March? Does that mean that you
Speaker 1: have reached the pinnacle or the peak? No, no, no, no,
Speaker 1: we know that we have ground to cover. We know
Speaker 1: that we are not done. Yes, Madame Legarde said, the
Speaker 1: ECBs inflation outlook is improving given that drop in energy prices. Now,
Speaker 1: the ecb is Governing Council gave more details on plans
Speaker 1: to shrink that five trillion euro bond portfolio a monthly
Speaker 1: cap of fifteen billion euros and maturing debt will now
Speaker 1: be allowed to expire between March and June. In the meantime,
Speaker 1: the Bank of England policymakers voted to raise the benchmark
Speaker 1: lending right there to four percent. That's the highest we've
Speaker 1: seen again since two thousand and eight, the majority saying
Speaker 1: that strong pay growth and an ongoing shortage of workers
Speaker 1: were driving price pressures in the economy. However, the b
Speaker 1: always latest forecast show that inflation is likely to fall
Speaker 1: sharply this year, down to around four percent, and that's
Speaker 1: down from a level percent last October. Those findings suggested
Speaker 1: policymakers may not need to raise rates much more. Today.
Speaker 1: BOE Governor Andrew Bailey struck an optimistic yet cautious tone.
Speaker 1: We are kind of react to the information and the
Speaker 1: evidence that we see. We're not on We're not We
Speaker 1: haven't pre announced an intention because we have reached a
Speaker 1: point and as I've said for I think we have
Speaker 1: started to turn a corner that's encouraging. There's a long
Speaker 1: way to go and there are a lot of risks.
Speaker 1: Bailey also pointed out that the bank's projections were inherently
Speaker 1: uncertain because of volatile energy and commodity markets. Still, the
Speaker 1: BOE dropped guidance that it was willing to respond forcefully
Speaker 1: to inflation if needed. That could be a sign that
Speaker 1: the Bank of England maybe near the end of its
Speaker 1: rate height cycle. And Doug I was struck by the
Speaker 1: incredible drop in the tenure UK guilt thirty basis points
Speaker 1: lower and the tenure German bun down twenty basis point. Yeah,
Speaker 1: it seems like the market is really expecting us to
Speaker 1: move beyond this tightening regime that we've been in globally,
Speaker 1: whether it's the FED, whether it's the E c B
Speaker 1: or the b o E. And maybe it's spells optimism
Speaker 1: for risk assets, but you wouldn't know it with the
Speaker 1: earnings that we had after the bell, we talked about Apple, Amazon,
Speaker 1: and Alphabet. We didn't touch on Qualcom. That stock got
Speaker 1: hit a little bit in the late session after a
Speaker 1: pretty lackluster quarterly sales forecast, And it kind of intersects
Speaker 1: with the Apple story, Brian, because it's suggests UH sales
Speaker 1: in terms of mobile handsets. I mean, we're going to
Speaker 1: continue to see a drag well into the year. Well,
Speaker 1: there's those individual stories, but then there's the big macro overhang,
Speaker 1: and whether you're buying stocks or handicapping China or trying
Speaker 1: to analyze the FED, you can look beyond the next
Speaker 1: six months, but you still have to go through them,
Speaker 1: and we're going to see a lot of volatility, and
Speaker 1: I think that is is something that there's just no
Speaker 1: way to escape. Yeah, and a big question mark on
Speaker 1: the reopening story in China. It's not just Apple talking
Speaker 1: about navigating its way through that. But look at star
Speaker 1: our Bucks. I mean weakness there that contributed to a
Speaker 1: big drop in sales. Yeah, and Kennedy Goose the story
Speaker 1: I'll tell later that stock down in New York and
Speaker 1: it spoke of weakness in China. It's time for global news.
Speaker 1: A lot of movement around the issues facing the U. S.
Speaker 1: China relationship, from chips to military bases. And Baxter has
Speaker 1: Global News in the nine sixty newsroom in San Francisco. Ed. Yeah, Brian,
Speaker 1: it's a big basket. And let's add surveillance balloon. The
Speaker 1: Pentagon says it is tracking a suspected Chinese high altitude
Speaker 1: surveillance balloon. The Pentagon says for several days it has
Speaker 1: made its way over the northern US. The Pentagon says
Speaker 1: it has decided not to shoot it down at this point,
Speaker 1: and but it will not say where it is now,
Speaker 1: so a surveillance balloon. Meanwhile, on his trip to Beijing,
Speaker 1: Anthony Blincoln, the Secretary of State, expected to meet with
Speaker 1: President hijimping the f TC the ft story. Says it
Speaker 1: would be making him the first U. S Secretary of
Speaker 1: State to sit down with she in the nearly six years.
