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Speaker 1: This is Bloomberg Daybreak Asia for this Friday, May fifth

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Speaker 1: in Hong Kong, Thursday May fourth in New York and

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Speaker 1: coming up today.

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Speaker 2: A selloff in regional lenders leads to mounting anxiety over

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Speaker 2: stability of the US banking system.

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Speaker 1: Apple beats estimates on signs that iPhone demand may be

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Speaker 1: weathering an industry wide slump.

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Speaker 2: And Ali Baba's global online commerce unit is said to

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Speaker 2: be weighing a US IPO.

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Speaker 3: Taiwan warrants China regarding potential drone incursions. The US Intelligence

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Speaker 3: Director says China seeks to achieve goals at US expense,

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Speaker 3: China voicing displeasure regarding Switzerland upping diplomatic efforts with Taiwan.

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Speaker 3: I'm at Baxter with Global News.

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Speaker 4: That's all straight Ahead on Bloomberg Daybreak Asia, The business

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Speaker 4: news you need to start your day in just one

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Speaker 4: fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App,

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Speaker 4: and everywhere you get your podcasts.

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Speaker 5: Morning.

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Speaker 1: I'm Doug Prisner and I'm Brian Curtiz. Here are the

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Speaker 1: stories we're following today. A route in regional banks leading

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Speaker 1: to a down day for markets. Packwest shares down fifty

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Speaker 1: one percent after the bank said it's in talks with

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Speaker 1: potential investors and partners. Western Alliance shares stumbled as much

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Speaker 1: as sixty two percent and then bounced back, if we

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Speaker 1: want to call it that, to close down thirty eight percent,

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Speaker 1: as after the bank said that a report that it

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Speaker 1: was exploring options, including a sale is categorically false. Meantime,

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Speaker 1: First Horizon shares dropping thirty three percent. The bank said,

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Speaker 1: along with Toronto Dominion Bank, that it had agreed to

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Speaker 1: termine the merger packed they cited uncertainty over regulatory approvals. Now,

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Speaker 1: the sell off today adds to concerns about the financial sector,

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Speaker 1: as you know, it has been rattled in recent months

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Speaker 1: by the collapse of multiple banks. Bloomberg's Hermann Chan stressed

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Speaker 1: that the needs that a lot more needs to be

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Speaker 1: done to soothe investor nerves.

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Speaker 6: Get this point, there needs to be a more holistic

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Speaker 6: solution from Washington, from regulators, because no matter what the

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Speaker 6: regionals are saying, from a fundamental view, and it's not

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Speaker 6: arresting the declines in the market pressure. So there needs

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Speaker 6: to be a more of a government response and deposit guarantee,

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Speaker 6: maybe a blanket guarantee over a short period of time

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Speaker 6: to calm market fears would be helpful.

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Speaker 1: All twenty one shares in the KBW Bank index we're

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Speaker 1: down for the day. Larger US lenders also declined, and

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Speaker 1: Goldman Sachs shares fell about two percent as the bank's

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Speaker 1: role in Silicon Valley banks attempt to raise funds is

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Speaker 1: now under review in a US probe.

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Speaker 2: And the same time, we are hearing today that the

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Speaker 2: FDIC is planning to release a highly anticipated proposal to

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Speaker 2: replenish its deposit Insurance fund that could happen as soon

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Speaker 2: as next week. And we have the story from Bloomberg's

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Speaker 2: Charlie Pellett.

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Speaker 5: The fund was partly depleted by the failures of Silicon

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Speaker 5: Valley Bank and Signature Bank. Sources say smaller lenders with

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Speaker 5: less than ten billion dollars in assets would not have

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Speaker 5: to pay. FDIC data showed there were more than four

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Speaker 5: thousand institutions under that threshold at the end of last year.

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Speaker 5: A political debate who has been raging over who should

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Speaker 5: be on the hook for refilling the fund after it

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Speaker 5: was depleted by billions of dollars When the government took

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Speaker 5: the extraordinary step of making all SVB and Signature depositors,

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Speaker 5: even uninsured ones whole in New York. Charlie Pellett Bloomberg

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Speaker 5: Daybreak Asia.

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Speaker 1: Apple reported second quarter sales amounting to ninety four point

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Speaker 1: eight billion dollars. That was better than the ninety two

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Speaker 1: point six billion analysts had predicted. The results suggest that

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Speaker 1: Apple is bouncing back from a slump that plagued both

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Speaker 1: the computer and smartphone industries. We got reaction from Dan

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Speaker 1: Morgan at Cinovistrust.

