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Speaker 1: This is Bloomberg day Break Asia for this Friday, June

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Speaker 1: second in Hong Kong, Thursday June first in New York

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Speaker 1: and coming up today. Apple is working on plans to

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Speaker 1: expand its retail chain with a deeper push into China

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Speaker 1: and India. Broadcom suffers a slowdown in sales despite gains

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Speaker 1: in Ai, and one FED official says the US Central

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Speaker 1: Bank should it least skip a rate hike in June.

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Speaker 2: The Senate continues to try to move closer to a

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Speaker 2: debt ceiling agreement, while in Asia, worries continue regarding the

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Speaker 2: relationship between the US and China. I'm Dan Schwartzman. I'll

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Speaker 2: have your news coming up.

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Speaker 3: That's all straight ahead on Bloomberg day Break Asia, the

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Speaker 3: business news you need to start your day, and just

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Speaker 3: one fifteen minute podcast available on Apple, Spotify, the Bloomberg

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Speaker 3: Business App, and everywhere you get your podcasts.

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Speaker 1: Good morning, I'm Rishad Salama and I'm Brian Curtiz. One

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Speaker 1: of the stories we're following today.

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Speaker 4: All right, well, we're having a look now at Apple.

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Speaker 4: Apple planning a deeper push into retail in China and India.

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Speaker 4: Let's get details now from Bloomberg Joanna One who sent

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Speaker 4: us this from Hong Kong.

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Speaker 5: Apple is in toox you open fifteen new stores across

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Speaker 5: the APAC region through twenty twenty seven. Sources say the

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Speaker 5: idea is to build Apples brand in growth markets, especially

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Speaker 5: China and India. The APAC market generated about one hundred

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Speaker 5: and thirty billion dollars of Apple's revenue last year. That's

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Speaker 5: roughly a third of total sales. Currently, Apple has more

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Speaker 5: than five hundred and twenty stores in twenty six countries,

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Speaker 5: about half of them in the United States. Yet the

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Speaker 5: company gets most of its revenue from other channels, including

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Speaker 5: its e commerce site. So why the added stores while

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Speaker 5: they're more about building Apple's brand than actually selling goods

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Speaker 5: in Hong Kong, joined Wang Bloomberg Day Brigasia Well.

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Speaker 1: Broadcom says artificial intelligence spending is helping fuel sales, but

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Speaker 1: it wasn't enough to offset a broader post pandemic slow

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Speaker 1: down in the industry. Let's get the story from Bloomberg's

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Speaker 1: Charlie Pellett. Broadcom is one of the world's biggest chip makers.

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Speaker 1: It said revenue in the fiscal third quarter will be

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Speaker 1: about eight point eight five billion dollars of four point

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Speaker 1: six percent from a year earlier. Though that tops the

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Speaker 1: Analys estimate of eight point seven six billion, it would

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Speaker 1: represent its slowest growth in years. On the plus side,

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Speaker 1: the forecast suggests that Nvidia is not the only chip

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Speaker 1: maker benefiting from the AI frenzy. Broadcoms networking components helped

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Speaker 1: direct traffic between computers in giant data centers, and it's

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Speaker 1: a maker of custom chips for some of the biggest

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Speaker 1: cloud computing providers in New York. Charlie Pellett Bloomberg Daybreak Asia.

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Speaker 1: In late trading, the stock bounced around a little bit,

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Speaker 1: down two point four percent now at one point it

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Speaker 1: was higher and earlier we mentioned the Apple story during

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Speaker 1: the regular session, Apple gaining one point six percent.

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Speaker 4: Rish yep Blue Lulemon Athletica reporting better than anticipated profits

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Speaker 4: and sales for the first quarter, projecting four year results

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Speaker 4: that outpaced analyst estimates. It has been interpreted as a

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Speaker 4: sign that demand for the company's price the active way.

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Speaker 4: It's persisting despite emerging weakness among consumers. We've got reaction

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Speaker 4: from Bloomberg's Pudam Goyle.

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Speaker 6: What I think struck out to us to be very

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Speaker 6: very good was the international revenue growth, which was sixty percent,

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Speaker 6: and you can attribute a lot of that to China,

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Speaker 6: but remember China wasn't weak for them last year when

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Speaker 6: it was for everyone else, even before reopening. So just

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Speaker 6: you know, good numbers on top of good numbers here.

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Speaker 4: Put going from Bloomberg Intelligence there. Lululemon also been working

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Speaker 4: down bloated inventories since last year, reporting that levels are

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Speaker 4: up twenty four percent from a year ago in the

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Speaker 4: first quarter. It's an improvement from the fifty percent year

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Speaker 4: of a year gain reported last quarter, though it's still

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Speaker 4: higher than usual. Lululemon shares last timm I checked were

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Speaker 4: up thirteen percent in late trading.

