WEBVTT - Intel Shares Plunge; Apple Overhaul in the EU

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Nathan Hager and I'm Amy Morris. Here are the

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<v Speaker 2>stories we're following today.

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<v Speaker 3>The drop in futures follows another record close on highs

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<v Speaker 3>for US stocks and a disappointing after the bell forecast

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<v Speaker 3>from Intel. The shares of the chip maker are plunging

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<v Speaker 3>twelve percent in early trading. Intel's first quarter projection for

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<v Speaker 3>both sales and profit came in well short of Wall

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<v Speaker 3>Street estimates. Dan Morgan is a portfolio manager with Sinovis Trust.

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<v Speaker 4>The guideance going into the first quarter is disappointing, even

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<v Speaker 4>if you look at the midpoint of that range at

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<v Speaker 4>the game and revenues, and the came at twelve point

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<v Speaker 4>seven billion. Street was at fourteen point two billion, and

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<v Speaker 4>then that EPs number was a big mess.

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<v Speaker 3>Dan Morgan of Sinov's Trust notes the chip maker's personal

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<v Speaker 3>computer business is recovering, but demand is weakening in the

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<v Speaker 3>lucrative market for data center.

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<v Speaker 2>Chips, and we're also seeing shares of Visa fall. In

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<v Speaker 2>early trading, all of the world's biggest payments network posted

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<v Speaker 2>profit above estimates. It forecasts low double digit revenue growth

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<v Speaker 2>and diluted earnings per share to grow in the low

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<v Speaker 2>teens the stock had closed at a record high before

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<v Speaker 2>the earnings.

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<v Speaker 3>And Amy earnings are front in center in Europe as well.

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<v Speaker 3>Let's go to London get the latest with Bloomberg Stephen Carrol, Stephen.

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<v Speaker 5>Good morning, Nathan and Amy. Better than expected sales figures

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<v Speaker 5>from LVMH have champagne corks popping on European markets, investors

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<v Speaker 5>seeing the resilience from the world's largest luxury conglomerate as

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<v Speaker 5>a positive sign for the sector. The sentiment driving shares

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<v Speaker 5>higher not only for LVMH, but also rivals kerring Ermez

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<v Speaker 5>and Richemont. Another top performing stock in Europe is drinks

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<v Speaker 5>maker Remi Quantro. That's despite reporting falling sales, investors instead

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<v Speaker 5>focused on cost cutting plans and hopes the Cognac slump

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<v Speaker 5>may have bottomed out.

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<v Speaker 6>In London.

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<v Speaker 5>Stephen Carrol, Bloomberg Radio.

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<v Speaker 2>All right, thanks Steven. Back here in the US, we're

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<v Speaker 2>seeing major changes at Apple. The company is embarking on

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<v Speaker 2>an historic overhaul of its iOS Safarian app store offerings

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<v Speaker 2>in the European Union, Mark German covers Apple for Bloomberg

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<v Speaker 2>in San Francisco, So I would say.

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<v Speaker 7>These changes are historic. For the first time, Apple is

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<v Speaker 7>going to allow users and again this is EU specific

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<v Speaker 7>to install third party app stores. So you'll be able

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<v Speaker 7>to install maybe an app store from Epic Games, maybe

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<v Speaker 7>from Microsoft met maybe from Meta, replace the app store

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<v Speaker 7>from Apple on the phone, and install applications to get

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<v Speaker 7>those third party programs. So that's the biggest change.

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<v Speaker 2>Bloomberg's Mark German says the sweeping changes are coming in

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<v Speaker 2>March and is a direct response to the new EU

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<v Speaker 2>New Digital Markets Act, which imposes rigid restrictions on the

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<v Speaker 2>largest tech firms.

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<v Speaker 3>Turning to the economy, amy the US has pulled farther

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<v Speaker 3>ahead in the race to be the world's biggest. We

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<v Speaker 3>get the details from Bloomberg's Jeff Bellinger.

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<v Speaker 8>The US economy is emerging from the pandemic period in

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<v Speaker 8>a better place than China's, and you can thank the

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<v Speaker 8>vibrant American consumer. Gross domestic product rows six point three

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<v Speaker 8>percent in nominal terms, that is, unadjusted for inflation last year,

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<v Speaker 8>outpacing China is four point six percent gain. China has

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<v Speaker 8>been struggling under the weight of a year's long real

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<v Speaker 8>estate bust and its worst streak of deflation in some

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<v Speaker 8>twenty five years. The economic outperformance is also reflected in

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<v Speaker 8>the respective country stock markets. US shares have hit all

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<v Speaker 8>time highs this week, while Chinese equities are mired in

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<v Speaker 8>a six trillion dollar plus bear market route. Jeff Bullinger,

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<v Speaker 8>Bloomberg Radio.