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Speaker 7: Well, obviously the big numbers that stand out to me,

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Speaker 7: and there's this huge beat in iPhone revenue because coming

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Speaker 7: in this quarter I had forty eight point ninety seven

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Speaker 7: that came in a fifty one point three and that

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Speaker 7: forty eight point nine seven would have represented a negative

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Speaker 7: growth rate of about three point two percent. This is

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Speaker 7: going to put them, I think, probably flatter, even slightly

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Speaker 7: up on iPhone revenue. I was looking for about fifty

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Speaker 7: five million units, so that's a huge number for them.

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Speaker 1: From a supply perspective, the second quarter was an opportunity

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Speaker 1: for the iPhone fourteen to rebound. The device had suffered

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Speaker 1: from constraints during the prior quarter because of COVID policies

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Speaker 1: in China. Separately, Apple announced plans for ninety billion dollars

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Speaker 1: in stock repurchases, which was the same as last year's plan,

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Speaker 1: and the company raised its quarterly dividend four percent to

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Speaker 1: twenty four cents a share. Apple shares had traded up

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Speaker 1: around three percent in after hours trading. At the moment,

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Speaker 1: they have advanced about two percent.

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Speaker 4: Well.

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Speaker 2: Lift is forecasting disappointing revenue for the current quarter. According

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Speaker 2: to the company, top line will be between a billion

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Speaker 2: to one point zero two billion dollars. That is less

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Speaker 2: than what the street was looking for. Analysts were estimating

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Speaker 2: one point zero eight billion. Lift also reported fewer than

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Speaker 2: expected active riders on its platform. It's an indication Lift

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Speaker 2: is failing to stay competitive with Uber despite lowering rider fares.

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Speaker 2: Here's Bloomberg's Man Deep sing.

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Speaker 8: What Uber has done well is they've created tiered pricing

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Speaker 8: for you know, really attracting all kinds of users. So

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Speaker 8: if you're if you care about price, you can find

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Speaker 8: that kind of right on Uber. If you want that convenience,

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Speaker 8: you can find an expensive ride and shorter eta. Lift

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Speaker 8: just is struggling to keep that driver's supply on the platform,

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Speaker 8: and that's why the ETAs are going up. So you know,

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Speaker 8: the user experience won't be as good because people don't

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Speaker 8: want to wait.

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Speaker 2: That is Bloomberg's man Deep saying. By the way, today's

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Speaker 2: results regarding Lift come as the company's new CEO, David Rischer,

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Speaker 2: is attempting to turn Lift into a properly profitable company.

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Speaker 2: He's already begun to shake things up, recently cutting twenty

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Speaker 2: six percent of Lift's workforce. Risher has also said he's

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Speaker 2: committed to being competitive on prices. He's planning to wrecked

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Speaker 2: some of the cost savings to subsidizing lower fares and

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Speaker 2: boosting driver earnings. Lift shares right now in the late

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Speaker 2: US session down by more than fifteen percent.

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Speaker 1: Ali Baba's international online shopping unit is exploring a US

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Speaker 1: initial public offering. We hear more from Bloomberg's Joanne Wong

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Speaker 1: in Hong Kong.

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Speaker 9: We're told the ibo might be launched as soon as

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Speaker 9: next year. The company's weighing options to spur growth for

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Speaker 9: the business, and that includes major e commerce brands Lazada

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Speaker 9: and Ali Express. Earlier in March, Ali Baba unveiled plans

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Speaker 9: to break up his empire into units such as e commerce,

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Speaker 9: logistics and the cloud and Is said it'll have each

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Speaker 9: business potentially explore fundraising and an IPO and an appropriate time.

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Speaker 9: If the USIPO plan goes ahead, it will be competing

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Speaker 9: with rivals such as Amazon in markets outside China. Analysts

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Speaker 9: valuation for Alibaba's international business units vary between twenty nine

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Speaker 9: and thirty nine billion dollars in Hong Kong, Joan Wong

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Speaker 9: Blueberg day Break Asia.

