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Speaker 1: Good morning. I'm Brian Curtis. Here are the stories we're

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Speaker 1: following today. The US has struck targets in Iraq and

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Speaker 1: also Hooti rebels attacking a container ship in the Red

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Speaker 1: Sea at Baxter has that story and more from San Francisco.

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Speaker 2: Yeah, Brian, that's a Hoothy attack. The Pentagon says it's

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Speaker 2: forest launch strikes against three installations in Iraq. Has not

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Speaker 2: only the ships, but also US bases have become targets

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Speaker 2: of the Hoothies. Bloomberg's Henry Meyer takes us through the process.

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Speaker 3: This was in retaliation for an attack on a US

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Speaker 3: base in Iraq that wounded three servicemen. So, you know,

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Speaker 3: I think that this is a pattern which we've seen

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Speaker 3: in the past. Obviously, they've been in a series of

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Speaker 3: attacks in recent weeks on US military installations in both

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Speaker 3: Syria and Iraq, which have met with American retaliation.

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Speaker 2: As for the container ship, it was enroute to Pakistan

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Speaker 2: from Saudi Arabia. The company says it's assessing but will

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Speaker 2: be sending it around the Cape of Good Hope. US says, well,

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Speaker 2: it is not seeking to escalate conflict in the region.

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Speaker 2: It will protect its people and facilities. So with that,

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Speaker 2: there is a risk of widening war or is there well.

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Speaker 2: Terry Haynes of a Pangaea policy in Bloomberg says there

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Speaker 2: is well more risk.

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Speaker 4: The risk I think is greater than a trailing risk.

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Speaker 4: I don't think it is inevitable or substantial at this

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Speaker 4: point though. But what the United States is going to

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Speaker 4: have to do is going to have to move past

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Speaker 4: kind of negative optioning things, by which I mean deciding

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Speaker 4: to take or not take certain actions and deal a

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Speaker 4: little bit more holistically now.

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Speaker 2: Meanwhile, growing unrest in Israel over the holiday is a

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Speaker 2: demonstration's form asking for Prime Minister net and Yahoo to

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Speaker 2: get them freedom the hostages. Lek Harpas says a ceasefire

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Speaker 2: must be reached and reached soon.

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Speaker 5: Just admit that you failed and do the deal and

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Speaker 5: bring them back and you know, and after that you

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Speaker 5: need to start a long term negotiation for these two

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Speaker 5: state one state, don't you know, I don't care.

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Speaker 2: And the United Nations Secretary General Antonio Gutera says he's

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Speaker 2: named a senior humanitarian and reconstruction coordinator for Gaza. This

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Speaker 2: comes as Israel warns it will no longer automatically issue

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Speaker 2: visas for un representatives. Top Biden administration officials will be

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Speaker 2: in Mexico tomorrow to discuss the influx of migrants. Bloomberg's

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Speaker 2: Nancy Lyons has a story.

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Speaker 6: US Secretary of State Anthony Blincoln and Secretary of Homeland

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Speaker 6: Security Alejandre Mayorcis will meet with Mexican President Andre's Manuel

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Speaker 6: Lopez Obrador to address the ongoing border security challenges and

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Speaker 6: what each country can do to alleviate the problem. B

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Speaker 6: Lincoln's office notes the migration across the southern border has

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Speaker 6: been unprecedented. Lincoln is expected to focus on creating legal

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Speaker 6: pathway into the US, as well as additional enforcement in Washington.

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Speaker 6: Nancy Lyons Bloomberg Radio.

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Speaker 2: All right, thank you, Nacy. Global News twenty four hours

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Speaker 2: a day and whenever you want it with Bloomberg News

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Speaker 2: now in San Francisco. I'm at Baxter in. This is

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Speaker 2: Bloomberg garb Brian.

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Speaker 1: All right, thanks very much.

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Speaker 7: Ed.

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Speaker 1: Top business stories here. Apple says it is appealing a

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Speaker 1: ban on its smart watches. The move comes after the

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Speaker 1: White House declined to overturn a ruling. We get more

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Speaker 1: on the story from Bloomberg's Karen Moscow.

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Speaker 7: The ban followed a ruling from the US International Trade

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Speaker 7: Commission in October that determined Apple violated two Massimo Health

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Speaker 7: Technology patents related to a blood oxygen sensor in its watches.