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<v Speaker 2>Thank you, Jeff, And speaking of the economy, we will

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<v Speaker 2>get a report this morning that is closely watched by

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<v Speaker 2>the FED. The core PCE deflator, the Fed's preferred inflation measure,

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<v Speaker 2>likely grew at a subdued pace in December. Economists are

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<v Speaker 2>forecasting a gain of two tenths of a percent.

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<v Speaker 9>Well.

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<v Speaker 3>Treasury Secretary Janet Yellen is putting out some positive words

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<v Speaker 3>about inflation, amy saying it is now well under control.

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<v Speaker 10>We were through a period in which inflation was high,

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<v Speaker 10>higher than we hid really seen since the late seven

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<v Speaker 10>or early eighties, but it has come down quickly.

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<v Speaker 3>Treasury Secretary Yelling ads Americans are also benefiting from wage

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<v Speaker 3>growth that now exceeds inflation.

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<v Speaker 2>On Capitol Hill, Senate Republican leaders are trying to salvage

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<v Speaker 2>a deal on Ukraine aid and border security. GOP negotiators

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<v Speaker 2>are concerned an impasse at the border would deny Ukraine

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<v Speaker 2>the sixty one billion dollars in aid that it's seeking

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<v Speaker 2>in its fight against Russia. Meanwhile, Texas is still putting

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<v Speaker 2>up razor wire at the border, even after the Supreme

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<v Speaker 2>Court and gave the Biden administration the go ahead to

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<v Speaker 2>cut it down. Texas Governor Greg Abbott, we.

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<v Speaker 11>Are going to make it impossible to enter Texas illegally,

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<v Speaker 11>and that includes maintaining the National Garland border, building more

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<v Speaker 11>border wall just like what President Trump put up, as

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<v Speaker 11>well as extending the razor wire wall in the state

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<v Speaker 11>of Texas.

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<v Speaker 2>Governor Greg Abbott tells Bloomberg the state has a constitutional

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<v Speaker 2>right to defend itself. You can hear more of our

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<v Speaker 2>conversation with the Texas governor on the Bloomberg Talks podcast.

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<v Speaker 3>And when it comes to those border togoas Amy, some

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<v Speaker 3>senators are concerned Donald Trump is inserting himself into the process.

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<v Speaker 3>Bloomberg zed Baxter has that part of the story.

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<v Speaker 12>Mitt Romney says this cannot happen.

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<v Speaker 9>Former President Trump is indicated to senators that he does

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<v Speaker 9>not want us to sell the pumbit the border. He

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<v Speaker 9>wants to lay the play of the border at Biden

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<v Speaker 9>and the idea that someone running for president would say,

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<v Speaker 9>please hurt the country so I can blame my opponent

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<v Speaker 9>and help my politics is a shocking development.

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<v Speaker 12>Now with Trump being perceived as the eventual GOP nominee,

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<v Speaker 12>of the question is will he insert himself into every

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<v Speaker 12>congressional battle Ed Baxter, Bloomberg Radio.

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<v Speaker 8>Thank you, Ed.

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<v Speaker 2>Closing arguments are set to begin later today in the

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<v Speaker 2>defamation case against Donald Trump. They come after the former

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<v Speaker 2>president left a Manhattan courtroom fuming after his three minute

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<v Speaker 2>testimony gave him little time to refute writer's sexual abuse claims.

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<v Speaker 2>Time now for a look at some of the other

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<v Speaker 2>stories making news around the world, and for that we're

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<v Speaker 2>joined by Bloomberg's John Tucker.

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<v Speaker 6>Good morning John, Good morning Amy. A moratorium this morning

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<v Speaker 6>from the White House, the Biden administration has halted the

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<v Speaker 6>approval of new licenses to export liquefied natural gas. This

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<v Speaker 6>gives the administration time to scrutinize how the shipments impact

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<v Speaker 6>climate change. The administration's pause comes as environmentalists have seized

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<v Speaker 6>on the projects as a litmus test to the President's

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<v Speaker 6>climate change commitment. Overnight, the state of Alabama executed death

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<v Speaker 6>row inmate Kenneth Smith, marking the first time in US

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<v Speaker 6>history nitrogen gas was used to carry out capital punishment.

