WEBVTT - Apple and Broadcom Unite on 5G, Alibaba Job Cuts

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<v Speaker 1>This is Bloomberg day Break Asia for this Wednesday, May

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<v Speaker 1>twenty fourth in Hong Kong, Tuesday May twenty third in

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<v Speaker 1>New York and coming up today.

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<v Speaker 2>US stocks fall as negotiations over raising the debt ceiling

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<v Speaker 2>remain at an impasse.

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<v Speaker 1>Apple signs a new multi billion dollar deal with Broadcom

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<v Speaker 1>to get five G radio frequency components for its devices.

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<v Speaker 2>And Ali Baba's cloud division will cut its workforce by

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<v Speaker 2>seven percent as it prepares for a spin off.

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<v Speaker 3>China's new ambassador to the US asks for open communication.

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<v Speaker 3>China opposes US trade agreement. Mixed messages coming from debt

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<v Speaker 3>ceiling talk same sticking point as where to play spending caps.

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<v Speaker 3>I'm at Baxter with Global News.

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<v Speaker 4>That's all straight ahead on Bloomberg day Break Asia, The

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<v Speaker 4>business news you need to start your day in just

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<v Speaker 4>one fifteen minute podcast available on Apple, Spotify, the Bloomberg

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<v Speaker 4>Business App, and everywhere you get your podcasts.

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<v Speaker 2>Good morning, I'm Doug Chrisner and I'm Brian Curtiz.

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<v Speaker 1>Here are the stories we're following today. Apple has signed

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<v Speaker 1>a new multi year, multi billion dollar deal with Broadcom

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<v Speaker 1>to get new components for its devices. These would be

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<v Speaker 1>five G radio frequency components. The deal extends the sometimes

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<v Speaker 1>contentious relationship between two of the world's biggest tech companies.

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<v Speaker 1>Let's get more on the story from Bloomberg's Denise Pellgreening.

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<v Speaker 5>Apple says the collaboration will include wireless connectivity components, and

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<v Speaker 5>those components will be designed and built in several US

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<v Speaker 5>manufacturing hubs, including Fort Collins, Colorado, where Broadcom has a

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<v Speaker 5>major facility. Apple says it already helps support more than

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<v Speaker 5>one thousand jobs in Fort Collumns and the partnership will

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<v Speaker 5>enable Broadcom to continue to invest in automation projects. The Iphonemaker,

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<v Speaker 5>as a matter of fact, is spending tens of billions

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<v Speaker 5>of dollars to develop five G technology in the US,

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<v Speaker 5>and these investments are all part of that commitment Apple

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<v Speaker 5>made back in twenty twenty one to invest four hundred

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<v Speaker 5>and thirty billion dollars in the US economy over the

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<v Speaker 5>next five years. Denise Pelgreney, Bloomberg Day Brakesia.

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<v Speaker 2>As I mentioned earlier, WTI crude oil rose in New

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<v Speaker 2>York to just under seventy three dollars a barrel as

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<v Speaker 2>the market evaluated a warning from Saudi Arabia's top energy

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<v Speaker 2>official to short sellers. Here's Saudi Energy Minister Prince Abdulaziz

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<v Speaker 2>Ben Solomon speaking at the Cutter Economic Forum. Speculators like

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<v Speaker 2>any think in any market.

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<v Speaker 5>They are there to say.

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<v Speaker 2>I keep advising them that they will be ouching.

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<v Speaker 5>They did ouch in Avrid.

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<v Speaker 2>That warning, by the way, comes as the market considers,

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<v Speaker 2>or at least indicates that oil short sellers who initially

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<v Speaker 2>fled in April or making a comeback. Crewde traders were

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<v Speaker 2>surprised last month after OPEC Plus announced production cuts intended

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<v Speaker 2>to scare off those speculators. Traders now will have their

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<v Speaker 2>eyes on a meeting between opek Plus and its allies.

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<v Speaker 2>They will review their production policy for the second half

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<v Speaker 2>of the year June third and the fourth well.

