Speaker 1: This is Bloomberg day Break Asia for this Friday, June
Speaker 1: second in Hong Kong, Thursday June first in New York
Speaker 1: and coming up today. Apple is working on plans to
Speaker 1: expand its retail chain with a deeper push into China
Speaker 1: and India. Broadcom suffers a slowdown in sales despite gains
Speaker 1: in Ai, and one FED official says the US Central
Speaker 1: Bank should it least skip a rate hike in June.
Speaker 2: The Senate continues to try to move closer to a
Speaker 2: debt ceiling agreement, while in Asia, worries continue regarding the
Speaker 2: relationship between the US and China. I'm Dan Schwartzman. I'll
Speaker 2: have your news coming up.
Speaker 3: That's all straight ahead on Bloomberg day Break Asia, the
Speaker 3: business news you need to start your day, and just
Speaker 3: one fifteen minute podcast available on Apple, Spotify, the Bloomberg
Speaker 3: Business App, and everywhere you get your podcasts.
Speaker 1: Good morning, I'm Rishad Salama and I'm Brian Curtiz. One
Speaker 1: of the stories we're following today.
Speaker 4: All right, well, we're having a look now at Apple.
Speaker 4: Apple planning a deeper push into retail in China and India.
Speaker 4: Let's get details now from Bloomberg Joanna One who sent
Speaker 4: us this from Hong Kong.
Speaker 5: Apple is in toox you open fifteen new stores across
Speaker 5: the APAC region through twenty twenty seven. Sources say the
Speaker 5: idea is to build Apples brand in growth markets, especially
Speaker 5: China and India. The APAC market generated about one hundred
Speaker 5: and thirty billion dollars of Apple's revenue last year. That's
Speaker 5: roughly a third of total sales. Currently, Apple has more
Speaker 5: than five hundred and twenty stores in twenty six countries,
Speaker 5: about half of them in the United States. Yet the
Speaker 5: company gets most of its revenue from other channels, including
Speaker 5: its e commerce site. So why the added stores while
Speaker 5: they're more about building Apple's brand than actually selling goods
Speaker 5: in Hong Kong, joined Wang Bloomberg Day Brigasia Well.
Speaker 1: Broadcom says artificial intelligence spending is helping fuel sales, but
Speaker 1: it wasn't enough to offset a broader post pandemic slow
Speaker 1: down in the industry. Let's get the story from Bloomberg's
Speaker 1: Charlie Pellett. Broadcom is one of the world's biggest chip makers.
Speaker 1: It said revenue in the fiscal third quarter will be
Speaker 1: about eight point eight five billion dollars of four point
Speaker 1: six percent from a year earlier. Though that tops the
Speaker 1: Analys estimate of eight point seven six billion, it would
Speaker 1: represent its slowest growth in years. On the plus side,
Speaker 1: the forecast suggests that Nvidia is not the only chip
Speaker 1: maker benefiting from the AI frenzy. Broadcoms networking components helped
Speaker 1: direct traffic between computers in giant data centers, and it's
Speaker 1: a maker of custom chips for some of the biggest
Speaker 1: cloud computing providers in New York. Charlie Pellett Bloomberg Daybreak Asia.
Speaker 1: In late trading, the stock bounced around a little bit,
Speaker 1: down two point four percent now at one point it
Speaker 1: was higher and earlier we mentioned the Apple story during
Speaker 1: the regular session, Apple gaining one point six percent.
Speaker 4: Rish yep Blue Lulemon Athletica reporting better than anticipated profits
Speaker 4: and sales for the first quarter, projecting four year results
Speaker 4: that outpaced analyst estimates. It has been interpreted as a
Speaker 4: sign that demand for the company's price the active way.
Speaker 4: It's persisting despite emerging weakness among consumers. We've got reaction
Speaker 4: from Bloomberg's Pudam Goyle.
Speaker 6: What I think struck out to us to be very
Speaker 6: very good was the international revenue growth, which was sixty percent,
Speaker 6: and you can attribute a lot of that to China,
Speaker 6: but remember China wasn't weak for them last year when
Speaker 6: it was for everyone else, even before reopening. So just
Speaker 6: you know, good numbers on top of good numbers here.
Speaker 4: Put going from Bloomberg Intelligence there. Lululemon also been working
Speaker 4: down bloated inventories since last year, reporting that levels are
Speaker 4: up twenty four percent from a year ago in the
Speaker 4: first quarter. It's an improvement from the fifty percent year
Speaker 4: of a year gain reported last quarter, though it's still
Speaker 4: higher than usual. Lululemon shares last timm I checked were
Speaker 4: up thirteen percent in late trading.