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Speaker 1: Philadelphia Fedbank President Patrick Harker says the FED is close

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Speaker 1: to the point where it can stop raising interest rates,

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Speaker 1: and he thinks the FED can at least skip a

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Speaker 1: rate hike at the June meeting. Is Harker speaking at

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Speaker 1: an event with the National Association for Business Economics.

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Speaker 7: I do believe that we are close to the point

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Speaker 7: where we can hold rates in place and let monetary

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Speaker 7: policy do its work to bring inflation back to the

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Speaker 7: target in a timely manner. Along this path, I projected

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Speaker 7: we will see modest growth this year, with real GDP

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Speaker 7: coming in a bit below one percent.

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Speaker 1: Harker, who votes on monetary policy this year, said inflation

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Speaker 1: is way above the fed's two percent target. He emphasized

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Speaker 1: that he'll assess incoming data to determine whether additional tightening

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Speaker 1: is needed. One data point FED officials will be watching

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Speaker 1: tomorrow is the May jobs report in the United States.

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Speaker 1: Those numbers coming at eight thirty in the morning.

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Speaker 4: Wall Street time, Well, we are also looking at what's

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Speaker 4: happening with investment banking and if anything's to go by

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Speaker 4: looking great because Goldman Sachs is winning of a shop

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Speaker 4: slowed down in its investment bank and Kate's reports.

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Speaker 8: Goldman president John Waldron says the Wall Street giant is

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Speaker 8: preparing for a tougher economic environment and is taking additional

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Speaker 8: action on headcount. The bank's trading business is down more

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Speaker 8: than twenty five percent this quarter compared to a year ago,

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Speaker 8: and Waldron describes capital markets activity as sluggish. Analysa forcas

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Speaker 8: AT annual revenue at Goldman Sachs will be roughly in

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Speaker 8: line with what it posted last year at forty eight

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Speaker 8: billion dollars. That is more than ten billion dollars less

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Speaker 8: than what the firm notched in twenty twenty one during

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Speaker 8: a frenzied period of deal making and heightened trading activity

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Speaker 8: in Washington and Kate's Bloomberg Daybreak Asia.

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Speaker 1: I'm Brian Curtis along with Rashad Salamat a little bit

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Speaker 1: more on coming up later on China's home sales growth.

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Speaker 1: We had a little bit of a slow down in

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Speaker 1: May after a rebound in the previous couple of months.

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Speaker 1: Values up six point seven percent, and that gains that

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Speaker 1: compares to gains twenty nine percent over the previous couple

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Speaker 1: of months. And then Reuter is this reporting at Tesla

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Speaker 1: ceo Elon Musk before he left met with China's Vice

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Speaker 1: Premier Ding shu Chiang. That was yesterday in Beijing, and

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Speaker 1: it marked the first time that Ding was known to

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Speaker 1: have had a one on one meeting with a foreign CEO.

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Speaker 1: Those stories ahead, but let's take a closer look now.

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Speaker 1: At World News, the Senate is debating further the debt

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Speaker 1: ceiling agreement. Dan Schwartzman with more in the newsroom in

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Speaker 1: New York.

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Speaker 2: Dan, that's right, Brian. Senators have been working all day

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Speaker 2: to try to agree on a path forward to pass

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Speaker 2: the debt ceiling agreement ahead of a June fifth deadline

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Speaker 2: to averted default. The House was able to approve the

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Speaker 2: bill Wednesday evening. While passage through the Senate is considered

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Speaker 2: a virtual certainty, when that occurs is seemingly the question.

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Speaker 2: Some of the hold upstar military spending as well as

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Speaker 2: aid to Ukraine. Republican Senator Lindsay Graham says it needs

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Speaker 2: to be more funding for the military in Ukraine.

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Speaker 9: I'm not going to destroy our military in the name

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Speaker 9: of raising the debt. I'm not going to be part

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Speaker 9: of a political system in Washington that pulled the plug

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Speaker 9: on the UK at the time they're making advances. I'm

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Speaker 9: not going to be the savior of Putin.

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Speaker 2: Meanwhile, Independent Vermont's Senator Bernie Sanders things for spending too much.

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Speaker 3: We're talking about, over a two year period, a fifty

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Speaker 3: six billion dollar increase in military spending at a time

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Speaker 3: when we spend more than the next ten nations. Come on.