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Speaker 7: After a review of the ban, the Office of the

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Speaker 7: US Trade Representative put out a statement today saying it

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Speaker 7: decided not to reverse the decision. Apple has stopped selling

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Speaker 7: the Apple Watch Series nine and Ultra two in the US.

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Speaker 7: The band threatens a business that generated about seventeen billion

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Speaker 7: dollars in revenue in the last fiscal year, according to

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Speaker 7: analyst estimates. Karen Moscow Bloomberg.

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Speaker 1: Radio, and Apple stock actually was down about three tenths

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Speaker 1: of one percent in the latest trading. We'll have our

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Speaker 1: reporter Mark German for more color on the story. Well,

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Speaker 1: brister Miles Squibb has agreed to buy the drug developer

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Speaker 1: raised Bio for four point one billion dollars. It's the

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Speaker 1: latest deal in a spending spree by the company aimed

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Speaker 1: at bolsterring its pipeline. We get more on this from

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Speaker 1: Bloomberg's Madison Mueller.

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Speaker 8: Pharmaceutical companies. Big Pharma is really interested in getting in

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Speaker 8: on this space. We've seen deals with Eli, Lilly and Co.

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Speaker 8: Earlier this year at Bristol have bought another cancer drug maker,

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Speaker 8: Marati in October as well. We obviously have the massive

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Speaker 8: Advisor Stagen deal that was in the cancer drug space

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Speaker 8: as well. So what's different about these drugs is these

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Speaker 8: are more targeted at the tumors. They attack the cancerous

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Speaker 8: cells and they leave the other healthy cells relatively unscathed.

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Speaker 8: There's a lot of innovation happening in this space, and

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Speaker 8: big pharma wants in on.

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Speaker 1: That Berg's Madison Mueller. AstraZeneca has agreed to acquire China's

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Speaker 1: Gray Cell Biotechnologies for as much as one point two

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Speaker 1: billion dollars. That story from Bloomberg's Tracy Junkie.

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Speaker 9: AstraZeneca has agreed to acquire Shanghai based Gray Cell Biotechnologies

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Speaker 9: and a deal worth as much as one point two

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Speaker 9: billion dollars. Grey Sale's work is in cell therapy, modifying

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Speaker 9: a patient's own immune sales to fight cancer. According to

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Speaker 9: their statement, one therapy and the works could treat blood

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Speaker 9: cancers such as multiple myeloma and autoimmune.

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Speaker 10: Diseases like lupus.

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Speaker 9: Astra in November struck another deal with Chinese biotech Echogene

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Speaker 9: to co develop a weight loss pill Tracy Jonkie Bloomberg

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Speaker 9: Radio Well.

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Speaker 1: FedEx shares rose after the package shipping company entered into

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Speaker 1: a share repurchase agreement with Mazooho Markets Americas. The agreement

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Speaker 1: is to repurchase one billion dollars of FedEx's common stock.

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Speaker 1: Under the terms of the deal, FedEx will receive an

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Speaker 1: initial share delivery of roughly three zo point two million shares.

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Speaker 1: On December twenty eighth, FedEx is up forty five percent

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Speaker 1: this year, despite slumping recently in the wake of giving

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Speaker 1: a disappointing outlook. China is sanctioning a US company and

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Speaker 1: two human rights researchers over work related to Shinjog. Bloomberg's

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Speaker 1: Bonniao has the story from Hong Kong.

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Speaker 10: China's Foreign Ministry said it was freezing any assets held

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Speaker 10: in China by the firm Coron. Coron is an early

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Speaker 10: based company that identifies sanctions and compliance risks for organizations.

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Speaker 10: Two researchers at Caron were also bought from entering China

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Speaker 10: and had any assets there frozen. Chinese companies are now

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Speaker 10: banned from working with them and the company. It's the

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Speaker 10: latest in a dispute between the US and China on

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Speaker 10: allegations of forced labor in Shinjiang. Earlier this month, the

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Speaker 10: US sanctioned a pair of Chinese officials. They were said

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Speaker 10: to be linked to human rights abuses against minority groups,

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Speaker 10: including vegas in the region in Hong Kong. I'm Bonnie

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Speaker 10: al Bloomberg Radio.