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<v Speaker 1>By Dance's TikTok appears to be on track now to

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<v Speaker 1>have all of its US user data hosted and overseen

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<v Speaker 1>by the American company Oracle. TikTok CEO showed that Chew

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<v Speaker 1>said that Oracle has begun a review of his company's

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<v Speaker 1>source code, and he said that Oracle is now the

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<v Speaker 1>default destination for the app's user data US user data now.

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<v Speaker 1>This comes as by Dance struggles to win over critics

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<v Speaker 1>that critics are worried about national security implications of TikTok.

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<v Speaker 1>She said that the video app will continue to make

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<v Speaker 1>sure that its data is as safe as possible.

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<v Speaker 5>TikTok is not available in inland China today.

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<v Speaker 6>As we said many times, the Chinese government has actually

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<v Speaker 6>never asked us for US user data and we will

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<v Speaker 6>not provide even if asked.

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<v Speaker 1>Well, to address security concerns, TikTok said that it's US

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<v Speaker 1>and EU projects will have their user information stored locally

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<v Speaker 1>by a local company and it will be overseen by

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<v Speaker 1>local staff. TikTok also said that it will continue to

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<v Speaker 1>work with Oracle and the US government on data protection.

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<v Speaker 2>Ali Baba's Cloud division is said to be reducing its

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<v Speaker 2>staff by seven percent as the company prepares for a spinoff.

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<v Speaker 2>We have more from Bloomberg zvon Menn in Hong Kong.

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<v Speaker 7>The Cloud division is said to have begun offering severance

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<v Speaker 7>paid to employees. Sources say it's either that or workers

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<v Speaker 7>could be transferred to other parts of the Ali Baba group.

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<v Speaker 7>The moves are intended to streamline the business. Ali Baba

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<v Speaker 7>plans to carve out the cloud unit into a separate

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<v Speaker 7>company within a year. It would then prepare for an IPO.

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<v Speaker 7>Some analysts value the cloud business at upwards of thirty

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<v Speaker 7>billion dollars. Ali Baba Cloud is one of the biggest

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<v Speaker 7>companies that will be created in a six way split

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<v Speaker 7>of the parent in Hong Kong. I'm ivon Mann Bloomberg

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<v Speaker 7>day Break Asia and.

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<v Speaker 1>Ali Baba has really struggled here over the past month

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<v Speaker 1>or so, down around five percent or so, and in

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<v Speaker 1>this latest session, even with this news, Baba created lower

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<v Speaker 1>three point seven four percent with its usad rs. The

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<v Speaker 1>Reserve Bank of New Zealand is expected to raise interest

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<v Speaker 1>rates for the twelfth meeting in Row when it meets today.

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<v Speaker 1>Bloomberg's Paul Allen has more from Sydney.

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<v Speaker 8>Eighteen of twenty one economists surveyed by Bloomberg see the

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<v Speaker 8>Arbenz delivering another twenty five basis point rate increase at

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<v Speaker 8>today's meeting that would take the cash rate to five

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<v Speaker 8>and a half percent. The other three economists, well, they

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<v Speaker 8>see an even bigger fifty basis point move rebuilding from

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<v Speaker 8>a severe cyclone earlier this year, combined with the record

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<v Speaker 8>inflows of migrants as boosting economic activity even as inflation

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<v Speaker 8>shows signs of slowing. The RBNZ will also release a

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<v Speaker 8>new set of forecasts, and Governor Adrian Or will hold

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<v Speaker 8>a press conference following today's rate decision. Many economists believe

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<v Speaker 8>that even after today's anticipated twelfth consecutive rate increase, the

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<v Speaker 8>RBNZ may still not be done tightening yet. Paul Allen

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<v Speaker 8>Bloomberg day Break Asia and.

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<v Speaker 1>The Bank of Korea is set to hold its policy

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<v Speaker 1>rate for a third straight meeting when it meets this Thursday,

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<v Speaker 1>that's tomorrow here in Asia. I'm brand Curtis along with

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<v Speaker 1>Doug Christmas. Doug, a little bit of frustration maybe seeping

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<v Speaker 1>into market participants with these debt sealing negotiations.

