WEBVTT - Daybreak Asia: January 26, 2023

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<v Speaker 1>This is Bloomberg Daybreak Asia, but it's Thursday January in

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<v Speaker 1>Hong Kong, Wednesday January in New York and coming up

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<v Speaker 1>this hour, Tesla is seeking to boost output quickly after

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<v Speaker 1>the ev maker reported better than expected profits last quarter.

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<v Speaker 1>FED Vice chair Leal Brainerd appears to be a top

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<v Speaker 1>contender to head President Biden's Economic Council, and a SML

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<v Speaker 1>says limiting China's access to certain technologies will have unintended consequences.

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<v Speaker 1>US and Germany announced the sending of heavy tanks to Ukraine.

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<v Speaker 1>Russia says the West is escalating the war. China says

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<v Speaker 1>it sees a major decline in severe COVID cases. I'm

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<v Speaker 1>at Baxter with Global News. Novak Djokovic moves on to

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<v Speaker 1>the semis of the Australian Open in dominating fashion. I'm

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<v Speaker 1>Dan schwartz Been. I'll have that story more coming up

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<v Speaker 1>in Bloomberg Sports. That's all straight ahead on Bloomberg Daybreak

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<v Speaker 1>Asia on Bloomberg eleven three on York, Bloomberg on Washington,

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<v Speaker 1>d C, Bloomberg one six one, Boston, Bloomberg nine sixties,

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<v Speaker 1>San Francisco, Sirius XM one nineteen and around the world

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<v Speaker 1>on Bloomberg Radio dot com and via the Bloomberg Business app.

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<v Speaker 1>Good morning, I'm Dead Prisoner and I'm Brian Curtis. Here

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<v Speaker 1>are the stories we're following today. We do have earnings

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<v Speaker 1>to get right to hear. Tesla reporting better than expected

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<v Speaker 1>profits in the latest quarter. It signaled strength to a

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<v Speaker 1>degree as the company faces growing questions about car buyer

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<v Speaker 1>demand for it's all electric vehicle lineup. Let's get details

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<v Speaker 1>from Bloomberg's Charlie Pellett. The Austin, Texas based company reported

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<v Speaker 1>adjusted earnings per share of a dollar nineteen, beating the

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<v Speaker 1>dollar twelve share average of analysts estimates compiled by Bloomberg.

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<v Speaker 1>The ev market leader says it will increase output quote

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<v Speaker 1>as quickly as possible, in line with previous guidance for

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<v Speaker 1>average annual growth of fifty sent over multiple years. It

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<v Speaker 1>also says it is on track to deliver about one

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<v Speaker 1>point eight million vehicles this year in New York. Charlie

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<v Speaker 1>Pellott Bloomberg Daybreak Asia. Well, thank you, Charlie. Now, A

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<v Speaker 1>key question going forward is whether there's some downside risk

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<v Speaker 1>for corporate earnings. In three the c IO of New Vein,

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<v Speaker 1>Sarah Malic says, the answer is yes, and for that

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<v Speaker 1>reason she's making the case for fixed income. Just looking

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<v Speaker 1>at rate heights going forward about fifty more basis points

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<v Speaker 1>expected from the FAT, So that's starting to move behind it.

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<v Speaker 1>You can start to increase some of your duration and

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<v Speaker 1>fixed income and get strong total returns in it without

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<v Speaker 1>a lot of these heavy macro risks that are going

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<v Speaker 1>to hit equity. So earns risk in some of these

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<v Speaker 1>other areas that ensumer slow down and that impact on

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<v Speaker 1>revenue growth and all of that with equities considering their

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<v Speaker 1>valuations is less attractive. That is Sarah Malic there from

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<v Speaker 1>New ven By the way, Bloomberg Intelligence has fourth quarter

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<v Speaker 1>earnings for the tech firms within the S and P

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<v Speaker 1>five hundred are projected to have fallen nine from last year.

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<v Speaker 1>Here's the thing. Just three months ago those profits were

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<v Speaker 1>expected to be flat. Well, shares in Adani Group companies fell.

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<v Speaker 1>That's after the US investor Hindenburg Research said it was

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<v Speaker 1>shorting the conglomerate stocks. It accused firms owned by Asia's

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<v Speaker 1>richest man Gatamadanni of brazen market manipulation and accounting fraud.

