WEBVTT - Traders Assess Tech Earnings, Fed Outlook

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News.

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<v Speaker 2>Welcome to the Daybreak Asia podcast. I'm Doug Krisner. Today

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<v Speaker 2>it's all about earnings. First, in Seoul, Samsung's chip unit

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<v Speaker 2>reported a profit increase of more than fivefold for the

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<v Speaker 2>December quarter, given that robust demand from memory for artificial intelligence,

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<v Speaker 2>and at the same time, Samsung announced a two and

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<v Speaker 2>a half billion dollar stock buyback. In the States, meantime,

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<v Speaker 2>there were a number of key earnings after the US close.

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<v Speaker 2>We heard from Microsoft to Meta as well as IBM,

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<v Speaker 2>along with Tesla. Joining us now for a closer look

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<v Speaker 2>is Daniel Newman. He is the CEO of Futurum Group.

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<v Speaker 2>Thank you so much for being here. Let's start with Microsoft.

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<v Speaker 2>The earnings and revenue for the latest quarter were above estimates. However,

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<v Speaker 2>Microsoft's cloud sales growth seemed to slow and CAPEX spending

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<v Speaker 2>hit a record, so the stock was down quite a

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<v Speaker 2>bit in late trading, around five percent. How do you

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<v Speaker 2>read this price action? What is it telling us?

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<v Speaker 3>Yeah, first of all, it was a pretty good quarter.

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<v Speaker 4>So when you see it fall six percent or so

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<v Speaker 4>after hours, you definitely have to, you know, raise an

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<v Speaker 4>eyebrown and say, what's happening, I actually think the thing

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<v Speaker 4>that spooking investors has more to do with the large

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<v Speaker 4>backlog that was shared by cfo Amy Hood. I think

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<v Speaker 4>it's about six hundred and twenty billion, which is a

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<v Speaker 4>massive number. But if you remember when Oracle did a

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<v Speaker 4>similar thing, shared its big backlog, there's a common denominator

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<v Speaker 4>here and that's open Ai. So while Microsoft is having

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<v Speaker 4>tremendous growth record results and by the way, I think

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<v Speaker 4>the cloud myths that everyone keeps talking about at thirty

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<v Speaker 4>nine percent azure growth against a forty percent a quarter ago,

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<v Speaker 4>so this is minuscule in terms of a miss still

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<v Speaker 4>really strong momentum, but that open ai commitment and the

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<v Speaker 4>relationship between Microsoft Open Ai, and basically right now everything

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<v Speaker 4>that open ai is touching feels a little bit toxic.

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<v Speaker 4>So all the companies that are in the kind of

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<v Speaker 4>ecosystem of Sam Altman's trillions of dollars of committed compute

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<v Speaker 4>spend seem to be penalized because there's a lack of

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<v Speaker 4>confidence in the market as to whether or not SAM

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<v Speaker 4>and open a are going to be able to execute.

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<v Speaker 4>So while some people are pointing to cloud, some people

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<v Speaker 4>are pointing to the CAPEC spending.

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<v Speaker 3>I see it a little differently.

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<v Speaker 4>I think people are a little nervous that there's too

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<v Speaker 4>much of its business committed to being able to support

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<v Speaker 4>open Ai. But I think Microsoft is well diversified, and

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<v Speaker 4>I think that might be an overreaction.

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<v Speaker 2>Before we talk about Meta, I want to explore this

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<v Speaker 2>open ai issue a little bit more visa v. Microsoft.

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<v Speaker 2>Are you saying that open ai potentially could be facing

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<v Speaker 2>a lot more in the way of competition, whether from

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<v Speaker 2>Alphabet or Google essentially, or perhaps Anthropic.

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<v Speaker 3>Yes, one percent.

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<v Speaker 4>I think what we're seeing, and by the way, Meta,

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<v Speaker 4>which we will talk about Meta Google and Thropic. But

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<v Speaker 4>Enthropic has been especially noisy lately, and then a really

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<v Speaker 4>good way we've seen what it's been able to do

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<v Speaker 4>with its code generation. It announced an outsized revenue performance

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<v Speaker 4>for the year. It has five times oversubscribed investment at

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<v Speaker 4>three hundred and fifty billion right now, and while that

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<v Speaker 4>still is smaller than open Ai, there's no question that

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<v Speaker 4>Entropic is executing very well, and it has to be

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<v Speaker 4>creating some jitters within investors that are looking at open