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Speaker 1: Joining US now for a closer look at the Apple

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Speaker 1: story is Mark German, Bloomberg, Chief correspondent on Global Technology. Mark,

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Speaker 1: thanks very much for being with us. So Apple will

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Speaker 1: challenge this, Ben, what are the grounds that we think

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Speaker 1: they'll have or be using for the challenge?

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Speaker 11: Well, this is pretty cut and dry from the ITC,

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Speaker 11: the International Tree Commission, and Massimo point of view. Apple

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Speaker 11: violated these patents. They need to do something so they're

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Speaker 11: no longer in violation. And Apple's belief is they have

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Speaker 11: a software update up its sleeves that will bring the

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Speaker 11: Apple Watch in compliance with the ITC. And so what

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Speaker 11: Apple has done is they submitted detail of this software

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Speaker 11: upgrade to the US Customs Agency and on January twelve,

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Speaker 11: the US Customs Agency will make a decision whether or

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Speaker 11: not to approve the refresh to the Watch to make

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Speaker 11: that fix. And if they go ahead and approve that

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Speaker 11: and the ITC and other entities and the US agree

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Speaker 11: the Apple Watch can come back to market. Obviously, this

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Speaker 11: is a potentially lengthy and windy process, and this is

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Speaker 11: something they are probably going to have to go back

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Speaker 11: on forth with them a couple times. But we see

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Speaker 11: some resolutions possibly occurring in the next two or three

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Speaker 11: weeks or so.

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Speaker 1: Might there be any damages paid to Masimo?

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Speaker 11: No, no, no, The damages would have come in a

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Speaker 11: lawsuit that actually ended it in a hung jury. This

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Speaker 11: was a couple months ago, and this was the lawsuit

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Speaker 11: over patent infringement over trade secrets. So that lawsuit ended

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Speaker 11: in a hung jury. Masumo actually asked for three billion

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Speaker 11: dollars espectually three point one billion. The judge knocked down

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Speaker 11: the damages in half to one point something billion. Apple said,

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Speaker 11: if they they're found guilty, they should only owe about

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Speaker 11: thirty five million, As a good lawyer does knock that

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Speaker 11: down to, you know, less than three percent of the

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Speaker 11: total equation of what the company is asking for. But yeah,

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Speaker 11: that ended in a mistrial. Now that's going back to

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Speaker 11: trial round two, probably at the tail end of this

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Speaker 11: year or the tail end of twenty twenty four. But

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Speaker 11: until then, there's going to be no damages. This is

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Speaker 11: purely an injunction in two parts, importing the devices into

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Speaker 11: the US and seizing sales at Apple retail and online stores.

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Speaker 11: So no damage is here. The only damage is to

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Speaker 11: Apple's bottom line of not being able to push out

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Speaker 11: as many watches as they normally would.

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Speaker 1: Yeah, and we mentioned that the reaction in the marketplace

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Speaker 1: wasn't so severe today with Apple stock down three tenths

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Speaker 1: of a percent. We have seen some considerable gains for

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Speaker 1: Masimo over the past month or so, but let's set

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Speaker 1: that aside for the moment. In terms of the reaction

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Speaker 1: for Apple, we do say in our story that the

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Speaker 1: business does generate some seventeen billion dollars in sales. Is

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Speaker 1: that not large enough to really move the needle on

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Speaker 1: earnings or is there another reason why the stock didn't

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Speaker 1: budget that much?

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Speaker 11: Okay, well, to answer one question, the seventeen billion on

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Speaker 11: an annual basis is material on an annual basis. If

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Speaker 11: you look at it in terms of sales, stopping for

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Speaker 11: a month, you're talking about a one or so billion

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Speaker 11: dollar head win, maybe two billion dollars head win at most.