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<v Speaker 2>Yes, even so, I think that where you're seeing most

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<v Speaker 2>of the stress is obviously at the shorter end of

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<v Speaker 2>the curve. Today we had the two year picking up

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<v Speaker 2>around two basis points. We heard from Neil Kashkari again today,

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<v Speaker 2>the head of the Minneapolis Fed. He was saying that

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<v Speaker 2>if inflation were to become more entrenched, the Fed could

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<v Speaker 2>keep rates elevated for a longer period of time. Now

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<v Speaker 2>tomorrow here in the US, we're going to be getting

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<v Speaker 2>minutes from the last FED meeting. Maybe maybe we'll get

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<v Speaker 2>some insight into whether or not the pause is going

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<v Speaker 2>to happen at the June meeting. That seems to be

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<v Speaker 2>what the market is counting on at this point.

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<v Speaker 1>Yeah, a little interesting that long term yields were lower

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<v Speaker 1>while the short term was up. And I think you've

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<v Speaker 1>got the one month, the three month, the six month,

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<v Speaker 1>the one year, all over five percent. Yet the equity

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<v Speaker 1>markets have hung in there today not so much. But

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<v Speaker 1>we've talked a little bit about if and when the

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<v Speaker 1>bear might change their stripes, and I was interested to

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<v Speaker 1>hear Bank of America's Cevita Supermanian turned a little bit bullish.

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<v Speaker 1>Years she's talking forty three hundred now for the S

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<v Speaker 1>and P five hundred. That's not a huge game. She

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<v Speaker 1>made a couple of interesting points on surveillance, which is

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<v Speaker 1>right before bedtime for me, but I thought it was

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<v Speaker 1>kind of interesting. And one point is that big tech

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<v Speaker 1>doesn't really have to crack from here if their duration

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<v Speaker 1>risk is shortened. Now that needs a little unpacking. Perhaps

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<v Speaker 1>you can get to that. And the second point is

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<v Speaker 1>that the S and P five hundred equal weight can

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<v Speaker 1>take up the slack going forward and can outperform through

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<v Speaker 1>the next many months. I found that quite.

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<v Speaker 2>Interesting, and I'm wondering when it comes to what's happening

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<v Speaker 2>in the foreign exchange, when you begin to consider the

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<v Speaker 2>revenue outlook for American companies, how much of that is

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<v Speaker 2>predicated on the dollar kind of weakening just a bit

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<v Speaker 2>and improving the fortunes the potential fortunes of US multinationals.

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<v Speaker 2>I thought it interesting today that Goldman Sachs was saying

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<v Speaker 2>enough that the dollar has more room to strengthen from here,

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<v Speaker 2>more so than the market is currently estimating, which kind

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<v Speaker 2>of surprised me.

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<v Speaker 1>It is surprising. I think the market is a bit

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<v Speaker 1>split on this whether or not if the FED really

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<v Speaker 1>sticks to higher for longer and inflation stays up there,

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<v Speaker 1>that probably means, you know, a firm dollar. But a

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<v Speaker 1>lot of people think the reverse will happen, and they

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<v Speaker 1>are betting that, especially if recession comes in, maybe yields

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<v Speaker 1>moved down a little bit and the dollar would ease

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<v Speaker 1>a little as well. It's all there, it's all there

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<v Speaker 1>for us over the next many months, and thank goodness

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<v Speaker 1>we have these jobs. It's time now for global news. Well,

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<v Speaker 1>China's new ambassador to the United States is asking for

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<v Speaker 1>some cooperation from the White House to build relations at

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<v Speaker 1>Baxter has Global News in the nine to sixty newsroom

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<v Speaker 1>in San Francisco.

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<v Speaker 3>Yeah, exactly right. Ambassador Chiafang is a citing disputes over

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<v Speaker 3>technology spying allegations and Taiwan at.

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<v Speaker 6>Presence signo, US relations is facing serious difficulties and challenges.

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<v Speaker 6>We hope that the United States will work together with

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<v Speaker 6>China to increase dialogue.