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Speaker 1: We had a little bounce in alib Bobba shares up

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Speaker 1: one and a quarter percent in US trading with the ADRs,

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Speaker 1: and we also saw an advance yesterday in Hong Kong,

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Speaker 1: up four tenths of a percent, but that stock has

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Speaker 1: straded down about twenty percent over the past month. Well,

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Speaker 1: I'm Brian Curtis, along with Doug Kristner. Doug Apple's numbers

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Speaker 1: really didn't do too much to change the sort of

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Speaker 1: level of heat or coolness in the markets, and I

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Speaker 1: wanted to strip out the China numbers because it didn't

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Speaker 1: appear in our story. It's because it wasn't that newsworthy

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Speaker 1: sales were down a little but sort of in line

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Speaker 1: with the rest of the revenues, down two point eight percent,

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Speaker 1: but the next quarter could be quite interesting in that

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Speaker 1: we know that the reopening is playing into this year

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Speaker 1: and last year in the second quarter we had the lockdowns,

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Speaker 1: particularly in the Shanghai area, so that could be could

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Speaker 1: be good for Apple. Japan was down, but not that much. Interestingly,

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Speaker 1: the rest of the Asia Pacific was up fifteen percent,

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Speaker 1: and that's quite surprising, and.

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Speaker 2: Cook saying on the comment, Fferends called with analysts that

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Speaker 2: India is an incredibly exciting market for the company to

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Speaker 2: focus on. Let's not forget that Apple did authorize an

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Speaker 2: additional stock buyback program of up to ninety billion. That's

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Speaker 2: pretty significant. I think analysts have already kind of adjusted

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Speaker 2: expectations for this company a great deal. If you remember

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Speaker 2: the stock so far this year, I think is what

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Speaker 2: up twenty eight percent. It's outperformed the overall market quite significantly.

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Speaker 1: Yeah, is PE is twenty eight the forward PE twenty six,

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Speaker 1: not chan, and that's high compared to where it often trades. However,

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Speaker 1: it's really the same as Procter and Gamble, Coke, McDonald's

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Speaker 1: and those are you know, those are considered staples. Is

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Speaker 1: Apple a staple? I think many people would say yes,

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Speaker 1: it sort of is, and it grows faster than those

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Speaker 1: companies I just mentioned.

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Speaker 2: Yeah, I'd like to get your reaction to this idea

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Speaker 2: that maybe we'll get a rate cut as soon as

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Speaker 2: the July FED meeting. At the swaps market right now,

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Speaker 2: pricing in odds well over fifty percent based on what

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Speaker 2: we heard yesterday from the FED chairman, that doesn't seem

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Speaker 2: to be a possibility. Maybe the market's not buying the

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Speaker 2: Fed's story right now.

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Speaker 1: I almost think it's the Fed and Jay Powell not

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Speaker 1: buying the market story because the market is calling for

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Speaker 1: these three cuts towards the end of the year, and

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Speaker 1: essentially they're almost talking about different things. As I mentioned

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Speaker 1: in our conference call, it seems like the FED is

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Speaker 1: really thinking about this in terms of inflation, and it

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Speaker 1: thinks that the market's cuts mean that inflation will come down,

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Speaker 1: and the Fed does not believe that's what's going to happen.

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Speaker 1: But it's actually the market thinking that there's trouble out

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Speaker 1: there and it could be recessionary conditions. But you didn't hear.

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Speaker 1: You didn't hear Jay Powell talking about that. What he

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Speaker 1: talked about was that the job numbers are solid and

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Speaker 1: there are no immediate signs that recession is in the picture,

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Speaker 1: certainly by by July, so it creates an interesting battle.

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Speaker 2: Yeah, let's get to Global News next. Here on Dave

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Speaker 2: Break Asia, Taiwan's defense minister is saying the country will

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Speaker 2: treat china drone incursions as a first strike attempt. Let's

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Speaker 2: get to ed Baxter in the Bloomberg newsroum at San Francisco.

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Speaker 3: Edty, Yeah, that's right, Doug saying the ministry does not

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Speaker 3: wish for war to break out on the Taiwan Strait,

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Speaker 3: but Chu Ku Cheng, repeating previous declarations made about aircraft

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Speaker 3: violating the twelve mile line now applying to drones. This

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Speaker 3: while China's sent increasing numbers into the broader air defense

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Speaker 3: identification zoned a state out of the more narrow region

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Speaker 3: so far. Meanwhile, the US Director of National Intelligence, Abril

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Speaker 3: Hagines is telling the Senate Armed Services Committee today that

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Speaker 3: the CCP is increasingly convinced it can only fulfill Shesha

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Speaker 3: Impeing's vision at the expense of the United States and.

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Speaker 10: Through tools of coercion, using demonstrations of strength as well

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Speaker 10: as economic and political coercion to compel governments to acquiesce

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Speaker 10: to the CCP's preferences, including the land, sea and air

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Speaker 10: claims in the region and its assertions of sovereignty over Taiwan.