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<v Speaker 1>Adani Group CFO Jushinder Singh later rejected the claims. What

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<v Speaker 1>they report is suggesting that Adana Group companies have created

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<v Speaker 1>shell companies and Yui Caribbean Islands and Maulitias which is

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<v Speaker 1>leading to a tax theft, corruption and money laundering. However,

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<v Speaker 1>that Adani Group CFO has countered, then he has he

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<v Speaker 1>has denied all this allegation and he had said also

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<v Speaker 1>criticized the timing of this landing of this report because

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<v Speaker 1>Janu Day, the flagship company of Adani Group, Dania Enterprises,

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<v Speaker 1>is launching is fullow on offer which is going to

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<v Speaker 1>be the largest fullow on offer in India. Adani Group

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<v Speaker 1>financial officer jusiend Singh. Bloomberg data, by the way, shows

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<v Speaker 1>the market value of ten Donnie owned stocks was eroded

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<v Speaker 1>by about twelve billion dollars in Wednesday's trading. Well. The

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<v Speaker 1>Dutch chip making equipment company A s m L says

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<v Speaker 1>limiting China's access to certain technologies will have unintended consequences.

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<v Speaker 1>We have more from Bloomberg's Annabel Jewelers. The Biden administration

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<v Speaker 1>is leading an effort to curb exports of chip manufacturing

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<v Speaker 1>equipment to China. The Netherlands and Japan are expected to

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<v Speaker 1>join in, but a s mL CEO Peter Venick says

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<v Speaker 1>the measures could eventually push Beijing to create its own technology.

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<v Speaker 1>Simply put, he says, if China cannot get access to

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<v Speaker 1>those machines, the country will create their own. Even so,

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<v Speaker 1>Vennick admits the complex supply chain, combined with the knowhow

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<v Speaker 1>required to recreate advanced chipmaking technology will be a massive challenge.

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<v Speaker 1>Vennick is also critical of export control for other reasons.

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<v Speaker 1>He says chip availability could be reduced and limiting access

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<v Speaker 1>means a less efficient infrastructure and cost will very likely

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<v Speaker 1>go up. In Hong Kong, I'm Annabel Ruler's bloom blow

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<v Speaker 1>daybreak Asia. Meantime, in Europe, Germany's business outlook brightened further.

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<v Speaker 1>A gauge of expectations by the EFO Institute rose to

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<v Speaker 1>eighty six point four in January from the three point

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<v Speaker 1>to the previous month. We heard from EFO President Clemen's

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<v Speaker 1>Foist companies are telling us they are optimistic regarding the

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<v Speaker 1>next six months and that suggests overall we will avoid

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<v Speaker 1>a technical recession with most important risk for the German

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<v Speaker 1>economy was a gas rationing scenario, so that risk is

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<v Speaker 1>off the table. Now due to the mild weather, I

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<v Speaker 1>guess a storage is full. Foist also said that he

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<v Speaker 1>expects a shrinking economy in the first quarter, but that

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<v Speaker 1>will be followed by an improvement towards the summer. Well

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<v Speaker 1>back here in the States, we are hearing that FED

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<v Speaker 1>Vice Chair Leo Brainerd is now a top contender to

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<v Speaker 1>become the head of the National Economic Council. The role

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<v Speaker 1>within the White House will be vacated by Brian Deese

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<v Speaker 1>at an undetermined time. Here's Bloomberg's and Marie Hordern. We

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<v Speaker 1>should no decisions have been made, and there are another

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<v Speaker 1>names that have been thrown around, like Gene Sperling, like

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<v Speaker 1>Wally Adamo. But right now what you potentially could see

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<v Speaker 1>in the coming weeks is that the FEDS number two

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<v Speaker 1>becomes the number one economic voice in the West Wing.

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<v Speaker 1>This is on top of a little bit of a

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<v Speaker 1>shake up at the White House, which is pretty much

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<v Speaker 1>natural when you have after a metrom election and two

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<v Speaker 1>years of an administration that is Bloomberg's and Marie hoor Dern.