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<v Speaker 3>So is he. He is here now. His appointment is

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<v Speaker 3>thought to try and normalize relations going forward. China says

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<v Speaker 3>it's firmly opposed to the US Taiwan trade agreement. It's

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<v Speaker 3>urging the US to honor the One China principle not

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<v Speaker 3>to support Taiwan independence. Russian Prime Minister Mikhail Mitsubishi has

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<v Speaker 3>kicked off a two day visit to China. This is

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<v Speaker 3>Bosco seeking to deepen trade ties with Beijing. Russia has

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<v Speaker 3>said the nation's farmers are ready to significantly increase agricultural

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<v Speaker 3>exports to China. While the staffs of the two sides

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<v Speaker 3>and the dead ceiling talks in the US meet today,

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<v Speaker 3>House Speaker Kevin McCarthy is sounding anything but optimistic. His

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<v Speaker 3>tone today not optimistic at all saying things are not

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<v Speaker 3>even close.

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<v Speaker 9>People spent too much money and the dim that want

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<v Speaker 9>to even spend more than the new spent last year.

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<v Speaker 9>That is not going to happen.

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<v Speaker 3>And he says things are far apart.

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<v Speaker 4>We could still finish this by June first.

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<v Speaker 3>In a timeline, Have McCarthy says Democrats are not showing

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<v Speaker 3>any urgency, though disputed by White House spokes when Kareine

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<v Speaker 3>Jean Pierre.

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<v Speaker 5>Republicans saying that the White House is not showing any

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<v Speaker 5>urgency is a ridiculous question. Is a ridiculous statement for

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<v Speaker 5>them to be making now.

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<v Speaker 3>On the negotiations, Bloomberg Michael Shepherd says, the sticking point

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<v Speaker 3>seems to be where to set the spending cap.

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<v Speaker 10>Whether it's twenty twenty three or twenty twenty four levels,

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<v Speaker 10>and how long they decided to keep these caps in place.

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<v Speaker 10>Those seem to be the two key issues. Once they

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<v Speaker 10>lock that down, the rest of the deal seems to

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<v Speaker 10>be falling into place more quickly.

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<v Speaker 3>So that could be good news. But Republicans are also

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<v Speaker 3>questioning how Treasury is figuring out the so called X

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<v Speaker 3>State Congressman Steve Scalise, we'd like.

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<v Speaker 9>To see more transparency on how they come to that date.

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<v Speaker 9>Pa Janet Yell and herself. She left the door open

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<v Speaker 9>to delaying that in her tweets yesterday. The comments that

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<v Speaker 9>she sent out yesterday implied that it's June first or later,

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<v Speaker 9>giving some openness to the idea that June first may

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<v Speaker 9>not be the so called XT stage.

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<v Speaker 3>So any transparency. Illinois Attorney General's Office has released results

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<v Speaker 3>of the investigation of sexual abuse at the hands of

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<v Speaker 3>clerics of the Catholic Church, ag Kawani Raul, saying that

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<v Speaker 3>it comes from roughly six hundred interviews with survivors abuse

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<v Speaker 3>between nineteen fifty and twenty nineteen.

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<v Speaker 11>This report reveals the names and detail informations information of

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<v Speaker 11>four hundred and fifty one Catholic clerics and religious brothers

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<v Speaker 11>who abuse at least one nine hundred and ninety seven

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<v Speaker 11>children across all of the diocese in the state of Illinois.

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<v Speaker 3>Raoul says because of the Statute of limitations, many of

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<v Speaker 3>the cases will never be prosecuted, but that decades of

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<v Speaker 3>Catholic leaders have allowed abuses to hide in planes site

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<v Speaker 3>and that the culture and that part of the church

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<v Speaker 3>needs to be exposed. Global News powered by more than

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<v Speaker 3>twenty seven hundred journalists and analysts in over one hundred

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<v Speaker 3>twenty countries in San Francisco. I'm Ed Baxter, and this

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<v Speaker 3>is Bloomberg.

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<v Speaker 1>Brian curtis here in Hong Kong along with Rishad Salamad,

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<v Speaker 1>and our guest is Mary Manning, global portfolio manager at

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<v Speaker 1>Alfinity Investment Management. So today, Mary, was a risk off day.