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<v Speaker 6>The UN Human Rights Office called on Alabama to stop

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<v Speaker 6>the execution, noting there's no scientific evidence to prove that

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<v Speaker 6>execution by nitrogen inhalation will not cause grave suffering. General

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<v Speaker 6>Motor is blaming poor leadership for mishandling its Cruise Robotaxi crisis.

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<v Speaker 6>That story from Bloomberg's Charlie.

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<v Speaker 13>It is an admission the company is hoping we'll get

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<v Speaker 13>its cars back on the roads. A report by the

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<v Speaker 13>law firm Quinn Immanuel, which was paid by Cruise, outlines

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<v Speaker 13>how executives took an adversarial approach with regulators after one

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<v Speaker 13>of its autonomous cars struck and seriously injured a woman.

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<v Speaker 13>The incident led Cruise to halt its fleet nationwide, which

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<v Speaker 13>undercuts GMCEO Mary Barra's vision to transform the carmaker from

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<v Speaker 13>a twentieth century metal bender to a transportation company of

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<v Speaker 13>the future. Charlie Pellett Bloomberg Radio.

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<v Speaker 6>Attorney General Merrick Garland spoke at an event marking the

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<v Speaker 6>start of a new foundation named at supporting mental health

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<v Speaker 6>and wellness for law enforcement officers.

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<v Speaker 14>Coverage through that program now extends to officers who are

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<v Speaker 14>permanently and totally disabled due to certain mental health disorders,

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<v Speaker 14>as well as to those who die by suicide as

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<v Speaker 14>a result of exposure to traumatic events that they encounter

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<v Speaker 14>while on duty.

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<v Speaker 6>Howie Lebengood Foundation, named after a Capitol police officer who

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<v Speaker 6>defended the building during the January sixth riot and done

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<v Speaker 6>by suicide three days later. It flew seventy two times.

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<v Speaker 6>It was only expended to fly five. NASA's Ingenuity Space

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<v Speaker 6>helicopter was deployed to the surface of Mars in two

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<v Speaker 6>thousand and one. NASA's now abounced the four pounds are

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<v Speaker 6>of vehicle has flown its last mission. Global news twenty

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<v Speaker 6>four hours a day, whenever you want it with Bloomberg

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<v Speaker 6>News Now. I'm John Tucker. This is Bloomberg Amy.

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<v Speaker 2>All right, Thank you, John, and we bring you news

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<v Speaker 2>throughout the day here on Bloomberg Radio. But now you

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<v Speaker 2>can get the latest news on demand whenever you want it.

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<v Speaker 2>Subscribe to Bloomberg News Now to get the latest headlines

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<v Speaker 2>at the click of a button. Get informed on your schedule.

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<v Speaker 2>You can listen and subscribe to Bloomberg News Now on

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<v Speaker 2>the Bloomberg Business app, Bloomberg dot Com plus apples, Spotify,

0:08:52.200 --> 0:09:00.520
<v Speaker 2>and anywhere else you get your podcasts. Time now for

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<v Speaker 2>our Bloomberg Sports Update, and for that we bring in

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<v Speaker 2>John Stashauer.

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<v Speaker 15>Amy upset at the Australian Open, where Novak Djokovic is

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<v Speaker 15>that ten times champion. He had won thirty three matches

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<v Speaker 15>in a row. He was trounced by the fourth seed,

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<v Speaker 15>Jannick Sinner, twenty two year old from Italy, who won

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<v Speaker 15>sixty one, six, y two, six, seven, and then six

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<v Speaker 15>to three. He's the youngest finalist at the Australian Open

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<v Speaker 15>since Djokovic. In two thousand and eight, two NFL teams

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<v Speaker 15>named new coaches, the LNF Falcons going with Raheem Morris,

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<v Speaker 15>who had.

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<v Speaker 8>Been the defensive cordator of the Rams.

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<v Speaker 15>He actually was an Atlanta assistant from twenty fifteen to

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<v Speaker 15>twenty and the Falcons interim head coach. He was also

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<v Speaker 15>the coach of the Tampa Bay Bucks for three years.