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<v Speaker 1>By the way, if Brainerd is appointed, that would open

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<v Speaker 1>a slot on the FED seven member board. Now President

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<v Speaker 1>Biden would then need to find a successor who could

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<v Speaker 1>win the full backing of the U S. Senate Brian.

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<v Speaker 1>We are a week away from the next FED decision.

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<v Speaker 1>But if you're talking central banks, I think it was

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<v Speaker 1>the BOC moving markets today. Yeah, that was very interesting

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<v Speaker 1>because all along it has been out in front and

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<v Speaker 1>this would be the first pause by the G seven

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<v Speaker 1>central banks, and it has led the FEDS, so it

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<v Speaker 1>may send a strong message. All right, let's update Global

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<v Speaker 1>News next here on day break. Asia Ukraine will soon

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<v Speaker 1>be some of the heavy artillery and tanks it's been

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<v Speaker 1>seeking for months. Ad Baxter with more from the Bloomberg

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<v Speaker 1>News room at San Francisco, Eddie, Yeah, exactly right, Douglas.

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<v Speaker 1>This comes as a U S and Germany broker a

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<v Speaker 1>deal to include tanks from a number of NATO countries.

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<v Speaker 1>German Chancellor all Off Schultz. Our goal is to quickly

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<v Speaker 1>provide two tank battalions together with our allies. There are

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<v Speaker 1>many countries that would like to supply, and we will

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<v Speaker 1>coordinate that and involve them to make that happen steps

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<v Speaker 1>by step. Yeah. So with that, U S. President Joe Biden,

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<v Speaker 1>today I'm announcing that the United States will be sending

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<v Speaker 1>Abram tanks to Ukraine. Yeah, and along with ukraining Ukrainian

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<v Speaker 1>forces and the use of them, he says. Biden says

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<v Speaker 1>it also sends a strong message at the US and

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<v Speaker 1>NATO are united in their full support of Ukraine's ability

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<v Speaker 1>to defend itself and conduct counter offensives. The expectation of

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<v Speaker 1>the part of Russia's we're going to break up, We're

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<v Speaker 1>not going to stay united. But we are fully, thorough

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<v Speaker 1>totally united, yeah, he says, as is the globe now

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<v Speaker 1>against Russia. Biden did stress that these weapons are not

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<v Speaker 1>to be used in launching first strike, but in defense

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<v Speaker 1>and counter attack. So what does this change, Well, Rose

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<v Speaker 1>gotten Muller, who is a former NATO Deputy Secretary General

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<v Speaker 1>now a professor at Stanford, I think it will make

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<v Speaker 1>a difference because these are the most capable battle tanks

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<v Speaker 1>in the world today. The Leopards are well known for

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<v Speaker 1>being reliable, for being capable, and I think the fact

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<v Speaker 1>that they are deployed across the European NATO allies and

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<v Speaker 1>also NATO partners such as Finland who have offered up tanks.

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<v Speaker 1>She says. Expectations are that Russia will launch major offenses

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<v Speaker 1>in the coming months and Godly says she feels it

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<v Speaker 1>will make NATO stronger. This agreement, delivery of tanks will

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<v Speaker 1>take those months the training begins. Now Russia, well, Russia's

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<v Speaker 1>decrying the decision, saying this is proof that in fact,

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<v Speaker 1>the West is escalating the war, and Russian activist hackers

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<v Speaker 1>have not German website offline in response to the decision.

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<v Speaker 1>Germany's b s I cyber agency says the digital blitz

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<v Speaker 1>has had a little tangible effect. China says a number

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<v Speaker 1>of COVID related deaths and severe cases and hospitals have

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<v Speaker 1>declined by more than seventy percent from peak levels in January.