0:12:25.480 --> 0:12:28.560
<v Speaker 1>It's today that many people probably showed a little bit

0:12:28.600 --> 0:12:33.160
<v Speaker 1>of fear over COVID running through China, the inconsistency of

0:12:33.160 --> 0:12:36.400
<v Speaker 1>the negotiations on the debt ceiling, and also fears about

0:12:36.440 --> 0:12:39.000
<v Speaker 1>inflation and the Fed. Were you buying today or were

0:12:39.040 --> 0:12:41.040
<v Speaker 1>you part of the gang that was lightening up?

0:12:41.360 --> 0:12:41.839
<v Speaker 5>Good morning?

0:12:41.840 --> 0:12:43.719
<v Speaker 12>Thank you very much for having me on the show.

0:12:44.520 --> 0:12:47.240
<v Speaker 12>Actually last night we weren't doing anything. Affinity is a

0:12:47.240 --> 0:12:50.640
<v Speaker 12>long term investor, and you know we don't invest or

0:12:50.679 --> 0:12:54.400
<v Speaker 12>divest based on what's happening daily on the market. But

0:12:54.480 --> 0:12:56.600
<v Speaker 12>you do raise a good point that we've had a

0:12:56.720 --> 0:12:59.200
<v Speaker 12>very good run year to date, particularly in some of

0:12:59.200 --> 0:13:02.839
<v Speaker 12>the larger caps, the megacap tech stocks, and yesterday was

0:13:03.200 --> 0:13:06.120
<v Speaker 12>definitely a down day. The other thing which happened yesterday

0:13:06.200 --> 0:13:07.960
<v Speaker 12>was there is quite a significant sell off in some

0:13:08.080 --> 0:13:10.400
<v Speaker 12>of the luxury stocks in Europe, which has been another

0:13:10.440 --> 0:13:13.400
<v Speaker 12>sector that's been on a tear for you know, eighteen months,

0:13:13.400 --> 0:13:16.640
<v Speaker 12>two years now. So we're definitely watching those developments very closely,

0:13:17.040 --> 0:13:19.880
<v Speaker 12>but not changing the portfolio, you know, based on what's

0:13:19.880 --> 0:13:20.679
<v Speaker 12>happening overnight.

0:13:21.000 --> 0:13:23.200
<v Speaker 13>So how are you at the moment, Then what's your

0:13:23.240 --> 0:13:27.280
<v Speaker 13>trajectory if you will you know, because you're obviously passive

0:13:27.360 --> 0:13:28.000
<v Speaker 13>yet active.

0:13:28.280 --> 0:13:30.880
<v Speaker 12>Yeah, so we're definitely active investors, but just taking a

0:13:30.920 --> 0:13:34.040
<v Speaker 12>long term view. So I think the trajectory is at alfinity,

0:13:34.080 --> 0:13:36.559
<v Speaker 12>we follow Earning's leadership, so that means we are investing

0:13:36.600 --> 0:13:38.880
<v Speaker 12>in stocks that are in an Earning's upgrade cycle or

0:13:39.000 --> 0:13:41.920
<v Speaker 12>you know, they're beating and raising every quarter or every half.

0:13:42.320 --> 0:13:44.880
<v Speaker 12>And I think what we've seen for maybe the last

0:13:45.120 --> 0:13:48.120
<v Speaker 12>year and a half is that there has been companies

0:13:48.160 --> 0:13:50.000
<v Speaker 12>have been in an earnings down grade cycle. So you

0:13:50.000 --> 0:13:52.720
<v Speaker 12>saw the big tech companies, there was pressure on cloud,

0:13:52.840 --> 0:13:55.600
<v Speaker 12>there was pressure in a lot of different aspects of

0:13:55.640 --> 0:13:59.400
<v Speaker 12>the economy of the market. But then this last quarterly

0:13:59.440 --> 0:14:02.440
<v Speaker 12>earnings were actually a little bit better than expected, and

0:14:02.520 --> 0:14:04.679
<v Speaker 12>so we have made some changes in the portfolio around