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<v Speaker 15>Carolina Panthers going with a relative unknown, Dave Kanalis, who

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<v Speaker 15>had been coaching the offense at Tampa Bay.

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<v Speaker 8>He's only forty two years old.

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<v Speaker 15>He's spent thirteen years coaching with the Seahawks NBA blowout

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<v Speaker 15>in New York, Nicks All over the defending champion Nuggets

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<v Speaker 15>won twenty two to eighty four, far and away the

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<v Speaker 15>Nuggets worst loss season Celtics with a blowout win that

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<v Speaker 15>was in Miami won forty three to one ten seven

0:10:05.600 --> 0:10:08.559
<v Speaker 15>Celtics and double figures. Warriors at home lost by a

0:10:08.679 --> 0:10:12.120
<v Speaker 15>point to Sacramento won thirty four one thirty three. The

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<v Speaker 15>ex Warrior Harrison Barnes the career high thirty nine points.

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<v Speaker 15>Wizards lost at home to Utah once twenty three to

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<v Speaker 15>one o eight. The Wizard's making a coaching change, moving

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<v Speaker 15>west Untel junior to the front office. Ryan Keith, an

0:10:24.080 --> 0:10:26.560
<v Speaker 15>assistant coach, takes over for the rest of the season.

0:10:26.600 --> 0:10:28.719
<v Speaker 15>Bruins won in overtime at Ottawa three to two on

0:10:28.760 --> 0:10:32.160
<v Speaker 15>a Brad Marshan goal. Edmonton shut out Chicago. The Oilers

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<v Speaker 15>have won fifteen in a row. John Stashed. We're Bloomberg Sports.

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<v Speaker 16>From coast to coast, from New York to San Francisco,

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<v Speaker 16>Boston to Washington, DC, nationwide on sirisxam, the Bloomberg Business

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<v Speaker 16>app in Bloomberg dot com. This is Bloomberg Daybreak.

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<v Speaker 8>Good morning.

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<v Speaker 3>I'm Nathan Hager. The frenzy around cutting edge technology and

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<v Speaker 3>artificial intelligence may be leaving some big tech names behind.

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<v Speaker 3>This morning, we're talking about Intel. It is tumbling in

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<v Speaker 3>early trading after delivering a sales and profit forecast that

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<v Speaker 3>came in well short of Wall Street expectations. For more

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<v Speaker 3>on these earnings and the text story going forward, we're

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<v Speaker 3>joined by Bloomberg's Pritty Gupta Critty. What's holding Intel back?

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<v Speaker 17>A little bit of everything? And you know, this is

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<v Speaker 17>so much pressure that Intel and Pad Gelsinger at the

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<v Speaker 17>helm of it really has to live up to remember

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<v Speaker 17>you for the last i want to say, two or

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<v Speaker 17>three years, even in kind of the epitome of that

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<v Speaker 17>chip gold that we had in twenty twenty one, where

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<v Speaker 17>supply chain issues were really the focus. You had this

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<v Speaker 17>major concern that Intel was not pulling its weight in

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<v Speaker 17>terms of the chip sector, and Pad Gelsinger at the

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<v Speaker 17>helmet it said, look, this is going to be our

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<v Speaker 17>turnaround story. We are going to be the comeback kid

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<v Speaker 17>of the chip sector. And that's exactly what's not happening.

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<v Speaker 17>Let me walking through the numbers here, Nathan, because they're

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<v Speaker 17>pretty substantial. It's their first quarter forecast that's really worrying

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<v Speaker 17>a lot of people here. The revenue coming in about

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<v Speaker 17>twelve point two billion to thirteen point two billion. That's

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<v Speaker 17>the forecast for what this first quarter is supposed to

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<v Speaker 17>look like for them. But the estimate, the Wall Street estimate,

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<v Speaker 17>was fourteen point three billions, so they're almost missing that

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<v Speaker 17>by somewhere between one to two billion dollars. That is

0:12:06.800 --> 0:12:10.520
<v Speaker 17>a very big margin to be missing from. It also

0:12:10.640 --> 0:12:12.640
<v Speaker 17>has to do a lot when it comes to their

0:12:12.760 --> 0:12:15.280
<v Speaker 17>actual business model and the when we think of Intel,

0:12:15.320 --> 0:12:16.959
<v Speaker 17>we kind of think of them as their old guard

0:12:17.040 --> 0:12:20.079
<v Speaker 17>tech and instead they've actually been trying to compete with

0:12:20.280 --> 0:12:23.439
<v Speaker 17>likes of Advanced micro Devices AMD or otherwise or Nvidia

0:12:23.480 --> 0:12:26.880
<v Speaker 17>for example, that really been going headfirst into the AI sector.