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<v Speaker 1>It says daily fatalities in hospitals a slid to eight

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<v Speaker 1>hundred nineties six as of Monday Monday, down from over

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<v Speaker 1>hundred January four um. Now, China's numbers have been questioned

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<v Speaker 1>by the World Health Organization, which would like to see

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<v Speaker 1>more data. And the meta platforms are going to end

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<v Speaker 1>Donald Trump's suspension. Facebook says it will have it back

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<v Speaker 1>up in the coming weeks. In San Francisco, I'm Ad Baxter,

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<v Speaker 1>this is Bloomberg. This is Bloomberg, Gaybreak Asia. I'm Brian

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<v Speaker 1>Curtis along with Rishad Salama. Let's get to our guest,

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<v Speaker 1>Sylvia Jablonsky, co founder, CEO and c i O at

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<v Speaker 1>defiance E t F S. Well, Sylvia, we seem to

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<v Speaker 1>be in a kind of muted reaction phase. So we

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<v Speaker 1>thought maybe Microsoft's guidance yesterday, the week of guidance, would

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<v Speaker 1>lead to a sell off today, but didn't happen. Really,

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<v Speaker 1>Microsoft was down about six tenths of one per cent.

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<v Speaker 1>Is this because to a certain degree, with the huge

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<v Speaker 1>losses we saw last year, Microsoft down some so Tesla

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<v Speaker 1>down two thirds that a lot of this is in

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<v Speaker 1>the price. Yeah, good evening. I think you make a

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<v Speaker 1>great point there. You know, we we had a nice

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<v Speaker 1>start to the year, particularly with the NAS dock up

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<v Speaker 1>and looking to recover on some of those tech stocks

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<v Speaker 1>that were just hammered last year to the tune of

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<v Speaker 1>twenty or more. UM. And I think, you know, the

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<v Speaker 1>Microsoft news addition, initially you saw stocks really selling off.

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<v Speaker 1>You saw, you know, futures pointed sort of grossly low,

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<v Speaker 1>and the morning was a little bit rough with us.

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<v Speaker 1>And so I think that ignited concerns that the market

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<v Speaker 1>generals were struggling. UM. As you know, rates have been

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<v Speaker 1>rising and refreshing. Rest and fears are growing. But I

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<v Speaker 1>do think that investors who are interested in tech for

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<v Speaker 1>the long term perhaps came off the sidelines a little

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<v Speaker 1>bit and thought, you know, while the outlook is sort

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<v Speaker 1>of bleak for the next year or two, this this

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<v Speaker 1>sector has been beat up so much, so much of

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<v Speaker 1>it is in the price already, and here's an opportunity

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<v Speaker 1>to you know, kind of get it on another pull

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<v Speaker 1>back if if you have a holding period beyond say so,

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<v Speaker 1>I really think that earnings are going to set the

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<v Speaker 1>tone for the market in the next couple of weeks.

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<v Speaker 1>And uh, you know, we'll see some of this choppiness

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<v Speaker 1>day by day depending on what the generals do. They

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<v Speaker 1>always sort of seeing to drive the market mentality or

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<v Speaker 1>psychology for the week. Well, you know, Silver, you you

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<v Speaker 1>make a good point that I mean, when you talk

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<v Speaker 1>about psychology, it's almost as if it's how could you

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<v Speaker 1>say hurry up? And wait? I mean, we are looking

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<v Speaker 1>at these stocks, you know, for for a tech particularly,

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<v Speaker 1>we're looking at five G quantum computing, we're looking at AI.

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<v Speaker 1>These are all things which are going to take time

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<v Speaker 1>before they come on stream, and uh, you know that

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<v Speaker 1>those things are in the price to some extent, and

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<v Speaker 1>you know, at the end of the day, it's hang

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<v Speaker 1>on a second, you know what, I can get some

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<v Speaker 1>value somewhere else right now too. Yeah, well, I think

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<v Speaker 1>that's a great point as well. You need to diversify

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<v Speaker 1>your portfolio rights. So I think that if you look

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<v Speaker 1>at the broader macro um you know, kind of economy

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<v Speaker 1>out there and some of the uncertainty in the near

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<v Speaker 1>near term, if you're looking at the short term, then

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<v Speaker 1>I would expect traders to look in more sort of

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<v Speaker 1>defensive sectors or at least make sure that they're allocating

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<v Speaker 1>to things like you know, bonds trateguries that pay four

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<v Speaker 1>percent whatever it might be, um their private trading accounts

0:12:24.760 --> 0:12:26.720
<v Speaker 1>where the cash cash degree three and a half percent.

0:12:26.800 --> 0:12:28.839
<v Speaker 1>You know, defensive stocks like healthcare and things like that.