0:14:04.760 --> 0:14:08.120
<v Speaker 12>that earnings outlook. But two areas that I'll call out

0:14:08.559 --> 0:14:11.320
<v Speaker 12>for the trajectory going forward. One would be big tech,

0:14:11.679 --> 0:14:14.520
<v Speaker 12>and you know, you saw over the last year a

0:14:14.520 --> 0:14:16.960
<v Speaker 12>lot of these companies get into earnings downgrade cycles, whether

0:14:17.000 --> 0:14:20.960
<v Speaker 12>it's Microsoft because of cloud or Amazon because of consumer Meta,

0:14:21.000 --> 0:14:22.920
<v Speaker 12>had a lot of different things going on, and those

0:14:22.960 --> 0:14:25.160
<v Speaker 12>companies have all turned the corner now or an earning's

0:14:25.200 --> 0:14:27.720
<v Speaker 12>upgrade cycle. So we own more of those companies and

0:14:27.760 --> 0:14:30.800
<v Speaker 12>more of them than we did twelve months ago. And

0:14:30.840 --> 0:14:33.080
<v Speaker 12>then the second thing which is developing is probably the

0:14:33.160 --> 0:14:35.440
<v Speaker 12>US consumer and there was some news on that last night,

0:14:35.480 --> 0:14:38.000
<v Speaker 12>particularly with lows coming out. You've seen a lot of

0:14:38.040 --> 0:14:42.080
<v Speaker 12>downgrades from US consumer or maybe not downgrades, but negative

0:14:42.080 --> 0:14:44.880
<v Speaker 12>commentary in the earnings releases, and that's something that we're

0:14:44.880 --> 0:14:45.760
<v Speaker 12>watching very closely.

0:14:45.880 --> 0:14:48.520
<v Speaker 1>Let's talk a little bit about big tech. Many investors

0:14:48.560 --> 0:14:51.920
<v Speaker 1>obviously last year worried about having long duration assets like

0:14:52.000 --> 0:14:54.800
<v Speaker 1>that with interest rates as high as they were, and

0:14:54.880 --> 0:14:57.120
<v Speaker 1>it seemed like coming into this year they were planning

0:14:57.160 --> 0:14:59.600
<v Speaker 1>for a pivot on the FED. We still haven't got

0:14:59.640 --> 0:15:02.920
<v Speaker 1>that yet, but the stocks have run. The comment that

0:15:02.960 --> 0:15:04.840
<v Speaker 1>I mentioned a few moments ago, if you heard the

0:15:04.840 --> 0:15:07.920
<v Speaker 1>beginning of our program, you talked about Savita SUPERMANI and

0:15:07.960 --> 0:15:10.920
<v Speaker 1>from Bank of America, who had been pretty bearish now

0:15:10.960 --> 0:15:13.560
<v Speaker 1>turning a little more bullish and making the point that

0:15:13.560 --> 0:15:16.760
<v Speaker 1>the big tech doesn't actually have to weaken a lot

0:15:17.120 --> 0:15:19.480
<v Speaker 1>if their duration risk you short. And I think what

0:15:19.520 --> 0:15:22.080
<v Speaker 1>she means by that is, if you're not such a

0:15:22.080 --> 0:15:25.359
<v Speaker 1>long duration asset, if you're starting to pay some dividends

0:15:25.400 --> 0:15:30.640
<v Speaker 1>and return capital to shareholders and cut costs so that

0:15:31.360 --> 0:15:35.560
<v Speaker 1>you're able to put forward better returns in the shorter term,

0:15:35.880 --> 0:15:37.720
<v Speaker 1>that they can still hold onto those games. Do you

0:15:37.800 --> 0:15:39.120
<v Speaker 1>see that happening in big tech?

0:15:39.240 --> 0:15:41.920
<v Speaker 12>Yeah, you've raised some really interesting points there. I don't

0:15:41.960 --> 0:15:45.640
<v Speaker 12>necessarily think it's a duration factor, but I think there

0:15:45.680 --> 0:15:48.240
<v Speaker 12>are some things that have changed in big tech which

0:15:48.640 --> 0:15:51.920
<v Speaker 12>will result in earnings upgrades more in the near medium term,

0:15:52.000 --> 0:15:54.720
<v Speaker 12>which is, you know, sort of consistent with a duration argument.