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<v Speaker 4>Ai as large commitments. And then, of course, all of

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<v Speaker 4>the companies attached to it its ecosystem. Google has no

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<v Speaker 4>doubt outperformed. Its market cap has soared. We were long

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<v Speaker 4>very optimistic about Google over the last year. We think

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<v Speaker 4>it's grown into a fair evaluation here, but it saw

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<v Speaker 4>its market cap almost double over the course of twenty

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<v Speaker 4>twenty five. And it's because it's been able to execute

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<v Speaker 4>not only models, but it has its own infrastructure. Microsoft

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<v Speaker 4>and Amazon other companies are just catching up on their

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<v Speaker 4>own homegrown chips. That's going to help with CAPEX. So yes,

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<v Speaker 4>all these things together are very important. But in the end,

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<v Speaker 4>what we're seeing Doug is compute is still the most

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<v Speaker 4>precious resource, and so you're seeing Metago big on investing

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<v Speaker 4>in compute. It's outsized CAPEX commitment. Microsoft is spending, but

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<v Speaker 4>they're spending to support that expected backlog, and so we

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<v Speaker 4>don't think the spending is as much a problem as

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<v Speaker 4>it is whether or not in who the customers are

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<v Speaker 4>that they're spending for. And I think that's what's creating

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<v Speaker 4>some consternation in the investor community.

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<v Speaker 2>So away from the hyperscalers, are you getting a sense

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<v Speaker 2>that we're going to begin for the people who are

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<v Speaker 2>actually investing in artificial intelligence, that we're going to begin

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<v Speaker 2>seeing an ROI, a return on investment.

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<v Speaker 4>We have said that this has to be and we

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<v Speaker 4>do believe it will be the year of ROI, of

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<v Speaker 4>a gentic AI and enterprise AI. And that's basically where

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<v Speaker 4>AI takes action to create greater productivity and efficiencies within business.

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<v Speaker 4>We think service now for instance, this quarter showed a

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<v Speaker 4>really strong perform so did IBM, both companies that provide

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<v Speaker 4>software to enterprises, AI platforms and AI capabilities to enterprises.

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<v Speaker 4>Enterprises are going to be consuming trillions of tokens. So

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<v Speaker 4>while many of us think of AI through the lens

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<v Speaker 4>of us using CHATGBT or using claud or using Gemini

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<v Speaker 4>in our everyday searches, the future is really when we

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<v Speaker 4>start to put AI to work to be able to

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<v Speaker 4>help automate workflows and processes within our everyday businesses. And

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<v Speaker 4>when that starts to scale inside healthcare and financial services

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<v Speaker 4>and inside manufacturing. That's where we think the inflection is

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<v Speaker 4>where business are going to say, okay, I spent X

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<v Speaker 4>dollars on AI software, agents, capabilities, and we are seeing

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<v Speaker 4>twenty thirty forty percent increases in productivity, which is yielding

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<v Speaker 4>greater profits, greater earnings, which.

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<v Speaker 3>Should be what it really appeases investors.

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<v Speaker 2>Tomorrow after the bell, we'll hear from Apple. This company

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<v Speaker 2>has been struggling a bit when it comes to artificial intelligence.

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<v Speaker 2>What will you be listening for or when Apple speaks

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<v Speaker 2>to analysts tomorrow after the bell.

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<v Speaker 4>Yeah, it's like Apple's wearing a fire retardant AI suit.

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<v Speaker 4>It just does not want to get in on AI.

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<v Speaker 4>I don't know why, you know, but it's funny because

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<v Speaker 4>they are sort of the opposite of all of these

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<v Speaker 4>other companies when it comes to their strategy.

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<v Speaker 3>They don't have the big cap ex commits.

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<v Speaker 4>They're really staying loyal to their existing hardware in the

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<v Speaker 4>moat that is their hardware ecosystem, and they're really trying

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<v Speaker 4>to maximize revenue by basically saying, yeah, we don't have

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<v Speaker 4>the models and we don't necessarily have the AI.

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<v Speaker 3>Software, but everybody's using it on our device.

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<v Speaker 4>So the big question for Apple is going to be

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<v Speaker 4>how long of a moat is the handset because that's

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<v Speaker 4>really where all of the momentum for Apple is.

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<v Speaker 3>And you're hearing things about wearables.