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Speaker 2: Senator Marco Rubio is calling on the Department of Justice

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Speaker 2: to investigate whether TikTok Ceo shoe Ze Chu made false

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Speaker 2: statements to Congress. The top Republican on the Senate Intelligence committees,

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Speaker 2: using a report from Forbes that claimed the social media

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Speaker 2: apps stored users financial information on servers in China that

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Speaker 2: were accessible to employees. Shoe had testified under oath before

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Speaker 2: a House panel that he has seen no evidence that

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Speaker 2: China has the ability to access TikTok user data. Cho

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Speaker 2: claims that US data is stored in Virginia and in Singapore.

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Speaker 2: Rubio has urged Attorney General Merrick Garland to investigate Chu

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Speaker 2: and his claims. Warries asked the relationship between the US

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Speaker 2: and China were on display at a defense conference in

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Speaker 2: Singapore as participants expressed nervousness regarding Taiwan. China, also rebuffing

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Speaker 2: attempts by the US to set up a meeting between

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Speaker 2: Defense Secretary Lloyd Austin and his Chinese counterpart, Lee Shang Fu,

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Speaker 2: has also worried those in attendance. Ever since an alleged

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Speaker 2: Chinese by balloon floated over the US and was later

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Speaker 2: shot down by a fighter jet, relationships between the two

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Speaker 2: powers have been at a low. President Biden, speaking at

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Speaker 2: the US Air Force Academy commencement, says the country is

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Speaker 2: not looking at conflicts with China.

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Speaker 10: The United States does not seek conflict or confrontation with China.

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Speaker 10: China and the United States should be able to work

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Speaker 10: together where we can solve some global challenges like climate.

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Speaker 7: But we are.

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Speaker 10: Prepared for bigous competition. We will stand stand up for

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Speaker 10: our interest, for our friends, and for our values.

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Speaker 2: That was President Biden at the US Air Force Academy commencement.

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Speaker 2: Global News twenty four hours a day, powered by more

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Speaker 2: than twenty seven hundred journalists and analysts in more than

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Speaker 2: one hundred and twenty countries. I'm Dan Schwartzman, and this

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Speaker 2: is Bloomberg.

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Speaker 1: I'm Brian Curtis with Rashad So. I'm not Aerin gibbs

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Speaker 1: Is with US. She's senior partner and CIO of Main

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Speaker 1: Street Asset Management. Aaron, it looks like the debt ceiling

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Speaker 1: and spending negotiations we'll be passing. We'll get through, and

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Speaker 1: that's at the same time that the FED will pause.

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Speaker 1: Is that enough to juice up these markets further or

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Speaker 1: is that more or less priced in?

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Speaker 11: I think that's very much priced in. I think right

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Speaker 11: now are the real concern for the most of the

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Speaker 11: markets is the FED rate hike and what's going to

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Speaker 11: come in the next two weeks.

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Speaker 4: All right, Well, you know, you look at that, where

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Speaker 4: would you think interest rates are going to be in

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Speaker 4: about six months or thereabouts? Because if they are low,

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Speaker 4: would that be an admission that actually the Fed got

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Speaker 4: it wrong?

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Speaker 11: Yeah? Absolutely. I think if we see any cuts within

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Speaker 11: twenty twenty three, I think that is an indication that

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Speaker 11: the Fed, you know, if they're reversing it just within

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Speaker 11: six months of the last hike, I think that's definitely

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Speaker 11: an indication that, you know, they're having to pull back,

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Speaker 11: maybe they've overtightened. And so I think right now, I

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Speaker 11: think we might still see another two hikes towards the

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Speaker 11: end of the year. I'm in more of that camp

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Speaker 11: that we might see a pause, but maybe not a

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Speaker 11: cut this year. It might be we might have to

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Speaker 11: wait until twenty twenty four to really see that reversal

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Speaker 11: of these recent hikes.

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Speaker 1: And what are your thoughts about whether or not we

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Speaker 1: get a recession and whether or not that's enough to

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Speaker 1: get the Fed to start cutting maybe towards the end

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Speaker 1: of the year.

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Speaker 11: I think that's still very much a risk, whether we're

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Speaker 11: looking through indications through the bond markets or through just

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Speaker 11: what corporate profits are doing. That's still out there. You know.

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Speaker 11: Obviously the opposing side is that we just have such

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Speaker 11: a strong jobs report and we're still dealing with very

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Speaker 11: high inflation, and so how quickly we could transform into

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Speaker 11: actually growth being into negative and having two quarters of

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Speaker 11: negative negative growth just within this year seems less likely

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Speaker 11: given sort of the types of strengths that we're seeing,

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Speaker 11: particular in the labor market. I think again, that might

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Speaker 11: be something that we might see maybe you know, the

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Speaker 11: beginning of it, maybe in the fourth quarter this year

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Speaker 11: and potentially you know, into twenty twenty four.

