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Speaker 1: Good morning. I'm Brian Curtiz and I'm Doug Krisner. Here

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

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Speaker 2: Apple sales falling for a fourth consecutive quarter, making the

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Speaker 2: largest and longest slowdown it we've seen since way back

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Speaker 2: in two thousand and one. The company also did not

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Speaker 2: provide any formal guidance for the current quarter, sticking with

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Speaker 2: the policy it adopted during the pandemic. The results suggest

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Speaker 2: that Apple is facing a bigger deceleration in China than feared.

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Speaker 2: It comes as the government there has imposed iPhone bands

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Speaker 2: in some workplaces. We got reaction from Bloomberg's Honor Agrana.

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Speaker 3: You know, if it is a consumer spending slowdown, then

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Speaker 3: I personally am not that concerned. Maybe things get pushed

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Speaker 3: out for another six to nine months. But if they're

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Speaker 3: losing market share to a local phone maker, I think

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Speaker 3: that's a bigger concern because China is for the mid term,

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Speaker 3: the big growth driver for Apple's products.

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Speaker 2: That's Honor ag Grana. The new phone that Honrog referred

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Speaker 2: to is from Huawei Technologies and it's in new competition

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Speaker 2: to Apple's iPhone. The shares of Apple are trading in

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Speaker 2: late trading down three and a quarter percent or so,

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Speaker 2: having touched one point eighty two at one point, out

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Speaker 2: trading in the seventy one to seventy one range.

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Speaker 1: Well, in the regular session, we had shares in Starbucks

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Speaker 1: jumping nearly ten percent. That's the largest increase we've seen

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Speaker 1: since May twenty twenty. This rally came, by the way,

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Speaker 1: after the coffee Giant gave a positive forecast for revenue.

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Speaker 1: The story from Bloomberg's Tom Busby.

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Speaker 4: The coffee chain giant easily topping earnings expectations last quarter

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Speaker 4: thanks to more coffee orders and larger orders per transaction,

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Speaker 4: especially in the US and in China. Now, last quarter,

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Speaker 4: same store sales rose eight percent, way more than the

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Speaker 4: six point three percent estimated, But the chain is forecasting

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Speaker 4: global sales to rise between five and seven percent over

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Speaker 4: the next year. That's a less aggressive target than it

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Speaker 4: gave one year ago. That's on worries about china slow

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Speaker 4: recovery and the financial strength of US consumers. Tom Busby

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Speaker 4: Bloomberg Well.

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Speaker 2: The jury in the fraud trial of FTX co founder

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Speaker 2: Sam Bankman Freed began its deliberations this afternoon. US District

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Speaker 2: Judge Lewis Kaplan told jurors that they will not be

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Speaker 2: deliberating tomorrow, but he said that they could work as

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Speaker 2: late as eight pm tonight if it were needed.

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Speaker 5: If they needed that much.

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Speaker 2: Time, the judge said that the court would provide dinner

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Speaker 2: and cars home for jurors and then deliberations would resume

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Speaker 2: on Monday if there was no verdict today.

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Speaker 1: Well, the equity market, as we mentioned a short while ago,

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Speaker 1: rally today on the bet that the Fed is done

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Speaker 1: with rate hikes. We had the S and P five

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Speaker 1: hundred today jumping by about one point nine percent. That's

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Speaker 1: the biggest rally that we have seen since April. It

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Speaker 1: comes the day before we get the October reemployment report

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Speaker 1: numbers tomorrow morning eight thirty am Wall Street Time. In

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Speaker 1: Bloomberg's Michael McKee as a preview, we're watching what they

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Speaker 1: are watching.

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Speaker 6: FED chair j. Powell says a tight labor market could

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Speaker 6: lead to another rate move, which means market we'll parts

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Speaker 6: the October jobs report trying to determine what it signals.

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Speaker 6: Is hiring still much stronger than what's needed to absorb

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Speaker 6: and increasing labor force have higher interest rates led companies

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Speaker 6: to pull back on hiring or even start letting people go.

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Speaker 6: Our companies still paying up to attract workers, while the

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Speaker 6: Fed we'll also see the November payrolls report before its

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Speaker 6: next meeting. Powell says it will take several months of

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Speaker 6: data to make any decisions, so study the numbers and

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Speaker 6: file them away for the December meeting. Michael McKee Bloomberg Radio.