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<v Speaker 4>Maybe it's a metaglasses, maybe it's a pin or pendant

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<v Speaker 4>that's going to be worn from open ai. So the

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<v Speaker 4>platform is going to really matter over time. Apple, I think,

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<v Speaker 4>is one of those companies. Though they do the buybacks,

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<v Speaker 4>they continuously are sort of a safe haven because while

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<v Speaker 4>their numbers aren't as exciting as some of these other

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<v Speaker 4>companies for growth, they tend to perform and that's really

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<v Speaker 4>what Tim Cook's great at.

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<v Speaker 3>But I do think they need a leadership change.

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<v Speaker 4>They need to bring a young, aggressive, sort of transformational

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<v Speaker 4>leader to be the next Steve Jobs, the next person

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<v Speaker 4>that's you know, and there's no other Steve Jobs, but

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<v Speaker 4>the next of that ILK that's going to come in

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<v Speaker 4>and really change up Apple, because right now it is

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<v Speaker 4>definitely getting a little bit stale.

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<v Speaker 2>So the former Apple designer Johnny Ive is working with

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<v Speaker 2>open ai right now and developing a physical AI hardware device.

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<v Speaker 2>And before and I heard the criticism that you made

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<v Speaker 2>earlier of open ai, and that just how concentrated it

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<v Speaker 2>is right now in terms of its ability to kind

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<v Speaker 2>of connect with other companies in this AI space and

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<v Speaker 2>the risk that that may present. Is it too soon

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<v Speaker 2>to write off open Ai? I mean, we don't want

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<v Speaker 2>to throw out the baby with the bathwater necessarily, do we.

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<v Speaker 4>It's it would be a huge mistake. I mean, this

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<v Speaker 4>company has grown faster than any other company in history,

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<v Speaker 4>and it has some great capabilities. It is still the

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<v Speaker 4>synonymous brand with Generative AI or LLLMS. Right, you're using Chatchipt.

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<v Speaker 4>Even if you're using Gemini, people say I'm using Chatchipt.

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<v Speaker 4>So they've definitely created a brand an identity in the market.

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<v Speaker 3>But what has happened is a couple of things.

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<v Speaker 4>The first thing to happen is we have seen models,

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<v Speaker 4>and we talked about this earlier, you know, with model parody.

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<v Speaker 4>We're seeing Gemini leap frog and open ai model, and

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<v Speaker 4>then Anthropic and leapfrogs both, and then maybe a Chinese

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<v Speaker 4>open source model leapfrogs all of them in a certain capability,

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<v Speaker 4>and then open ai comes back. But what all these

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<v Speaker 4>companies understand is that the real mote is going to

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<v Speaker 4>be compute power, so all of them and this is

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<v Speaker 4>why Sam was spending so big. This is why Anthropics

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<v Speaker 4>now gone to Google and Amazon beyond Nvidia, this is

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<v Speaker 4>why Microsoft is spending so much on Capex, and of

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<v Speaker 4>course this is why Mark wants to build the Metacloud.

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<v Speaker 4>Sam was right when he was trying trying to go

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<v Speaker 4>out and build these contracts and get all these commitments

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<v Speaker 4>for compute power, because what that gives open ai will

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<v Speaker 4>be the flexibility to continue to innovate, to build, and

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<v Speaker 4>to pivot, knowing that.

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<v Speaker 3>What they're building today may only be the DVD.

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<v Speaker 4>Shipment version of Netflix, and that the future might be

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<v Speaker 4>something that looks more like the streaming version. You know,

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<v Speaker 4>we are going to see great innovation in AI, and

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<v Speaker 4>we don't even know what's going to come next. But

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<v Speaker 4>the one thing that all of these AI labs know,

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<v Speaker 4>that all of these hyper scalers know, that Mark Zuckerberg knows,

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<v Speaker 4>is that they don't have the compute power. They will

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<v Speaker 4>not be able to compete at some inflection in the future.

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<v Speaker 4>So Sam should not be SAM and openet should not

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<v Speaker 4>be written off. But there is very real reason to

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<v Speaker 4>be concerned if the current offerings that Sam has, if

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<v Speaker 4>he doesn't have a trick up his sleeve, because he's

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<v Speaker 4>certainly been caught with companies offering parody, offering competitive products,

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<v Speaker 4>and offering you know, alternatives that he has to deal with,

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<v Speaker 4>and so so that's going to be a big question.