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Speaker 11: So I would consider that fairly immaterial. Second part of

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Speaker 11: your question is why didn't the stock move today. Well,

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Speaker 11: nothing happened today, Brian. To be honest with you, this

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Speaker 11: move happened two days ago. Apple stores stopped selling the

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Speaker 11: launches two days ago, and the move was essentially finalized

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Speaker 11: and announced about eight days ago, not yesterday, but the

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Speaker 11: previous Monday. So there was nothing necessarily new for the

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Speaker 11: market to trade on. The market had been trading on

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Speaker 11: this for the past eight days, so it was completely

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Speaker 11: priced in at this point. The development we had today

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Speaker 11: was the trade organization. Catherine Tie, the ambassador for that

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Speaker 11: organization in the US, put out a statement saying that

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Speaker 11: she wouldn't be detilling or intervening. Well, that was obvious

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Speaker 11: given the sales stop two days ago. So that's true.

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Speaker 11: But you're not seeing much of a reaction.

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Speaker 1: Yeah, I guess you know. The market does tend to

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Speaker 1: overreact a little in some of these cases. Let's talk

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Speaker 1: a little bit about Massimo stock. It was up twenty

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Speaker 1: seven percent over the past month or so, so this

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Speaker 1: has meant a great deal to the company.

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Speaker 11: So why are Masimo investors buying up more stock or

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Speaker 11: why are people investing in Masamo? Let me give you

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Speaker 11: a couple one. I believe that there are hopes from

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Speaker 11: certain investors or people who are buying into the stock

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Speaker 11: that Apple will need to strike in agreement with Massimo

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Speaker 11: to inject more cash into Massimo in order to get

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Speaker 11: a cross licensing agreement or buy a portion of the patent portfolio,

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Speaker 11: which would obviously juice Masumo revenue considerably. And if you're

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Speaker 11: getting in at the current price in Masumo, you might

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Speaker 11: be getting lucky because it may go up significantly because

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Speaker 11: of that influx of money from Apple. Right, that is

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Speaker 11: a bet that some people are making now who was

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Speaker 11: up to me. I don't trade on Massimo. I would

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Speaker 11: bet against that because I don't think there's going to

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Speaker 11: be a settlement. Part two, Massimo is now a household

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Speaker 11: name thinks is lost in this Apple No matter how

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Speaker 11: many millions they spent on this lawsuit, no matter how

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Speaker 11: briefly or how long the Apple Watch is banned from

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Speaker 11: retail stores and online in the US, what they've spent

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Speaker 11: and invested on this is priceless in terms of marketing.

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Speaker 11: So many people are now familiar with Massimo that had

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Speaker 11: no idea Masimo existed two months ago, and that's great

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Speaker 11: for their stock.

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Speaker 1: Well back to Apple, because that's the one that most

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Speaker 1: people know about. One of the points I think that

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Speaker 1: you mentioned was that Apple is not selling this now,

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Speaker 1: but other retailers are still able to, like Best Buying,

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Speaker 1: Walmart and such, they can sell these products for what

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Speaker 1: just I guess as long as they last.

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Speaker 11: They can sell these products as long as they last.

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Speaker 11: That's right, because like I said at the two part

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Speaker 11: in junction one is the season desisted Apple retail and online,

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Speaker 11: as well as the import band. As long as Best Buying,

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Speaker 11: Target and Walmart and Costco and you name it have

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Speaker 11: supplied the Apple Watch, they can keep going. The problem

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Speaker 11: is is if they run out of new watches before

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Speaker 11: some a concession is reached to be able to import

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Speaker 11: new ones from China and Vietnam.

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Speaker 1: And I don't know if you know this, and pardon

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Speaker 1: me if I'm catching by surprise, but do companies like

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Speaker 1: Target and Walmart do they sell much of this compared

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Speaker 1: to what Apple actually moves out of its own retail.

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Speaker 11: Yeah, that's a good question. The majority of Apple products

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Speaker 11: are actually sold outside of Apple's retail channels, right, and

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Speaker 11: particularly for the iPhone. The iPhone, more than fifty percent

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Speaker 11: of iPhones are sold from the carriers, so certainly that

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Speaker 11: is a component. But I think the bigger picture here

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Speaker 11: is this is not really going to impact are effect

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Speaker 11: they're Q one because Apple only stops sales on the

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Speaker 11: twenty first and online the twenty fourth retail stores. The

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Speaker 11: quarter is over on the thirty first, So the headwin got.

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Speaker 1: A huge impact on this quarter, but perhaps next Yeah,

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Speaker 1: this is Bloomberg Daybreak Asia, your morning brief on the

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