0:12:26.920 --> 0:12:29.720
<v Speaker 17>So Intel has been saying, look, traditionally we look at PCs,

0:12:29.800 --> 0:12:31.720
<v Speaker 17>maybe we should be focusing and set on the data

0:12:31.760 --> 0:12:35.240
<v Speaker 17>centers that are meant to power the AI story. And

0:12:35.280 --> 0:12:38.040
<v Speaker 17>that's where they're saying that those that investment the sales

0:12:38.040 --> 0:12:41.280
<v Speaker 17>there fell ten percent in the fourth quarter, So not

0:12:41.320 --> 0:12:43.600
<v Speaker 17>only are they not growing, they're actually able to keep

0:12:43.640 --> 0:12:46.479
<v Speaker 17>up the momentum that they currently have, they're actually contracting.

0:12:46.559 --> 0:12:49.240
<v Speaker 17>So it's kind of a bag of negativity when it

0:12:49.280 --> 0:12:50.679
<v Speaker 17>comes to the Intel story.

0:12:50.960 --> 0:12:53.079
<v Speaker 3>So does this mean that the names that we've heard

0:12:53.320 --> 0:12:58.000
<v Speaker 3>of elsewhere in Vidia, AMD, these names that have built

0:12:58.080 --> 0:13:01.559
<v Speaker 3>so much excitement around the idea of artificial intelligence and

0:13:01.640 --> 0:13:04.400
<v Speaker 3>gotten a lot of investors jazzed up. Are they just

0:13:04.480 --> 0:13:06.600
<v Speaker 3>running away with this and Intel's getting left behind?

0:13:07.200 --> 0:13:09.160
<v Speaker 17>Well, they've got a little bit of a different dynamic here.

0:13:09.320 --> 0:13:11.719
<v Speaker 17>Vidia think about it as a much larger company that

0:13:11.880 --> 0:13:14.680
<v Speaker 17>Intel is the same with advanced micro devices. AMD actually

0:13:14.800 --> 0:13:16.800
<v Speaker 17>was one of the early players in terms of really

0:13:16.800 --> 0:13:20.120
<v Speaker 17>solidifying that AI presence. Remember they actually partnered with meta

0:13:20.120 --> 0:13:23.400
<v Speaker 17>platforms early on when Mark Zuckerberg's that he wanted to

0:13:23.400 --> 0:13:26.160
<v Speaker 17>dive in to the metaverse, and AMD kind of glatched

0:13:26.200 --> 0:13:29.200
<v Speaker 17>onto that. Story. Pad Gelsinger over at, Intel's dealing with

0:13:29.240 --> 0:13:30.800
<v Speaker 17>a little bit of a different issue, and it really

0:13:30.840 --> 0:13:34.280
<v Speaker 17>comes down to manufacturing capability. Remember, Intel was one of

0:13:34.320 --> 0:13:38.240
<v Speaker 17>the chief names that President Joe Biden has really been

0:13:38.240 --> 0:13:40.160
<v Speaker 17>focusing on when it comes to bringing some of the

0:13:40.240 --> 0:13:44.559
<v Speaker 17>chip manufacturing capacity back onto US soil. What that does

0:13:44.679 --> 0:13:46.960
<v Speaker 17>is make chips a little bit more expensive. It can

0:13:47.000 --> 0:13:49.800
<v Speaker 17>also mean losing customers in the process. So what Intel

0:13:49.800 --> 0:13:53.000
<v Speaker 17>has done is actually doubled down on their manufacturing operations

0:13:53.400 --> 0:13:57.480
<v Speaker 17>really putting tens of billions of dollars into US factories

0:13:57.520 --> 0:14:00.000
<v Speaker 17>as well, And that's something that some of their rivals

0:14:00.080 --> 0:14:02.800
<v Speaker 17>aren't doing because they are still doing a lot of

0:14:02.800 --> 0:14:05.800
<v Speaker 17>that production out of Taiwan, out of South Korea. Intel

0:14:05.920 --> 0:14:07.800
<v Speaker 17>kind of changing the game on that front, and by

0:14:07.840 --> 0:14:10.160
<v Speaker 17>the way, making investments that really only going to pay

0:14:10.320 --> 0:14:11.520
<v Speaker 17>ten twenty years.