Speaker 1: B Lincoln is scheduled to be there Sunday and Monday.
Speaker 1: Beijing meanwhile, as trying to blunt US moves to form
Speaker 1: new alliances regarding chip manufacture and supply. This comes just
Speaker 1: days after Japan and the Netherlands joined the US and
Speaker 1: agreeing to restrict some high technology exports to China. The
Speaker 1: Foreign Ministry says China will continue upholding market principles and
Speaker 1: openness towards ties. There's some growing thought in the US
Speaker 1: that between what's happening in Ukraine and trying to contain
Speaker 1: China around the issue of Taiwan, that the U. S
Speaker 1: military may be spread too thin. Republican Representative Josh Holly.
Speaker 1: If China invaded Taiwan today, Taiwan would fall. So that's
Speaker 1: just the that's the honest truth. We cannot both carry
Speaker 1: the main burden in Ukraine, which we're doing currently, and
Speaker 1: get to where we need to be to deter war
Speaker 1: with China. But US Defense Secretary Lloyd Austin, who made
Speaker 1: yesterday's announcement regarding the Philippines, says the US has to
Speaker 1: prepare for ats around the globe and the speaking of that,
Speaker 1: the US will now begin the process of building four
Speaker 1: new military bases in the Philippines. This in the wake
Speaker 1: of granted access the US as it will allow more
Speaker 1: rapid support for humanitarian and climate related disasters in the
Speaker 1: Philippines and respond to other shared challenges. So that would
Speaker 1: be a direct reference to security in the South China
Speaker 1: Sea and threats from China. US House Republicans are systematically
Speaker 1: removing Democrats from important committee positions. Democrats Adam Schiff and
Speaker 1: Erik Swalwell recently and today Representative Ilhan Omar ousted from
Speaker 1: the Foreign Affairs Committee. Republican leadership says she's made offensive
Speaker 1: remarks in the past. Bloomberg's Genie Schanzano she is apologized
Speaker 1: for those does that rise to the level of removal?
Speaker 1: These are conversations that have to be had, and unfortunately
Speaker 1: we don't see those moving forward. So I says Beeckman,
Speaker 1: Democrats get the House back. At some point there will
Speaker 1: be some form of retribution. And even the former Republican
Speaker 1: National Committee Commit Communications director Linda Kamuso Miller on Balance
Speaker 1: of Power says this is all just a distraction. The
Speaker 1: difficulty in Washington is that partisanship is absolutely reached an
Speaker 1: all time high and it makes it almost impossible to
Speaker 1: get anything done. But these kinds of UH tactics that
Speaker 1: we're using in order to vote others off of committees
Speaker 1: is absolutely a distraction and not the work that people
Speaker 1: want us to do. The fair being, it will spill
Speaker 1: over the bipartisan passage of important legislation and the FBI
Speaker 1: seeking information regarding the cyber attack on London based I
Speaker 1: on on trading in the UK. The cyber attacks snard
Speaker 1: global derivatives trading, and the FBI has reached out asking
Speaker 1: how customers were affected. Global News twenty four more than
Speaker 1: with more than twenty seven hundred journalists and analysts and
Speaker 1: over one hundred twenty countries. In San Francisco, I'm ed Baxter,
Speaker 1: this is Bloomberg. This is Bloomberg, Gabrika Asia. Hi, everybody
Speaker 1: on Bran Curtis along with Richard Salam and our guest
Speaker 1: is Jack McIntyre, portfolio manager at Brand DeWine Global. Jack,
Speaker 1: you've made the point that central banks are not as
Speaker 1: important markets this year as they were last year. What. Yeah.
Speaker 1: The reason being, Brian is you know last year it
Speaker 1: almost didn't matter what the data was. I mean, we
Speaker 1: were in an inflation storm. Central banks, Uh, just tighten
Speaker 1: the incredibly aggressively. Twenty three will be a year where
Speaker 1: that tightening works its way into the real economy. In
Speaker 1: part I think was that was part of the reaction
Speaker 1: you had today or yesterday in response to the FED
Speaker 1: response to the ECB in the Bank of England. Right now,
Speaker 1: on the surface, they were still hawkish, but you know,
Speaker 1: the markets are more forward looking, and I think the
Speaker 1: central banks gonna have to be more forward looking. They're
Speaker 1: going to be more data dependent, They're gonna probably follow
Speaker 1: the markets as opposed to the markets following the Fed.