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<v Speaker 4>But it's too soon to say open ai won't be

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<v Speaker 4>the winner.

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<v Speaker 2>So given everything we're talking about, does it really come

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<v Speaker 2>back to in Nvidia. At the end of the day,

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<v Speaker 2>you've got to belong that company because it's involved in

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<v Speaker 2>everything that's going right on right now in the space.

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<v Speaker 4>Look, if there wasn't great indicators from the TSMC results

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<v Speaker 4>from ASML which printed this morning that the insatiable demand

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<v Speaker 4>for compute is still very much intact. If these CAPEX

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<v Speaker 4>numbers aren't proving it, and if in Nvidia isn't the

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<v Speaker 4>biggest winner, I don't.

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<v Speaker 3>Know who is.

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<v Speaker 4>Nvidia is still making up the lion's share of the

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<v Speaker 4>compute It has among the most innovative products at any

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<v Speaker 4>given time. Of course, some may claim one spack or another,

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<v Speaker 4>but they have the deepest moat, the most loyalty in customers,

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<v Speaker 4>the largest backlog and revenue book that we've seen in

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<v Speaker 4>the marketplace, and right now it is the incumbent. And

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<v Speaker 4>also for the investors out there, it's trading at a

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<v Speaker 4>fairly low multiple. If you believe the forecast that it's

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<v Speaker 4>putting out and of course the order book that it

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<v Speaker 4>sees over the next year, you have to be very

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<v Speaker 4>optimistic that NVIDIAs come back to you. As an investor

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<v Speaker 4>and you have to be very positive that is still

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<v Speaker 4>the most likely to win the infrastructure battle over.

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<v Speaker 3>The long run.

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<v Speaker 2>Daniel will leave it there always a pleasure. Thanks so much.

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<v Speaker 2>Daniel Newman is the CEO of Futurum Group. Joining us

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<v Speaker 2>here on the Daybreak Asia podcast. Welcome back to the

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<v Speaker 2>Daybreak Asia Podcast. I'm Doug Krisner. The FED left interest

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<v Speaker 2>rates unchanged on Wednesday, in a move that was widely expected.

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<v Speaker 2>Policymakers pointed to improvements in the American economy as well

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<v Speaker 2>as the job market. Here is Chair J. Powell.

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<v Speaker 5>The US economy expanded at a solid pace last year

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<v Speaker 5>and just coming into twenty twenty six on a firm footing.

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<v Speaker 5>While job gains have remained low, the unemployment rate has

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<v Speaker 5>shown some signs of stabilization, and inflation remains somewhat elevated now.

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<v Speaker 2>As a result, the Fed did signal a more cautious

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<v Speaker 2>approach when it came to future potential cuts in interest rates.

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<v Speaker 2>And that's where we begin our conversation with Jeanette Garatty.

0:12:20.280 --> 0:12:23.880
<v Speaker 2>Jeanette is chief economist at Robertson Stevens. She spoke with

0:12:23.880 --> 0:12:27.119
<v Speaker 2>Bloomberg TV host Sherry on and April Hong.

0:12:27.120 --> 0:12:31.400
<v Speaker 6>And does today's FED decision move the needle at all

0:12:31.440 --> 0:12:34.000
<v Speaker 6>when it comes to great expectations for the rest of the.

0:12:34.000 --> 0:12:40.120
<v Speaker 7>Year, great expectations for the US economy. Perhaps not really,

0:12:40.480 --> 0:12:45.600
<v Speaker 7>I don't think this changes much of anything. First of all,

0:12:45.760 --> 0:12:50.560
<v Speaker 7>it was expected. Second of all, there was actually remarkably

0:12:50.640 --> 0:12:54.080
<v Speaker 7>little discussion in the press conference. I was very surprised

0:12:54.120 --> 0:12:59.560
<v Speaker 7>about the trajectory on interest rates beyond some discussion about

0:12:59.559 --> 0:13:04.760
<v Speaker 7>the next So I think he you know, maybe everybody

0:13:04.840 --> 0:13:07.440
<v Speaker 7>thought they knew what Jerome Powell was going to say

0:13:07.480 --> 0:13:09.400
<v Speaker 7>if they tried to pin him down to the second

0:13:09.400 --> 0:13:12.800
<v Speaker 7>half the year, But there really wasn't a whole lot

0:13:13.120 --> 0:13:17.720
<v Speaker 7>of substance there. And he did a rather interesting thing,