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Speaker 4: Erin I mean, we probably had the most aggressive manager

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Speaker 4: policy tighting in recent history take place globally. Why is

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Speaker 4: it that in the US we're not really seeing the

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Speaker 4: effects of it that much?

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Speaker 11: Yes, there is. I mean, I think we're just starting

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Speaker 11: to see some of the effects, and we're you know,

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Speaker 11: we're starting to see some big drops both in money

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Speaker 11: supply and inflation. You know, we've known that there's always

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Speaker 11: been sort of a nine to twelve month lag and

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Speaker 11: this this takes a while, and but it I think

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Speaker 11: ultimately it's because the FED is fighting a lot of

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Speaker 11: different you know, sort of opposing waves of posing flows

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Speaker 11: and part of that is federal spending, particularly in the US,

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Speaker 11: and so trying to counteract all of that money supply

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Speaker 11: that is going into the economy through tightening is just

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Speaker 11: you know, fighting a rather you know, difficult headwind.

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Speaker 1: I want to ask you kind of a complicated question

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Speaker 1: having to do with bubbles. First, do you think there's

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Speaker 1: a bubble in AI related stocks? Okay, but that's one

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Speaker 1: sort of bucket. The other bucket is, well, you don't

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Speaker 1: think there's a bubble in AI. It's very real and

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Speaker 1: it's going to be very important, but maybe the stocks

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Speaker 1: have run up or do you think the market is

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Speaker 1: actually looking at this quite rationally and that some of

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Speaker 1: these numbers, like even a Broadcom trading you know, with

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Speaker 1: pe of nineteen or twenty, it's not that expensive.

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Speaker 11: You know, so there are a few stocks where it

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Speaker 11: doesn't really look that terribly expensive. Just like you mentioned

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Speaker 11: Broadcom in video that's trading forty times earning. That's actually

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Speaker 11: you know, within its realm of averages. You know, prior

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Speaker 11: to now that we have this sort of almost doubling

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Speaker 11: of profits expectations and the forward forward pe get you know,

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Speaker 11: went from like a seventy to forty times, so that

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Speaker 11: it starts looking cheap when you double your profit expectations.

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Speaker 11: So I think there are companies where certainly the outlook

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Speaker 11: has so much improved that they may not be necessarily

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Speaker 11: bubble worth, but certainly expensive. So you know, are they

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Speaker 11: more at risk if we really hit a recession. Absolutely?

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Speaker 11: Is there really that possibility of growth in the future. Absolutely,

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Speaker 11: it's just you know, whether that's going to happen, if

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Speaker 11: they're going to have that downturn or a pullback, or

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Speaker 11: for this type of momentum is really going to be

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Speaker 11: able to continue. And so I think, you know, it's

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Speaker 11: really important for investors to be you know, selective about

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Speaker 11: which companies within this space, companies that don't have a

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Speaker 11: history of disappointing and you know, picking your points of

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Speaker 11: entry points because there obviously has been a big run

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Speaker 11: up and you might want to wait for some cooling off,

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Speaker 11: maybe some disappointing news with these high data types.

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Speaker 4: Of stocks erin. I mean, if you mentioned value there, well,

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Speaker 4: China and Hong Kong particularly looking very cheap. Are you

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Speaker 4: looking not right now?

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Speaker 11: I think given the overall expectations, you know, we've just

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Speaker 11: seen some really disappointing numbers. You know, obviously within manufacturing

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Speaker 11: and the economic growth. I think there's just so much

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Speaker 11: risk overall across the board. You know, we're still thirty

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Speaker 11: percent cash for a lot of our clients. I think

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Speaker 11: not just looking at you do US risk and European risk.

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Speaker 11: But though it's a good value, you know, you never

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Speaker 11: wanted to sort of buy that falling knife just yet.

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Speaker 1: Well, we've had some markets really gained so far this

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Speaker 1: year in Asia, markets like Japan and also in Taiwan.

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Speaker 1: Those are the two main leaders. Are those interesting at all?

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Speaker 1: Are you pretty much playing it from a domestic perspective

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Speaker 1: at the moment.

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Speaker 11: No, certainly Japan it does look very interesting, and so

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Speaker 11: I think it's more sort of the emerging markets, and

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Speaker 11: you know, sort of like with less transparency. I'm a

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Speaker 11: little more hesitant, but absolutely there are definitely good values

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Speaker 11: out there outside of the US.

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