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Speaker 2: The Bank of England has left its benchmark lending rate

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Speaker 2: at a fifteen year high. The Central Bank's Monetary Policy

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Speaker 2: Committee voted to maintain the key rate at five and

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Speaker 2: a quarter percent the BOE meeting, boosting expectations for when

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Speaker 2: policymakers might start lowering the key rate. But then Governor

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Speaker 2: Andrew Bailey tells us he still sees a long way

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Speaker 2: to go to reduce inflation.

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Speaker 7: We still see the risks to inflation as being on

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Speaker 7: the upside at the moment, and it's important not for

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Speaker 7: that message not to get lost. If the market has

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Speaker 7: taken from from what we have published today a view

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Speaker 7: that we are leaning towards more cuts, and I'm afraid

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Speaker 7: I will lean.

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Speaker 2: Against side Andrew Bailey. Bailey also warned of risks from

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Speaker 2: the Israel Hamas war causing turmoil in energy markets and

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Speaker 2: a tight labor market well.

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Speaker 1: Australian Prime Minister Anthony Alblinesi will begin a three day

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Speaker 1: visit in China on Saturday. This is the first trip

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Speaker 1: to China by an Australian Prime minister since twenty sixteen,

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Speaker 1: and it may be a sign of a thaw in

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Speaker 1: relations between these two countries. We have more from Bloomberg's

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Speaker 1: Paul Allen in Sydney.

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Speaker 8: Australia China relations have been in a dark place since

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Speaker 8: twenty twenty. Grievances have been piling up. China unhappy with

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Speaker 8: Australia's calls for an investigation into the origins of COVID,

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Speaker 8: through to the banning of Huawei from Australia's five G

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Speaker 8: rollout trade strikes on numerous Australian products, including Bali wine

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Speaker 8: and coal followed. The twenty twenty two election of the

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Speaker 8: Albanese government presented an opportunity for a reset. The trade

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Speaker 8: strikes have now been almost completely wound back, and this

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Speaker 8: weekend'st by Prime Minister Albanezi is both symbolic and significant.

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Speaker 8: At is core, this is a transactional relationship. China is

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Speaker 8: Australia's largest trade partner, while China also wants to join

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Speaker 8: the CPTPP Trade Pact, which requires agreement of all members

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Speaker 8: and that includes Australia. Paul Allen Bloomberg Radio.

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Speaker 2: Time Now for Global News. Israeli troops have encircled Gaza

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Speaker 2: City as the death toll rises at Baxter has news

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Speaker 2: from the nine to sixty news room in San Francisco.

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Speaker 5: Yeah as well. Brian tied to that the House has

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Speaker 5: voted on Israeli aid and has passed It will have

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Speaker 5: both of those stories. Israeli ground offensives intensified, with potential

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Speaker 5: to move on Gaza City soon. Authorities in Gaza say

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Speaker 5: more than nine thousand people have died due to the war.

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Speaker 5: That figure has not been confirmed elsewhere. Meanwhile, there appears

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Speaker 5: to be movement toward a short pause for humanitarian purposes.

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Speaker 5: US President Joe Biden says Israel and Homage should pause

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Speaker 5: fighting to allow hostages out and aid into Gaza. White

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Speaker 5: House Nation and Security Spokesman John Kirby.

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Speaker 9: In order to move hostages from where they were being

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Speaker 9: held to safety.

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Speaker 5: It does require us a short pause in the fighting

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Speaker 5: so that you can do it safely.

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Speaker 4: I mean, why wouldn't you.

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Speaker 5: Meanwhile, a Secretary of State Anthony Blincoln, on his way

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Speaker 5: to Israel, says the goal.

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Speaker 9: We're determined that this conflict nott spread, and we'll be

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Speaker 9: talking to both the Israeli government partners in the region

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Speaker 9: about what all of us are doing to prevent that

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Speaker 9: from happening.

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Speaker 5: But it already has spread to some degree. Pentagon spokesman

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Speaker 5: Pat Ryder says there have been twenty eight attacks aimed

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Speaker 5: at US military since October seventeenth, just since the sixteenth,

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Speaker 5: three in Iraq, five in Syria. He says no injuries

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Speaker 5: associated with them. The House has just passed the Israeli

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Speaker 5: aid bill, the one that takes some money from IRS spending.

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Speaker 5: It is dead on arrival in the Senate. In Bloomberg's

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Speaker 5: Jordan Fabian says as well.