Speaker 1: Jack absolutely, Because we're getting to a point where you know,
Speaker 1: they still pools. Then the conversation really goes away from them.
Speaker 1: Let's say they didn't think it's all about them and
Speaker 1: do so thing rash. Yeah, I think it's it's a
Speaker 1: good point in the sense that you know, we're getting
Speaker 1: you know, not surprisingly, you know, we're getting closer to
Speaker 1: that that pause, and they've got to set the narrative
Speaker 1: that pause does not automatically mean that they're going to
Speaker 1: be cutting rates, although the markets have kind of gotten
Speaker 1: ahead of them from that standpoint. But you know, I
Speaker 1: was just thinking about it. You know, as central banks
Speaker 1: tightened today, in theory, that's not going to impact the
Speaker 1: economies until so it was all about the tightening from
Speaker 1: last year. Well, and I think that is a point
Speaker 1: that you know, being the devil's advocate, rejects what you
Speaker 1: say that central banks aren't as important this year because
Speaker 1: their actions from last year will weigh in this year
Speaker 1: and thus they will be more important. Well, and I
Speaker 1: would not push back on that because I agree it
Speaker 1: reinforces the accents that they did last year. We're important
Speaker 1: because my my thesis is that in reasons I like
Speaker 1: treasuries in particular, is that this lag of act from
Speaker 1: all this tightening financial conditions is going to impact in
Speaker 1: this case, the US economy at a time where we
Speaker 1: already know it's slowing. We're way beyond peak inflation. Inflation
Speaker 1: is already coming down. So it's gonna be kind of
Speaker 1: a trifecta of slowing economy, uh putting more downward pressure
Speaker 1: on inflation, and that that's gonna be good for bonds
Speaker 1: and has been good for bonds this year. Perhaps the
Speaker 1: jobs are gonna be as important has been in the
Speaker 1: month's pass, but certainly will be. Um, you'll take on that,
Speaker 1: and then you take also when you know this huge
Speaker 1: rise in productivity and what it means, so you'll strategy. Yeah,
Speaker 1: so the employment report, it's another hurdle we kind of
Speaker 1: have to to get through. Um. You know, every cycle,
Speaker 1: employment is a lagging indicator. I feel as though this
Speaker 1: cycle is probably extra lagging, just because companies are struggled
Speaker 1: to find workers. My view is if it comes in
Speaker 1: close to expectations, and I haven't tracked anything that suggests
Speaker 1: that it shouldn't be close to expectations, but it uh
Speaker 1: as that just means that we're at a slow pace,
Speaker 1: we are seeing less job growth. I think markets will
Speaker 1: like that. So, yeah, it was very interesting today. You know,
Speaker 1: the unit labor cost coming in week Um, again, this
Speaker 1: gets us a little bit more towards mild recession, maybe
Speaker 1: a soft landing. I think that's the big issue that
Speaker 1: markets have to figure out to really get inflation down more.
Speaker 1: Do we need the recession? Do we need a soft landing? Um?
Speaker 1: And that unit labor cost tells us, you know, maybe
Speaker 1: we don't need quite as harder recession to get inflation lower,
Speaker 1: particularly because the central banks and the FED in particular
Speaker 1: talk about that service inflation and that's really driven by labor.
Speaker 1: I can definitely see that line of thinking. But you
Speaker 1: wonder whether or not both the bond in the stock
Speaker 1: markets are looking beyond what the actions are too later
Speaker 1: in the year when conditions could be better, when you know,
Speaker 1: you you really still have to live through the effects
Speaker 1: of what they did last year. Um, are we reacting
Speaker 1: too soon? Yeah, that's a tough one. That that's a
Speaker 1: you know, this is it's part of the art of
Speaker 1: money management versus the science trying to figure out when
Speaker 1: exactly is sort of the lag effect and and again
Speaker 1: it's not it shouldn't be off to the races in
Speaker 1: terms of risk assets doing well. Uh, you know again
Speaker 1: you look at Apples earnings, Amazon, Googles. I mean that
Speaker 1: there's the challenge of bottom up impacting companies versus maybe
Speaker 1: the inflationary backdrop at the forty foot level. Uh, it
Speaker 1: is improving, but I just think the macro backdrop is improving.
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