0:14:11.320 --> 0:14:11.960
<v Speaker 2>Down the road.

0:14:12.200 --> 0:14:14.880
<v Speaker 17>So they're dealing with a different set of issues. But

0:14:15.360 --> 0:14:17.680
<v Speaker 17>net Nathan, you're right, they are falling behind.

0:14:18.000 --> 0:14:21.280
<v Speaker 3>So what about that longer term outlook? When you see

0:14:21.320 --> 0:14:25.640
<v Speaker 3>a short term outlook like this that so disappoints Wall Street,

0:14:25.680 --> 0:14:28.280
<v Speaker 3>what does that mean for things when it comes to

0:14:28.800 --> 0:14:31.640
<v Speaker 3>Pad Gelsinger's turnaround plans longer term?

0:14:32.080 --> 0:14:34.480
<v Speaker 17>Well, look, he's still trying to enlist a lot of confidence.

0:14:34.480 --> 0:14:36.760
<v Speaker 17>If you look at on the commentary that came out

0:14:36.760 --> 0:14:38.720
<v Speaker 17>with this earning story, he is saying, look, this is

0:14:38.760 --> 0:14:41.280
<v Speaker 17>a first quarter story only if you look at their projections,

0:14:41.280 --> 0:14:44.160
<v Speaker 17>they are meant to kind of dip first and then recover.

0:14:44.320 --> 0:14:46.640
<v Speaker 17>But the problem is, there is a credibility issue here,

0:14:46.720 --> 0:14:50.000
<v Speaker 17>There's a believability issue here because Pat Gelsinger is also

0:14:50.120 --> 0:14:53.280
<v Speaker 17>on this kind of campaign to re ensure a lot

0:14:53.280 --> 0:14:55.760
<v Speaker 17>of investors and a lot of the folks that are

0:14:55.800 --> 0:14:58.520
<v Speaker 17>investing Intel not to mention the American government that they

0:14:58.520 --> 0:15:01.600
<v Speaker 17>can't actually pull the off. The problem here is just

0:15:01.640 --> 0:15:05.480
<v Speaker 17>that that initial number, the margin is so low, or

0:15:05.520 --> 0:15:07.960
<v Speaker 17>actually so large, that the drop in revenue is so

0:15:08.120 --> 0:15:10.400
<v Speaker 17>low that you are starting to see real issues when

0:15:10.440 --> 0:15:11.960
<v Speaker 17>it comes to Okay, well, not only are you going

0:15:12.040 --> 0:15:13.880
<v Speaker 17>to make up the margin you're missing in the first quarter,

0:15:14.120 --> 0:15:16.600
<v Speaker 17>but you also have to then grow by a substantial

0:15:16.600 --> 0:15:19.600
<v Speaker 17>amount to catch up to your competitors. And that's really

0:15:19.640 --> 0:15:21.320
<v Speaker 17>where they're facing a lot of the hurdles.

0:15:21.520 --> 0:15:24.080
<v Speaker 3>So in our last thirty seconds, what could we see

0:15:24.120 --> 0:15:27.240
<v Speaker 3>going forward from Intel, Well, if still.

0:15:27.120 --> 0:15:30.120
<v Speaker 17>This campaign about believability, they basically have to prove that

0:15:30.360 --> 0:15:32.720
<v Speaker 17>their way is the right way, that this comeback story

0:15:32.880 --> 0:15:35.280
<v Speaker 17>is not over yet and they can't actually deliver on

0:15:35.320 --> 0:15:38.040
<v Speaker 17>it at a time when the AI story and AI

0:15:38.120 --> 0:15:41.680
<v Speaker 17>investment story is moving very very quickly, and it comes

0:15:41.720 --> 0:15:43.240
<v Speaker 17>down to the fact of where do you want to

0:15:43.520 --> 0:15:46.160
<v Speaker 17>put your weight behind the traditional PC business that has

0:15:46.200 --> 0:15:49.200
<v Speaker 17>proved very lucrative or this kind of new fangled AI story.

0:15:51.480 --> 0:15:54.360
<v Speaker 1>This is Bloomberg day Break today, your morning brief on

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