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Speaker 3: She says China sees the US as a threat that

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Speaker 3: must be undercut in many ways. Haines also says China

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Speaker 3: would seek to exploit a debt default, propaganda and intelligence gathering.

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Speaker 3: China's embassy in Switzerland ISS voice what it called strong

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Speaker 3: discontent over a move in the Swiss parliament's lower house

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Speaker 3: aimed to intensify its relations with Taiwani's lawmakers. Now the

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Speaker 3: embassy says it is grossly interfered with China's internal affairs.

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Speaker 3: Ukraine's President Vladimir Zelenski has visited the International Criminal Court

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Speaker 3: at the Hague, acknowledging the recent arrest warrant for Vladimir Putin.

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Speaker 1: Of course, we all want to see different Vladimir here in.

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Speaker 3: The Hague, and the US State Department spokesman Vidant Patel

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Speaker 3: says Russia's running more and more attacks.

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Speaker 11: Since May one, Russia has launched more than one hundred

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Speaker 11: and forty five airstrikes across Ukraine. That means Russia has

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Speaker 11: launched more than one missile, one drone, or bomb every hour,

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Speaker 11: twenty four hours a day for four straight days.

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Speaker 3: And the State Department also saying it believes purported drone

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Speaker 3: attack on the Kremlin is a Russian false flag. Says

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Speaker 3: not very good one either. Former chairman of the Proud Boys,

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Speaker 3: Henry Enrique Tario, has been convicted of seditious conspiracy tie

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Speaker 3: to the January sixth insurrection and in the US and Europe,

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Speaker 3: today is the fourth of May.

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Speaker 6: Ice drink flow from the force, off the dark side, anger, aggression,

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Speaker 6: the dark side of the horse name.

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Speaker 4: May the fourth be with you.

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Speaker 3: Global News powered by more Than and Galaxy News more

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Speaker 3: than twenty seven hundred journalists and analysts and over one

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Speaker 3: hundred twenty countries. In San Francisco, I'm at Baxter in

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Speaker 3: this is Bloomberg.

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Speaker 1: I'm Brain Curtis along with Rashad Salama. We have Doug

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Speaker 1: Crisner on Markets and head Baxter there on News. And

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Speaker 1: now our guest is Christina Hooper, chief Global market strategist

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Speaker 1: at Invesco. Christina, we were just talking about the different

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Speaker 1: positioning from the FED and the swaps market. The swaps market,

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Speaker 1: the WORP function on the Bloomberg tells us it's more

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Speaker 1: than fifty two percent the likelihood that we'll get a

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Speaker 1: cut by July. Do you think that that's possible.

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Speaker 12: I think it's very unlikely, but there's always a possibility

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Speaker 12: something like that could happen. But I don't think we

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Speaker 12: would want to get to a scenario with the economy

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Speaker 12: where we would see the FED cut rates.

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Speaker 1: Hey, you know, Christina, I wanted to just phrase the

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Speaker 1: question differently. I'm kind of curious whether or not is

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Speaker 1: that like a hedging. It's not the market predicting it

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Speaker 1: or saying this is going to happen, but it's like

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Speaker 1: positioning yourself as a hedge in case it does happen.

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Speaker 12: Well, I think that's part of it. But I really

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Speaker 12: do believe markets are more are increasingly anticipating that the

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Speaker 12: FED has committed overkill and that we could see a

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Speaker 12: situation where the economy deteriorates significantly. We're also, of course,

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Speaker 12: in a disinflationary environment and that will continue. I think

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Speaker 12: that will accelerate. So but I think for the FED

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Speaker 12: to actually cut rates in July, we'd have to see

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Speaker 12: a very significant economic downturn. I hope we don't see it,

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Speaker 12: and I don't think it's.

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Speaker 13: Likely because you know, I had a guest in two

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Speaker 13: thousand and eight, and this is in July of that year,

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Speaker 13: and that's when the European Center Bank raised interest rates,

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Speaker 13: and he called it an economic war crime. I had

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Speaker 13: a guest on yesterday suggesting that tightening during a banking

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Speaker 13: crisis is an act of insanity. What are your thoughts.