0:13:19.040 --> 0:13:22.760
<v Speaker 7>in my view, which is to shine a light on

0:13:23.480 --> 0:13:27.120
<v Speaker 7>some of the fiscal policy issues, some of the things

0:13:27.160 --> 0:13:31.120
<v Speaker 7>that are bothering people in the US economy right now,

0:13:31.160 --> 0:13:34.440
<v Speaker 7>if you will, do not have monetary policy solutions, only

0:13:34.480 --> 0:13:40.040
<v Speaker 7>have fiscal policy solutions. So that's where I think he's

0:13:40.040 --> 0:13:43.720
<v Speaker 7>saying that the needle is going to move, and he's

0:13:43.760 --> 0:13:47.040
<v Speaker 7>comfortable with monetary policy where it is right now. That

0:13:47.080 --> 0:13:49.200
<v Speaker 7>could change, as it always.

0:13:51.120 --> 0:13:53.240
<v Speaker 6>To your point, a little bit of that ca shaped

0:13:53.240 --> 0:13:56.560
<v Speaker 6>economy that we're seeing, right, the wealthy getting wealthier. But

0:13:56.840 --> 0:13:58.880
<v Speaker 6>also I think a lot of that conversation was crowded

0:13:58.920 --> 0:14:00.920
<v Speaker 6>out by the fact that we were really getting a

0:14:00.920 --> 0:14:03.120
<v Speaker 6>lot of questions around the politics of everything.

0:14:03.200 --> 0:14:03.440
<v Speaker 3>Right.

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<v Speaker 6>I have to ask you, what do you make a

0:14:06.960 --> 0:14:08.880
<v Speaker 6>Governor Waller's dubbish descent.

0:14:09.280 --> 0:14:10.079
<v Speaker 3>Does that sort of.

0:14:10.000 --> 0:14:13.280
<v Speaker 6>Give us a FED put in the months ahead if

0:14:13.320 --> 0:14:14.959
<v Speaker 6>he were to become the next FED chair?

0:14:17.040 --> 0:14:21.040
<v Speaker 7>Possibly The only thing I made of it right now

0:14:21.640 --> 0:14:27.640
<v Speaker 7>actually one that's a bit of a offhand remark, which

0:14:27.720 --> 0:14:31.480
<v Speaker 7>is that he's the only FED governor that the current

0:14:31.600 --> 0:14:38.440
<v Speaker 7>sitting FED voting member who is being contemplated to be

0:14:38.520 --> 0:14:42.400
<v Speaker 7>a future head of the FED. So, you know, he

0:14:42.960 --> 0:14:46.640
<v Speaker 7>voted this way because as perhaps he wanted to single

0:14:46.880 --> 0:14:50.680
<v Speaker 7>signaled to various people that he in fact would be

0:14:50.800 --> 0:14:56.920
<v Speaker 7>rather dummish. The leeway, the theoretical leeway for why he

0:14:57.000 --> 0:15:01.840
<v Speaker 7>did that was in d compous remarks. He did say

0:15:02.920 --> 0:15:05.880
<v Speaker 7>that while he feels and why the majority of the board,

0:15:05.960 --> 0:15:08.880
<v Speaker 7>while the majority of the Board felt that they were

0:15:08.960 --> 0:15:14.440
<v Speaker 7>very comfortably in the neutral range for monetary policy, in

0:15:14.480 --> 0:15:17.160
<v Speaker 7>the neutral rate of interest, that it was at the

0:15:17.240 --> 0:15:21.240
<v Speaker 7>high end, So there could be you know, it's not

0:15:22.240 --> 0:15:25.320
<v Speaker 7>out of bounds that Chris Waller could say, well, I

0:15:25.360 --> 0:15:27.720
<v Speaker 7>think we could have cut a quarter point and we

0:15:27.760 --> 0:15:34.200
<v Speaker 7>would still be firmly in the area of neutral policy stances.

0:15:34.240 --> 0:15:36.280
<v Speaker 7>So that would be the cover for what he decided

0:15:36.320 --> 0:15:36.560
<v Speaker 7>to do.

0:15:39.680 --> 0:15:41.720
<v Speaker 8>And that's just seems to be just focused on the

0:15:41.800 --> 0:15:44.240
<v Speaker 8>puff in the second half for the FED. I mean,

0:15:44.280 --> 0:15:46.200
<v Speaker 8>you look at the way goal has popped, right, the

0:15:46.400 --> 0:15:50.320
<v Speaker 8>expectation of a doubbish shift. What is your sense of

0:15:50.760 --> 0:15:53.280
<v Speaker 8>you know, in the first half, is it fair assumption

0:15:53.440 --> 0:15:54.560
<v Speaker 8>that we're not going to see a cut?