Speaker 1: Philadelphia Fedbank President Patrick Harker says the FED is close
Speaker 1: to the point where it can stop raising interest rates,
Speaker 1: and he thinks the FED can at least skip a
Speaker 1: rate hike at the June meeting. Is Harker speaking at
Speaker 1: an event with the National Association for Business Economics.
Speaker 7: I do believe that we are close to the point
Speaker 7: where we can hold rates in place and let monetary
Speaker 7: policy do its work to bring inflation back to the
Speaker 7: target in a timely manner. Along this path, I projected
Speaker 7: we will see modest growth this year, with real GDP
Speaker 7: coming in a bit below one percent.
Speaker 1: Harker, who votes on monetary policy this year, said inflation
Speaker 1: is way above the fed's two percent target. He emphasized
Speaker 1: that he'll assess incoming data to determine whether additional tightening
Speaker 1: is needed. One data point FED officials will be watching
Speaker 1: tomorrow is the May jobs report in the United States.
Speaker 1: Those numbers coming at eight thirty in the morning.
Speaker 4: Wall Street time, Well, we are also looking at what's
Speaker 4: happening with investment banking and if anything's to go by
Speaker 4: looking great because Goldman Sachs is winning of a shop
Speaker 4: slowed down in its investment bank and Kate's reports.
Speaker 8: Goldman president John Waldron says the Wall Street giant is
Speaker 8: preparing for a tougher economic environment and is taking additional
Speaker 8: action on headcount. The bank's trading business is down more
Speaker 8: than twenty five percent this quarter compared to a year ago,
Speaker 8: and Waldron describes capital markets activity as sluggish. Analysa forcas
Speaker 8: AT annual revenue at Goldman Sachs will be roughly in
Speaker 8: line with what it posted last year at forty eight
Speaker 8: billion dollars. That is more than ten billion dollars less
Speaker 8: than what the firm notched in twenty twenty one during
Speaker 8: a frenzied period of deal making and heightened trading activity
Speaker 8: in Washington and Kate's Bloomberg Daybreak Asia.
Speaker 1: I'm Brian Curtis along with Rashad Salamat a little bit
Speaker 1: more on coming up later on China's home sales growth.
Speaker 1: We had a little bit of a slow down in
Speaker 1: May after a rebound in the previous couple of months.
Speaker 1: Values up six point seven percent, and that gains that
Speaker 1: compares to gains twenty nine percent over the previous couple
Speaker 1: of months. And then Reuter is this reporting at Tesla
Speaker 1: ceo Elon Musk before he left met with China's Vice
Speaker 1: Premier Ding shu Chiang. That was yesterday in Beijing, and
Speaker 1: it marked the first time that Ding was known to
Speaker 1: have had a one on one meeting with a foreign CEO.
Speaker 1: Those stories ahead, but let's take a closer look now.
Speaker 1: At World News, the Senate is debating further the debt
Speaker 1: ceiling agreement. Dan Schwartzman with more in the newsroom in
Speaker 1: New York.
Speaker 2: Dan, that's right, Brian. Senators have been working all day
Speaker 2: to try to agree on a path forward to pass
Speaker 2: the debt ceiling agreement ahead of a June fifth deadline
Speaker 2: to averted default. The House was able to approve the
Speaker 2: bill Wednesday evening. While passage through the Senate is considered
Speaker 2: a virtual certainty, when that occurs is seemingly the question.
Speaker 2: Some of the hold upstar military spending as well as
Speaker 2: aid to Ukraine. Republican Senator Lindsay Graham says it needs
Speaker 2: to be more funding for the military in Ukraine.
Speaker 9: I'm not going to destroy our military in the name
Speaker 9: of raising the debt. I'm not going to be part
Speaker 9: of a political system in Washington that pulled the plug
Speaker 9: on the UK at the time they're making advances. I'm
Speaker 9: not going to be the savior of Putin.
Speaker 2: Meanwhile, Independent Vermont's Senator Bernie Sanders things for spending too much.
Speaker 3: We're talking about, over a two year period, a fifty
Speaker 3: six billion dollar increase in military spending at a time
Speaker 3: when we spend more than the next ten nations. Come on.