0:15:55.000 --> 0:15:56.280
<v Speaker 5>So a few things I'll call out.

0:15:56.400 --> 0:15:59.840
<v Speaker 12>One is AI AI or maybe at like peak AI

0:16:00.760 --> 0:16:03.520
<v Speaker 12>in the media and talking about it, but for certain

0:16:03.520 --> 0:16:05.520
<v Speaker 12>of the big tech stocks, it really is a game

0:16:05.640 --> 0:16:08.200
<v Speaker 12>changer versus where we were maybe middle of last year.

0:16:08.360 --> 0:16:11.280
<v Speaker 12>So Microsoft obviously with open AI and the implications for

0:16:11.360 --> 0:16:13.720
<v Speaker 12>chat GPT that you'll be able to see that in

0:16:13.760 --> 0:16:15.920
<v Speaker 12>their earnings in twenty twenty four, so that is sort

0:16:15.920 --> 0:16:19.000
<v Speaker 12>of like a near and present opportunity, whereas before it

0:16:19.040 --> 0:16:22.880
<v Speaker 12>was maybe longer term. Similarly, for Google, Google had its

0:16:22.920 --> 0:16:25.440
<v Speaker 12>Google Io day maybe two weeks ago, and I think

0:16:25.480 --> 0:16:28.360
<v Speaker 12>the market really changed their view on what generative AI

0:16:28.480 --> 0:16:31.360
<v Speaker 12>can do for Google's earnings in the near term. And

0:16:31.400 --> 0:16:35.120
<v Speaker 12>then you very rightly point out that these big tech companies,

0:16:35.120 --> 0:16:37.600
<v Speaker 12>for the first time since I can remember, have actually

0:16:37.640 --> 0:16:41.080
<v Speaker 12>started focusing on costs, and that's really important. Meta is

0:16:41.120 --> 0:16:43.960
<v Speaker 12>probably the best example there. The cost cutting the five

0:16:44.000 --> 0:16:47.840
<v Speaker 12>point five billion dollars is quite significant. And then also

0:16:47.840 --> 0:16:50.600
<v Speaker 12>in other companies you've seen layoffs which don't make a

0:16:50.720 --> 0:16:53.280
<v Speaker 12>huge impact on the bottom line, but it shows that

0:16:53.480 --> 0:16:57.160
<v Speaker 12>these companies are actually focused on costs to the extent

0:16:57.200 --> 0:16:59.840
<v Speaker 12>that they haven't been before. So I do agree with

0:17:00.440 --> 0:17:04.119
<v Speaker 12>you know, the the thesis that big tech can continue

0:17:04.119 --> 0:17:08.080
<v Speaker 12>to to continue to perform. Well, I will add one

0:17:08.080 --> 0:17:10.720
<v Speaker 12>other thing is about valuation. So you know, a lot

0:17:10.720 --> 0:17:14.040
<v Speaker 12>of times when people think about the technology sector and duration,

0:17:14.960 --> 0:17:17.359
<v Speaker 12>you know, those unprofitable tech companies where you have to

0:17:17.440 --> 0:17:19.960
<v Speaker 12>use some sort of DCF or some sort of very

0:17:19.960 --> 0:17:23.600
<v Speaker 12>extended valuation metric to justify the stock prices. That is

0:17:23.640 --> 0:17:25.520
<v Speaker 12>not the case at all for the you know, the

0:17:25.600 --> 0:17:28.040
<v Speaker 12>sort of feg Mans or the former fang Man's. Right now,

0:17:28.160 --> 0:17:30.840
<v Speaker 12>Google is training at sixteen times pe a few weeks ago.

0:17:30.960 --> 0:17:33.360
<v Speaker 12>Now it's at twenty. But these are still very reasonable

0:17:33.440 --> 0:17:35.639
<v Speaker 12>valuations where you don't need to fiddle with your whack

0:17:35.720 --> 0:17:37.159
<v Speaker 12>to justify the share prices.