0:12:29.080 --> 0:12:32.360
<v Speaker 1>But they're the time to pick, to pick up on

0:12:32.480 --> 0:12:35.440
<v Speaker 1>a thematic ETFs and ideas for the future, and ideas

0:12:35.520 --> 0:12:37.599
<v Speaker 1>that will play out in the next few years. It

0:12:37.720 --> 0:12:40.079
<v Speaker 1>is now. It is when when you know the prices

0:12:40.120 --> 0:12:43.000
<v Speaker 1>are kind of knocked off of their highs multiples or

0:12:43.600 --> 0:12:45.839
<v Speaker 1>or you know, cut in half or a third, and

0:12:46.400 --> 0:12:48.559
<v Speaker 1>when you think about these ideas, you know, five G

0:12:48.760 --> 0:12:50.920
<v Speaker 1>is the name of a theme, right and quantum computing

0:12:50.920 --> 0:12:53.359
<v Speaker 1>in AI of the names of themes. But these companies

0:12:53.720 --> 0:12:56.160
<v Speaker 1>it's important to number one invest in those teams, right.

0:12:56.240 --> 0:12:59.199
<v Speaker 1>So so if you think about open AI for example,

0:12:59.320 --> 0:13:02.520
<v Speaker 1>right that the big big investment by Microsoft, that is

0:13:02.640 --> 0:13:05.679
<v Speaker 1>going to be something that can be monetized. It's something

0:13:05.800 --> 0:13:08.920
<v Speaker 1>that you know, can replace workers that companies can't find.

0:13:09.040 --> 0:13:12.920
<v Speaker 1>For example, UM it's it's you know, there's real value

0:13:12.960 --> 0:13:15.240
<v Speaker 1>to that and it affects the bottom line. But then

0:13:15.800 --> 0:13:18.760
<v Speaker 1>these themes like five G again quantum computing, they require

0:13:18.920 --> 0:13:22.599
<v Speaker 1>stocks like semiconductor stocks, and so those funds UM that

0:13:22.720 --> 0:13:25.120
<v Speaker 1>hold those names, those those companies are doing other things,

0:13:25.160 --> 0:13:26.880
<v Speaker 1>so A and D and and Nvidia. They're part of

0:13:27.240 --> 0:13:30.000
<v Speaker 1>you know, metaverse, they're part of UM running our coffee machine,

0:13:30.040 --> 0:13:32.679
<v Speaker 1>electric vehicles drivers, as far as AI machine learning. So

0:13:32.760 --> 0:13:36.079
<v Speaker 1>there's a lot there. So so so one, do you

0:13:36.160 --> 0:13:38.640
<v Speaker 1>like those companies? Are you starting to buy SMH and

0:13:38.720 --> 0:13:42.640
<v Speaker 1>some of the some of the semiconductor individual names. And secondly,

0:13:43.160 --> 0:13:46.199
<v Speaker 1>because I think this can be wrapped into Tesla blamed

0:13:46.360 --> 0:13:49.800
<v Speaker 1>China for many of its issues, saying that the challenges

0:13:49.880 --> 0:13:53.800
<v Speaker 1>were largely concentrated in China. That's all changing now there's

0:13:53.840 --> 0:13:56.760
<v Speaker 1>no more lockdowns and they're getting back to business. Does

0:13:56.840 --> 0:14:01.520
<v Speaker 1>that add to any optimism, Yeah, it does. So on

0:14:01.600 --> 0:14:05.000
<v Speaker 1>the first question, I do like semi conductors. I think that,

0:14:06.040 --> 0:14:07.280
<v Speaker 1>you know, if you look at the outlook for the

0:14:07.320 --> 0:14:09.520
<v Speaker 1>semi conductor space, and I like you know, and D

0:14:09.880 --> 0:14:12.559
<v Speaker 1>and the video sort of most because they're well capitalizing

0:14:12.640 --> 0:14:16.240
<v Speaker 1>part of every one of these revolutions, that revenue is

0:14:16.280 --> 0:14:18.960
<v Speaker 1>supposed to get to about two hundred and fifty billion

0:14:19.080 --> 0:14:23.920
<v Speaker 1>by that's not so far off, right. So I do

0:14:24.080 --> 0:14:26.040
<v Speaker 1>like semi conductors. They've been beat up. I think that

0:14:26.080 --> 0:14:28.560
<v Speaker 1>they're going to sort of start seeing their their resurrection.