Speaker 2: Senator Marco Rubio is calling on the Department of Justice
Speaker 2: to investigate whether TikTok Ceo shoe Ze Chu made false
Speaker 2: statements to Congress. The top Republican on the Senate Intelligence committees,
Speaker 2: using a report from Forbes that claimed the social media
Speaker 2: apps stored users financial information on servers in China that
Speaker 2: were accessible to employees. Shoe had testified under oath before
Speaker 2: a House panel that he has seen no evidence that
Speaker 2: China has the ability to access TikTok user data. Cho
Speaker 2: claims that US data is stored in Virginia and in Singapore.
Speaker 2: Rubio has urged Attorney General Merrick Garland to investigate Chu
Speaker 2: and his claims. Warries asked the relationship between the US
Speaker 2: and China were on display at a defense conference in
Speaker 2: Singapore as participants expressed nervousness regarding Taiwan. China, also rebuffing
Speaker 2: attempts by the US to set up a meeting between
Speaker 2: Defense Secretary Lloyd Austin and his Chinese counterpart, Lee Shang Fu,
Speaker 2: has also worried those in attendance. Ever since an alleged
Speaker 2: Chinese by balloon floated over the US and was later
Speaker 2: shot down by a fighter jet, relationships between the two
Speaker 2: powers have been at a low. President Biden, speaking at
Speaker 2: the US Air Force Academy commencement, says the country is
Speaker 2: not looking at conflicts with China.
Speaker 10: The United States does not seek conflict or confrontation with China.
Speaker 10: China and the United States should be able to work
Speaker 10: together where we can solve some global challenges like climate.
Speaker 7: But we are.
Speaker 10: Prepared for bigous competition. We will stand stand up for
Speaker 10: our interest, for our friends, and for our values.
Speaker 2: That was President Biden at the US Air Force Academy commencement.
Speaker 2: Global News twenty four hours a day, powered by more
Speaker 2: than twenty seven hundred journalists and analysts in more than
Speaker 2: one hundred and twenty countries. I'm Dan Schwartzman, and this
Speaker 2: is Bloomberg.
Speaker 1: I'm Brian Curtis with Rashad So. I'm not Aerin gibbs
Speaker 1: Is with US. She's senior partner and CIO of Main
Speaker 1: Street Asset Management. Aaron, it looks like the debt ceiling
Speaker 1: and spending negotiations we'll be passing. We'll get through, and
Speaker 1: that's at the same time that the FED will pause.
Speaker 1: Is that enough to juice up these markets further or
Speaker 1: is that more or less priced in?
Speaker 11: I think that's very much priced in. I think right
Speaker 11: now are the real concern for the most of the
Speaker 11: markets is the FED rate hike and what's going to
Speaker 11: come in the next two weeks.
Speaker 4: All right, Well, you know, you look at that, where
Speaker 4: would you think interest rates are going to be in
Speaker 4: about six months or thereabouts? Because if they are low,
Speaker 4: would that be an admission that actually the Fed got
Speaker 4: it wrong?
Speaker 11: Yeah? Absolutely. I think if we see any cuts within
Speaker 11: twenty twenty three, I think that is an indication that
Speaker 11: the Fed, you know, if they're reversing it just within
Speaker 11: six months of the last hike, I think that's definitely
Speaker 11: an indication that, you know, they're having to pull back,
Speaker 11: maybe they've overtightened. And so I think right now, I
Speaker 11: think we might still see another two hikes towards the
Speaker 11: end of the year. I'm in more of that camp
Speaker 11: that we might see a pause, but maybe not a
Speaker 11: cut this year. It might be we might have to
Speaker 11: wait until twenty twenty four to really see that reversal
Speaker 11: of these recent hikes.
Speaker 1: And what are your thoughts about whether or not we
Speaker 1: get a recession and whether or not that's enough to
Speaker 1: get the Fed to start cutting maybe towards the end
Speaker 1: of the year.
Speaker 11: I think that's still very much a risk, whether we're
Speaker 11: looking through indications through the bond markets or through just
Speaker 11: what corporate profits are doing. That's still out there. You know.
Speaker 11: Obviously the opposing side is that we just have such
Speaker 11: a strong jobs report and we're still dealing with very
Speaker 11: high inflation, and so how quickly we could transform into
Speaker 11: actually growth being into negative and having two quarters of
Speaker 11: negative negative growth just within this year seems less likely
Speaker 11: given sort of the types of strengths that we're seeing,
Speaker 11: particular in the labor market. I think again, that might
Speaker 11: be something that we might see maybe you know, the
Speaker 11: beginning of it, maybe in the fourth quarter this year
Speaker 11: and potentially you know, into twenty twenty four.