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Speaker 9: The White House said today that they also would not

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Speaker 9: sign a standalone Israel bill, So they're putting even more

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Speaker 9: pressure on the Senate to deliver that combined package. But

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Speaker 9: of course the question is can they get a combined

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Speaker 9: package through the House. They'll need Democratic help for that,

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Speaker 9: but we'll Speaker Johnson put it up for a vote.

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Speaker 5: Stay tuned, Yeah, and Democratic Congress from Pete Aguilar says

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Speaker 5: it has to have.

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Speaker 10: A feel that a bipartisan solution will come, A bipartisan

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Speaker 10: emergency supplemental will come at some point from the Senate

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Speaker 10: that looks out for our allies and friends, but does

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Speaker 10: so in a responsible way that doesn't set a terrible

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Speaker 10: precedent for national secure.

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Speaker 5: Now, House Speaker Mike Johnson, just off this recent victory

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Speaker 5: in the House a pass a few minutes, agrees that

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Speaker 5: something will get done.

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Speaker 11: Even our most hardline fiscal conservatives and those who typically

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Speaker 11: oppose the idea of foreign aid and principle, they understand

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Speaker 11: the necessity of.

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Speaker 5: This, and a House Speaker Johnson says, a plan for

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Speaker 5: aid for Ukraine and the border.

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Speaker 11: We were going to take care of a border in Ukraine.

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Speaker 11: We need to take care of America's border as well,

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Speaker 11: and I think there's bipartisan support for that idea.

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Speaker 5: Okay, so while we have mister Johnson, let's pivot a

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Speaker 5: little bit. He says he feels impeachment articles against President

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Speaker 5: Joe Biden could be filed soon.

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Speaker 11: I do believe that very soon we are coming to

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Speaker 11: a point of decision on it. We're in the impeachment

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Speaker 11: inquiry phase, as you know, which is an important step

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Speaker 11: in that du process.

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Speaker 5: So very full play. Almost all the China funded confucious

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Speaker 5: institutes in the US have closed, highlighting how soured ties

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Speaker 5: between Beijing and Washington have led US universities to abandon

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Speaker 5: which was once seen as a cheap way to offer

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Speaker 5: Chinese classes. All but five of the institutes which were

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Speaker 5: created in two thousand and four to promote Chinese language

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Speaker 5: are now closed. This is a government accountability office, so

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Speaker 5: it should be pretty accurate. Resource Global news twenty four

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Speaker 5: hours a day and whenever you want it. With Bloomberg

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Speaker 5: News now in San Francisco. I'm Ed Baxter, and this

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Speaker 5: is Bloomberg.

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Speaker 2: I'm Brian Curtis, along with Rishad Salamat, and our guest

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Speaker 2: is Marabell Lopez, founder and principal analyst at Lopez Research.

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Speaker 2: So we wanted to take a close to look at

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Speaker 2: Apple earnings. Myrabell, thanks very much for being with us.

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Speaker 2: One of the troubling signs I suppose to investors who

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Speaker 2: are long Apple is that Qualcom talked about how good

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Speaker 2: the chip business was there, that they had a thirty

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Speaker 2: five percent increase from Chinese phonemakers. And so with the

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Speaker 2: stumble by Apple, it suggests that it's not just the

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Speaker 2: slowdown in the economy, but other factors at play. How

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Speaker 2: important is the China business at the moment to Apple.

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Speaker 12: I think the China business is very important to Apple,

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Speaker 12: and I think during their earnings call they made statements

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Speaker 12: to try to lay years on this, basically by saying

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Speaker 12: that the September quarter was a record order for iPhone

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Speaker 12: sales in I believe they said mainland China. So they

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Speaker 12: really are trying to manage expectations around the China market,

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Speaker 12: and I think it's very difficult for investors to get

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Speaker 12: a handle on that right now. We have two outstanding factors,

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Speaker 12: the first one obviously being whether or not bands would

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Speaker 12: be extended, which would obviously hurt iPhone sales tremendously. The

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Speaker 12: second being what they're not competition from companies such as

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Speaker 12: Huawei would put a debt in their business due to

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Speaker 12: finances of various products, what the price points are if

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Speaker 12: they're close enough in functionality. So it's really a very

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Speaker 12: precarious market for Apple and China right now.

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Speaker 7: So in order to counter I suppose Mara, they are

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Speaker 7: really putting a bet on India.

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Speaker 12: And how do you think that's going to pan out

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Speaker 12: for them. Well, they obviously said that they had their

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Speaker 12: best quarter ever in India. They called it out as

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Speaker 12: the first market that they wanted to talk about. One

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Speaker 12: of the things you always worry about with the emerging markets.