0:15:57.160 --> 0:16:00.400
<v Speaker 7>Well, now you're pinning me down to time and date

0:16:00.600 --> 0:16:04.240
<v Speaker 7>and magnetude, all of that step that economists love to avoid.

0:16:05.360 --> 0:16:09.880
<v Speaker 7>I do think that there will be two cuts this year.

0:16:10.120 --> 0:16:14.320
<v Speaker 7>The timing of it I would see as mostly being

0:16:14.480 --> 0:16:16.640
<v Speaker 7>in the second half, but could come in a little

0:16:16.640 --> 0:16:21.080
<v Speaker 7>bit earlier. But my expectation is premised on an assumption

0:16:21.800 --> 0:16:25.440
<v Speaker 7>then we will actually see some improvements in the inflation

0:16:25.640 --> 0:16:29.240
<v Speaker 7>numbers because of the way that the numbers are calculated

0:16:29.280 --> 0:16:32.960
<v Speaker 7>and because of other general trends in the economy. And

0:16:32.960 --> 0:16:37.920
<v Speaker 7>I'm making a grand assumption that there won't be any

0:16:38.480 --> 0:16:45.400
<v Speaker 7>unexpected terrriff announcements. But if that doesn't happen, then then

0:16:45.520 --> 0:16:48.320
<v Speaker 7>I don't know about those two cuts, and we could

0:16:48.440 --> 0:16:53.320
<v Speaker 7>we could have a very confrontational environment if inflation starts

0:16:53.360 --> 0:16:57.280
<v Speaker 7>to go the other way. I don't see that right now.

0:16:57.520 --> 0:17:00.320
<v Speaker 7>I think two cuts are in the mix. See it

0:17:00.400 --> 0:17:02.960
<v Speaker 7>starting at midyear.

0:17:03.600 --> 0:17:08.320
<v Speaker 8>Okay, so a couple of caveats to those Outlook, what

0:17:08.480 --> 0:17:12.239
<v Speaker 8>is your sense of the dollar whiplacks that we've been

0:17:12.240 --> 0:17:16.199
<v Speaker 8>seeing this week and the overall negative trajectory for the

0:17:16.280 --> 0:17:19.400
<v Speaker 8>green bag. How might that affect the US economy?

0:17:21.680 --> 0:17:25.640
<v Speaker 7>It will have macroeconomic effects. It will have effects on

0:17:26.320 --> 0:17:30.439
<v Speaker 7>prices in the United States. So the weaker dollar makes

0:17:30.680 --> 0:17:34.440
<v Speaker 7>those goods coming in from overseas that much more expensive.

0:17:34.520 --> 0:17:38.040
<v Speaker 7>We always we always see that in play. I think

0:17:38.960 --> 0:17:45.880
<v Speaker 7>Scott Bessant and Jerome Pwell are being economically intellectually honest

0:17:45.960 --> 0:17:51.680
<v Speaker 7>here in recognizing that, first of all, you can't do

0:17:52.040 --> 0:17:54.760
<v Speaker 7>very often what you want to do for the domestic

0:17:54.840 --> 0:17:59.800
<v Speaker 7>economy if you are trying to do something for the

0:18:00.600 --> 0:18:04.480
<v Speaker 7>something in the global markets, for example, at the same time,

0:18:04.520 --> 0:18:07.800
<v Speaker 7>you usually have to pick one perspective to determine policy.

0:18:08.359 --> 0:18:10.760
<v Speaker 7>It's domestic and that's what they're going to stick with.

0:18:12.520 --> 0:18:17.040
<v Speaker 7>There's there's obviously a lot going on. I'm not sure

0:18:17.160 --> 0:18:21.199
<v Speaker 7>how much of what is going on honestly reflects the

0:18:21.200 --> 0:18:26.400
<v Speaker 7>fundamentals as I see it. This is still a very point,

0:18:27.119 --> 0:18:30.320
<v Speaker 7>you know, and so it should the dollar should not

0:18:30.400 --> 0:18:31.400
<v Speaker 7>weaken this much.