Speaker 4: Erin I mean, we probably had the most aggressive manager
Speaker 4: policy tighting in recent history take place globally. Why is
Speaker 4: it that in the US we're not really seeing the
Speaker 4: effects of it that much?
Speaker 11: Yes, there is. I mean, I think we're just starting
Speaker 11: to see some of the effects, and we're you know,
Speaker 11: we're starting to see some big drops both in money
Speaker 11: supply and inflation. You know, we've known that there's always
Speaker 11: been sort of a nine to twelve month lag and
Speaker 11: this this takes a while, and but it I think
Speaker 11: ultimately it's because the FED is fighting a lot of
Speaker 11: different you know, sort of opposing waves of posing flows
Speaker 11: and part of that is federal spending, particularly in the US,
Speaker 11: and so trying to counteract all of that money supply
Speaker 11: that is going into the economy through tightening is just
Speaker 11: you know, fighting a rather you know, difficult headwind.
Speaker 1: I want to ask you kind of a complicated question
Speaker 1: having to do with bubbles. First, do you think there's
Speaker 1: a bubble in AI related stocks? Okay, but that's one
Speaker 1: sort of bucket. The other bucket is, well, you don't
Speaker 1: think there's a bubble in AI. It's very real and
Speaker 1: it's going to be very important, but maybe the stocks
Speaker 1: have run up or do you think the market is
Speaker 1: actually looking at this quite rationally and that some of
Speaker 1: these numbers, like even a Broadcom trading you know, with
Speaker 1: pe of nineteen or twenty, it's not that expensive.
Speaker 11: You know, so there are a few stocks where it
Speaker 11: doesn't really look that terribly expensive. Just like you mentioned
Speaker 11: Broadcom in video that's trading forty times earning. That's actually
Speaker 11: you know, within its realm of averages. You know, prior
Speaker 11: to now that we have this sort of almost doubling
Speaker 11: of profits expectations and the forward forward pe get you know,
Speaker 11: went from like a seventy to forty times, so that
Speaker 11: it starts looking cheap when you double your profit expectations.
Speaker 11: So I think there are companies where certainly the outlook
Speaker 11: has so much improved that they may not be necessarily
Speaker 11: bubble worth, but certainly expensive. So you know, are they
Speaker 11: more at risk if we really hit a recession. Absolutely?
Speaker 11: Is there really that possibility of growth in the future. Absolutely,
Speaker 11: it's just you know, whether that's going to happen, if
Speaker 11: they're going to have that downturn or a pullback, or
Speaker 11: for this type of momentum is really going to be
Speaker 11: able to continue. And so I think, you know, it's
Speaker 11: really important for investors to be you know, selective about
Speaker 11: which companies within this space, companies that don't have a
Speaker 11: history of disappointing and you know, picking your points of
Speaker 11: entry points because there obviously has been a big run
Speaker 11: up and you might want to wait for some cooling off,
Speaker 11: maybe some disappointing news with these high data types.
Speaker 4: Of stocks erin. I mean, if you mentioned value there, well,
Speaker 4: China and Hong Kong particularly looking very cheap. Are you
Speaker 4: looking not right now?
Speaker 11: I think given the overall expectations, you know, we've just
Speaker 11: seen some really disappointing numbers. You know, obviously within manufacturing
Speaker 11: and the economic growth. I think there's just so much
Speaker 11: risk overall across the board. You know, we're still thirty
Speaker 11: percent cash for a lot of our clients. I think
Speaker 11: not just looking at you do US risk and European risk.
Speaker 11: But though it's a good value, you know, you never
Speaker 11: wanted to sort of buy that falling knife just yet.
Speaker 1: Well, we've had some markets really gained so far this
Speaker 1: year in Asia, markets like Japan and also in Taiwan.
Speaker 1: Those are the two main leaders. Are those interesting at all?
Speaker 1: Are you pretty much playing it from a domestic perspective
Speaker 1: at the moment.
Speaker 11: No, certainly Japan it does look very interesting, and so
Speaker 11: I think it's more sort of the emerging markets, and
Speaker 11: you know, sort of like with less transparency. I'm a
Speaker 11: little more hesitant, but absolutely there are definitely good values
Speaker 11: out there outside of the US.
Speaker 1: This is Bloomberg Daybreak Asia, your morning brief on the
Speaker 1: stories making news from Hong Kong to Singapore and Wall Street.
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Speaker 4: And I'm Richard Salama. Join us again tomorrow for all
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