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Speaker 12: For a company like Apples, they have a premium product.

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Speaker 12: Will they be able to have broad scale penetration in

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Speaker 12: a market with a very expensive product is still an

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Speaker 12: open question. I know they've been leaning very heavily on

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Speaker 12: their services business, and they actually tried to tie the

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Speaker 12: combination of the phone and the services together as a

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Speaker 12: possibility that that would help bridge the gap.

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Speaker 2: We did see actually pretty good performance in iPhone sales.

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Speaker 2: I mean, if you look at the numbers, forty three

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Speaker 2: point eight billion was stronger than the estimate of forty

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Speaker 2: three point seven And the mix, and an easy way

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Speaker 2: to kind of think of the mix of Apple overall

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Speaker 2: is about half of their sales is iPhones, about a

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Speaker 2: quarter is a fifth is services, and then kind of

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Speaker 2: everything else fits in from there. When you look at

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Speaker 2: how services actually did, what's your estimation about the quality

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Speaker 2: of that.

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Speaker 12: Because there's a few things you mentioned that I think

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Speaker 12: are worth digging into. You know, when you look at

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Speaker 12: the earnings, there was a bit of a mix in

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Speaker 12: terms of what we thought was going to happen and

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Speaker 12: what did happen. iPhone sales, I think we're stronger than

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Speaker 12: most people are predicted that they would be given the

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Speaker 12: maturity of the product. Services actually made up for significant

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Speaker 12: shortfall in other product categories, and I thought that was

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Speaker 12: a real win for them. We've alway has been a

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Speaker 12: bit suspective or whether services can actually bridge the gap,

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Speaker 12: but their margins were tremendous, So I think when I

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Speaker 12: look at the services business, I look at an opportunity

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Speaker 12: for a very broad install base to still have a

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Speaker 12: higher attached rate than it does now with a very

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Speaker 12: high margin product. Now, the balance of that always is

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Speaker 12: it's hard to grow top line revenue. Services do not

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Speaker 12: grow top line revenue at the same rate that selling

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Speaker 12: say iPhones would or selling back book pros would.

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Speaker 3: Absolutely, this is it, isn't it.

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Speaker 7: But I mean it's all part of the ecosystem, and

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Speaker 7: that ecosystem still serves them very well, does it not.

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Speaker 12: Absolutely, the ecosystem continues to grow. They had mentioned that

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Speaker 12: they have the largest installed base that they have ever had,

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Speaker 12: and with a large install base comes the opportunity to

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Speaker 12: layer more services and to have greater attach rate on

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Speaker 12: products as they add new products, and.

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Speaker 2: The PC market seems like it's ready for a rebound.

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Speaker 2: That's kind of what we've been seeing and hearing from

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Speaker 2: some other companies. And Apple did unveil this new MacBook

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Speaker 2: pros as well as Imax and new processors this week.

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Speaker 2: In terms of looking at these other areas like PCs

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Speaker 2: and then also AI.

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Speaker 7: What are you hearing?

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Speaker 12: I think you really hit it spot on with the

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Speaker 12: discussion about whether or not the PC winter is over.

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Speaker 12: We've had many quarters at this point of double digit

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Speaker 12: declines across the industry. It is time for a refresh

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Speaker 12: related TOAI. Basically, software is more AI enabled, it's creating

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Speaker 12: more tax on the processing that people have with their

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Speaker 12: existing footprint of PCs. So we expect that there will

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Speaker 12: definitely be business buys that will happen in twenty twenty four.

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Speaker 12: But we're also seeing that some of the markets that

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Speaker 12: traditionally were very performance heavy, such as gaming, would be

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Speaker 12: really interested in something such as the Mac Pro with

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Speaker 12: one of the new M three chips because of that

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Speaker 12: dynamic caching that they offered. It means the GPU performance

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Speaker 12: is better, and if your GPU performance is better, your

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Speaker 12: graphics and your gaming are better. So that is something

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Speaker 12: that could be a win. We could even begin to

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Speaker 12: see that win as part of the December quarter.

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Speaker 2: Yeah, absolutely didn't show up in this one, but looks

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Speaker 2: set for the quarter ending in December. Thanks so much

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Speaker 2: for joining us, Marabell Marabel Lopez, founder and principal analyst

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Speaker 2: Staff Lopez Research with us live. This is Bloomberg Daybreak Asia,

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