0:18:33.880 --> 0:18:36.000
<v Speaker 6>Yeah, I mean to your point on the inflationary effects

0:18:36.040 --> 0:18:37.959
<v Speaker 6>of the US dollar. We saw a long term treasure

0:18:38.040 --> 0:18:40.840
<v Speaker 6>yields actually move as the dollar was falling, and actually

0:18:40.840 --> 0:18:43.840
<v Speaker 6>moving the opposite direction as the dollar rebounded.

0:18:43.920 --> 0:18:44.160
<v Speaker 4>Right.

0:18:45.359 --> 0:18:47.280
<v Speaker 6>I want to take you to the earlier point that

0:18:47.320 --> 0:18:50.800
<v Speaker 6>you were making about this bifurcation in the US economy

0:18:50.840 --> 0:18:52.879
<v Speaker 6>as well, because we have seen the Fed now perhaps

0:18:52.920 --> 0:18:56.399
<v Speaker 6>shift towards UH their focus on the stabilization of the

0:18:56.480 --> 0:19:01.120
<v Speaker 6>job market, but that key shaped economy that we continue

0:19:01.119 --> 0:19:03.159
<v Speaker 6>to see in the US. How problematic could this be?

0:19:04.880 --> 0:19:10.440
<v Speaker 7>Well, it's very problematic from a political standpoint. It's problematic

0:19:10.520 --> 0:19:17.479
<v Speaker 7>for monetaries, for the Federal Reserve because it partially goes

0:19:17.520 --> 0:19:20.000
<v Speaker 7>to the heart of what they feel they are there

0:19:20.040 --> 0:19:24.560
<v Speaker 7>to do, which is to protect the general fabric of

0:19:24.640 --> 0:19:28.000
<v Speaker 7>the US economy, which is usually expressed in terms of

0:19:28.560 --> 0:19:31.960
<v Speaker 7>inflation and employment, but it covers a number of other things.

0:19:32.000 --> 0:19:36.399
<v Speaker 7>So I don't think they like necessarily what they're seeing there,

0:19:35.920 --> 0:19:40.359
<v Speaker 7>but their tools are not tools that are designed to

0:19:40.520 --> 0:19:44.280
<v Speaker 7>do something about many of these things, and so that's

0:19:44.280 --> 0:19:48.920
<v Speaker 7>why I think there was Jerome Powell correctly mentioned, well,

0:19:48.960 --> 0:19:53.440
<v Speaker 7>it's understandable why from a spending standpoint, we are seeing

0:19:53.520 --> 0:19:57.720
<v Speaker 7>stronger spending in one sector of the economy, because that's

0:19:57.720 --> 0:20:00.920
<v Speaker 7>a sector that attempts to hold more ox and bonds,

0:20:01.080 --> 0:20:04.200
<v Speaker 7>more real estate. Those are areas where prices have gone up,

0:20:04.240 --> 0:20:08.920
<v Speaker 7>and so they're spending it. But the fundamental problem of

0:20:09.200 --> 0:20:16.600
<v Speaker 7>affordability and employment availability in certain sectors, that's a hard

0:20:16.680 --> 0:20:18.560
<v Speaker 7>one for the FED to address.

0:20:20.119 --> 0:20:23.919
<v Speaker 2>That was Jeanette Gerritty, chief economist at Robertson Stephens, speaking

0:20:23.920 --> 0:20:27.600
<v Speaker 2>to Bloomberg TV host Sherry On in April home bringing

0:20:27.600 --> 0:20:32.480
<v Speaker 2>it to you here on the Daybreak Asia podcast. Thanks

0:20:32.520 --> 0:20:36.160
<v Speaker 2>for listening to today's episode of the Bloomberg Daybreak Asia

0:20:36.320 --> 0:20:40.760
<v Speaker 2>Edition podcast. Each weekday, we look at the story shaping markets, finance,

0:20:41.119 --> 0:20:44.199
<v Speaker 2>and geopolitics in the Asia Pacific. You can find us

0:20:44.200 --> 0:20:48.400
<v Speaker 2>on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere

0:20:48.440 --> 0:20:51.520
<v Speaker 2>else you listen. Join us again tomorrow for insight on

0:20:51.600 --> 0:20:55.720
<v Speaker 2>the market moves from Hong Kong to Singapore and Australia.

0:20:56.160 --> 0:20:58.639
<v Speaker 2>I'm Doug prisoner and this is Bloomberg