0:14:28.640 --> 0:14:31.600
<v Speaker 1>There's a natural tail one for that space coming um

0:14:31.880 --> 0:14:33.920
<v Speaker 1>where it's just been straight head winds for the last

0:14:33.960 --> 0:14:36.200
<v Speaker 1>two years. To the test the question, you know, what

0:14:36.320 --> 0:14:39.640
<v Speaker 1>are demand looks like it's outpacing two x what what

0:14:39.760 --> 0:14:42.720
<v Speaker 1>the industry expected. And while you know Elon Musk came

0:14:42.760 --> 0:14:45.240
<v Speaker 1>out and said he expects it to contract this year,

0:14:45.640 --> 0:14:47.240
<v Speaker 1>you know they do have trying to reopening. How much

0:14:47.280 --> 0:14:49.720
<v Speaker 1>will that play out? I don't know. But with with Tesla,

0:14:50.240 --> 0:14:52.680
<v Speaker 1>I think that, you know, you still have this situation

0:14:52.720 --> 0:14:54.720
<v Speaker 1>where the company is just by far the leader in

0:14:54.760 --> 0:14:56.800
<v Speaker 1>this space. Yes, they're going to have you know, sort

0:14:56.800 --> 0:14:58.880
<v Speaker 1>of more competition, but there will also be you know,

0:14:58.960 --> 0:15:01.160
<v Speaker 1>a higher market share for the EB space and that

0:15:01.320 --> 0:15:04.880
<v Speaker 1>also has talents of UM Inflation Reduction Act and you

0:15:04.920 --> 0:15:06.600
<v Speaker 1>know some of the tax credits and things like that

0:15:06.760 --> 0:15:09.120
<v Speaker 1>that that have been passed, and we'll go towards the

0:15:09.440 --> 0:15:11.400
<v Speaker 1>you know, the knuckle of going carbon neutral. So I

0:15:11.480 --> 0:15:13.560
<v Speaker 1>do think that they have they continue to benefit in

0:15:13.640 --> 0:15:16.000
<v Speaker 1>coming years. So I want to get back to your

0:15:16.320 --> 0:15:19.800
<v Speaker 1>point about semi conductors here. Sure, the government's giving some

0:15:19.960 --> 0:15:23.440
<v Speaker 1>compensation for the uh lots of China as a market,

0:15:23.480 --> 0:15:27.200
<v Speaker 1>but you're still talking about thirty percent of their market

0:15:27.320 --> 0:15:33.000
<v Speaker 1>disappearing here. That's got to hurt of their market is disappearing,

0:15:33.160 --> 0:15:36.040
<v Speaker 1>but uh, you know, large sums of their market are

0:15:36.200 --> 0:15:40.080
<v Speaker 1>are reappearing right so automatically. So automative industry is just

0:15:40.160 --> 0:15:43.040
<v Speaker 1>highly reliant on semiconductors, and then you're expecting to see

0:15:43.120 --> 0:15:45.800
<v Speaker 1>you know, massive revenue growth there. The focus of tech

0:15:45.840 --> 0:15:49.200
<v Speaker 1>companies again, we talked about Microsoft AI chart GBT. You

0:15:49.280 --> 0:15:53.040
<v Speaker 1>know this this week's favorite word. All of this requires um,

0:15:53.320 --> 0:15:55.240
<v Speaker 1>you know, sort of managing big data, little wait and

0:15:55.280 --> 0:15:58.720
<v Speaker 1>see that is that all comes through semi conductors. You

0:15:58.760 --> 0:16:01.320
<v Speaker 1>need semi conductors for natural language processing. You know the

0:16:01.400 --> 0:16:04.000
<v Speaker 1>feature of five G depends on it. So I just

0:16:04.080 --> 0:16:06.600
<v Speaker 1>think that whatever is sort of lost will be replaced.

0:16:08.400 --> 0:16:11.200
<v Speaker 1>This is Bloomberg Daybreak Asia, your morning brief on the

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