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Speaker 12: Well, I won't use such extreme language, but I do

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Speaker 12: think it's foolhardy. I think it's a mistake on the

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Speaker 12: part of the Fed. It is looking in the rear

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Speaker 12: view mirror at inflation. Inflation is a problem that is

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Speaker 12: certainly has been a very significant problem, but it is

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Speaker 12: going away, and it needs to be worried about breaking things,

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Speaker 12: and it needs to be worried about just how much

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Speaker 12: damage it is doing to the US economy and quite

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Speaker 12: frankly the global economy with the aggressive hikes that it

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Speaker 12: has made over the past fourteen or so months. Okay,

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Speaker 12: and we've got, of course, it's quite synchronized, right, We've

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Speaker 12: had a lot of central banks to it. So that's

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Speaker 12: adding to the kind of a very treacherous environment we're in.

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Speaker 1: Let me take the other side of the argument, is

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Speaker 1: what we do and defend Jerome pal He said quite

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Speaker 1: clearly yesterday that with the jobs market at this level,

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Speaker 1: that he doesn't really see that many hurdles on the horizon,

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Speaker 1: and that basically the reason they would cut would be

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Speaker 1: if inflation were coming down rapidly, and he does not

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Speaker 1: see that happening. If you look at the earnings that

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Speaker 1: we just got and put that together with a strong

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Speaker 1: jobs market, can you really see recession coming anytime soon?

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Speaker 12: Well, I certainly hope not. That is not my base case.

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Speaker 12: But we don't know what the lagged effects are of

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Speaker 12: such aggressive monetary policy tightening. Let's face it, there tends

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Speaker 12: to be a twelve to eighteen month lag, which means

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Speaker 12: we've only just begun to see the impact of rate

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Speaker 12: hikes on the economy, and so it could be quite

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Speaker 12: significant and there could be a lot of damage done.

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Speaker 12: But I do think he makes certainly a coherent argument

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Speaker 12: that the economy is in good shape right now, but

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Speaker 12: employment tends to be a lagging indicator. Let's hope it

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Speaker 12: holds up. Let's hope we don't see much in the

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Speaker 12: way of an increase in unemployment. Let's hope labor force

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Speaker 12: participation continues to improve. I certainly think there is a

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Speaker 12: scenario where we see I wouldn't say a soft landing,

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Speaker 12: but a bumpy landing, not a hard landing.

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Speaker 13: Tell me, what does the fixed thing came?

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Speaker 5: Muck?

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Speaker 13: It's a sovereign debt anyway. Treasury is actually at the

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Speaker 13: moment pricing in well.

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Speaker 12: I think their expectation is an economic slowdown, and that

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Speaker 12: is certainly in the cards given the kind of aggressive

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Speaker 12: tightening we've seen, but economic disaster definitely not.

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Speaker 1: Let's talk a little bit more about the banking crisis.

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Speaker 1: Doug raised a point several times on the program, not

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Speaker 1: really making the point, but raising the question should there

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Speaker 1: be a ban on short selling, because it seems like

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Speaker 1: a lot of banks are being targeted now that otherwise

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Speaker 1: look like solid banks, but their stock price is plummeting,

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Speaker 1: and it's an easy way for speculators in the market

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Speaker 1: to take advantage of fear. Do you see that as

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Speaker 1: reasonable as something that might be considered, well, I just.

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Speaker 12: Think there are other options that are less drastic.

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Speaker 8: Right.

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Speaker 12: We all want to believe in free markets. So the

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Speaker 12: better course, in my opinion, would be for the Fed

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Speaker 12: to come out, for the US Treasury to come out

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Speaker 12: and guarantee you know, the FDIC insurance would be more

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Speaker 12: broadly applied, perhaps an unlimited amount for deposits at least,

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Speaker 12: you know, in the very short term, because that seems

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Speaker 12: to be the catalyst for all that we're seeing. I

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Speaker 12: think there's this expectation that some of these banks are

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Speaker 12: very vulnerable because they don't have that insurance covering you know,

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Speaker 12: a significant portion of their deposits that could easily be remedied,

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Speaker 12: and that really, I think would end the short selling frenzy.

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Speaker 1: Okay, thirty seconds. We always like to talk about the

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Speaker 1: big macro conditions, but we want to know about actions too.

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Speaker 1: What would you buy here? What's your single best pick

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Speaker 1: of the moment.

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Speaker 12: I actually think it's technology, and my rationale is that

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Speaker 12: we're actually seeing rates come down. That's likely to benefit

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Speaker 12: tech more than other areas. But more importantly, the economy

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Speaker 12: is clearly in a slowdown mode and that's a time

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Speaker 12: to be in more defensive sectors as well as secular

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Speaker 12: growth areas of the economy, and technology is front and

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Speaker 12: center for that.

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