0:17:37.720 --> 0:17:39.679
<v Speaker 13>So tell me something here, Mary's, well, you know, you

0:17:39.720 --> 0:17:43.080
<v Speaker 13>look at big tech and then you see, are they

0:17:43.160 --> 0:17:46.680
<v Speaker 13>morphing now into becoming more like utilities in a funny

0:17:46.680 --> 0:17:47.160
<v Speaker 13>sort of way.

0:17:47.760 --> 0:17:49.760
<v Speaker 12>No, I don't think so, because the growth is still there.

0:17:50.080 --> 0:17:52.720
<v Speaker 12>So generally, you know, conceptually, I would consider something a

0:17:52.800 --> 0:17:55.720
<v Speaker 12>utility where there's no growth and there's no more opportunities,

0:17:55.760 --> 0:17:57.360
<v Speaker 12>so they just become sort of dividend.

0:17:57.520 --> 0:17:59.000
<v Speaker 5>They're highly regulated.

0:17:58.560 --> 0:18:01.000
<v Speaker 12>And they become you know, end payers, and I think

0:18:01.040 --> 0:18:04.040
<v Speaker 12>we're far away from that sort of characterization for Big Tech.

0:18:04.320 --> 0:18:07.359
<v Speaker 12>As I mentioned before, AI is a huge growth driver

0:18:07.480 --> 0:18:10.200
<v Speaker 12>going forward. They still have high growth, and they're still

0:18:10.240 --> 0:18:14.560
<v Speaker 12>actually you know, finding internal projects, and without internal projects,

0:18:14.600 --> 0:18:16.720
<v Speaker 12>they're using that money to buy back shares that that's

0:18:16.880 --> 0:18:19.000
<v Speaker 12>you know, better than paying dividends. So I would say

0:18:19.040 --> 0:18:20.120
<v Speaker 12>no in terms of utility.

0:18:20.520 --> 0:18:22.520
<v Speaker 1>Okay, We've got to finish on this. We have this

0:18:22.640 --> 0:18:27.720
<v Speaker 1>omicron variant XBB that's seemingly sweeping through China, and one

0:18:27.720 --> 0:18:32.520
<v Speaker 1>of your picks is LVMH LVMH and Hermez and others

0:18:32.760 --> 0:18:36.879
<v Speaker 1>got whacked pretty good. Are you concerned about the recovery

0:18:36.880 --> 0:18:40.040
<v Speaker 1>in China? In say, forty seconds.

0:18:40.040 --> 0:18:41.440
<v Speaker 5>Yes, I am.

0:18:41.680 --> 0:18:45.000
<v Speaker 12>I think there's a lot of momentum baked into what's

0:18:45.080 --> 0:18:48.159
<v Speaker 12>going to happen in China. And you know, particularly in

0:18:48.200 --> 0:18:51.040
<v Speaker 12>Europe or for portfolio managers in Europe, they are very

0:18:51.040 --> 0:18:54.720
<v Speaker 12>strongly positioned in those luxury stocks because there's no big

0:18:54.760 --> 0:18:57.600
<v Speaker 12>tech in Europe and the China macro data has been

0:18:57.680 --> 0:19:00.440
<v Speaker 12>quite mixed. So I'm actually going to China this weekend

0:19:00.480 --> 0:19:02.359
<v Speaker 12>and I'm going to spend next week there getting an

0:19:02.359 --> 0:19:04.480
<v Speaker 12>on the ground view. But for right now, I'm probably

0:19:04.520 --> 0:19:06.760
<v Speaker 12>more concerned than I was three weeks ago.

0:19:06.760 --> 0:19:10.240
<v Speaker 1>Well, you better swing by Hong Kong and visit us then, Mary, Yes,

0:19:10.280 --> 0:19:13.840
<v Speaker 1>that's very bleach. Thanks for being on the show. Mary

0:19:13.840 --> 0:19:20.080
<v Speaker 1>Manning from Alfinity Investment Management. This is Bloomberg Daybreak Asia,

0:19:20.080 --> 0:19:22.680
<v Speaker 1>your morning brief on the stories making news from Hong

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