WEBVTT - Intel Scraps Tower Deal, Tencent Falls After Earnings 0:00:01.280 --> 0:00:06.560 From Marhart where Innovation, Money and Power Collie in Silicon Valley, NBN. 0:00:06.920 --> 0:00:11.440 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:25.040 --> 0:00:27.639 And Caroline Hyde at Bloomberg's world headquarters in New York, 0:00:28.040 --> 0:00:29.760 and I met Ludlow in San Francisco. 0:00:29.880 --> 0:00:32.199 This is Bloomberg Technology coming up. 0:00:32.240 --> 0:00:35.519 Intel well, it scraps that five billion dollar deal for 0:00:35.560 --> 0:00:38.560 his Radi semiconductor firm Tower after failing to win approval 0:00:38.600 --> 0:00:40.839 in China. Will break down the implications. 0:00:41.720 --> 0:00:45.080 Plus, China tech firms report earnings with ten cent missing 0:00:45.120 --> 0:00:48.360 revenue estimates amid an uncertain economy. Will break down the 0:00:48.400 --> 0:00:52.040 results and look at WHYJD dot Com is bucking the slowdown. 0:00:52.320 --> 0:00:56.280 Speaking of slowdowns, from Buckingham, crypto custodian Bitgo defies the 0:00:56.320 --> 0:00:59.360 broader industry pullback to raise one hundred million dollars in 0:00:59.360 --> 0:01:02.840 securing one point seven five billion dollar valuation. So Mike 0:01:02.840 --> 0:01:05.440 Welsh's going to be joining us later to discuss how 0:01:05.480 --> 0:01:06.240 and why they did it. 0:01:06.640 --> 0:01:08.000 The top story, though, is clear. 0:01:08.080 --> 0:01:11.759 It is Intel walking away abandoning a deal to buy 0:01:11.840 --> 0:01:15.360 Tower Semi for five point four billion dollars. The concern 0:01:15.880 --> 0:01:19.399 is the timeline and the regulatory hurdle of China that 0:01:19.440 --> 0:01:21.880 they were not able to get approved Caro. It goes 0:01:21.920 --> 0:01:23.640 to the core of their foundry business. We're going to 0:01:23.640 --> 0:01:25.280 be talking to one of our guests about what this 0:01:25.360 --> 0:01:27.959 means for the foundry side later in the show. But 0:01:28.000 --> 0:01:30.119 you can see the impact on the market. Tower semi 0:01:30.160 --> 0:01:33.959 clearly down more ten percent, Intel down two point seven percent. 0:01:34.000 --> 0:01:38.240 By the way, Bloomberg reported this before the company confirmed it, Let's. 0:01:38.000 --> 0:01:39.680 Get to one of those reporters please to say a 0:01:39.720 --> 0:01:41.679 Leanna Baker is here with us and it was a scoop, 0:01:41.720 --> 0:01:44.520 but actually maybe the market had seen it coming because 0:01:44.560 --> 0:01:46.720 Tower had been selling off for what months before this. 0:01:46.840 --> 0:01:49.240 Basically it wasn't a total surprise. It was just about 0:01:49.320 --> 0:01:52.040 catching that finale. And even when we put out the story, 0:01:52.120 --> 0:01:54.240 we were wondering, what could happen if there's a hail 0:01:54.320 --> 0:01:59.600 Mary China's watchdog. They update their website at all hours 0:01:59.640 --> 0:02:01.200 of the night here in the US, so it was 0:02:01.280 --> 0:02:03.360 possible even at the last minute, they could have approved 0:02:03.400 --> 0:02:03.720 the deal. 0:02:03.760 --> 0:02:04.800 But once it became a. 0:02:04.840 --> 0:02:07.920 Parent that wasn't happening, it felt worth to publish that 0:02:08.000 --> 0:02:08.760 this was dead. 0:02:10.560 --> 0:02:12.960 Leanna walk us through the mechanics and timeline of the 0:02:13.000 --> 0:02:18.160 deal because there were multiple jurisdictional or regulatory challenges, China 0:02:18.240 --> 0:02:21.520 the main one. But Intel seems so confident when they 0:02:21.560 --> 0:02:23.959 announced this deal that they would get it done by 0:02:24.000 --> 0:02:24.840 a deadline. 0:02:25.200 --> 0:02:29.040 They announced the deal back in February of twenty twenty two, 0:02:29.200 --> 0:02:31.600 so that was already eighteen months ago, so it had 0:02:31.639 --> 0:02:32.760 really been dragging on. 0:02:33.280 --> 0:02:34.880 China is often. 0:02:34.639 --> 0:02:39.040 The last regulatory hurdle that you'll see in transactions. They 0:02:39.080 --> 0:02:43.960 really have jurisdiction over so many deals that have any 0:02:44.160 --> 0:02:48.840 connection to China. So anything right now in semiconductors is 0:02:48.919 --> 0:02:52.239 really hard to touch because it's just such a black box, 0:02:52.360 --> 0:02:54.200 this regulatory watchdog in China. 0:02:54.320 --> 0:02:55.280 It's not going away. 0:02:55.520 --> 0:02:58.840 I think any deal right now in semiconductors could face 0:02:58.880 --> 0:03:00.760 similar risks. 0:03:00.080 --> 0:03:02.960 And maybe other industries. We know that there's this overarching 0:03:03.080 --> 0:03:05.960 concern about AI, about chips when it comes to basically 0:03:06.000 --> 0:03:08.360 geopolitics at play. Does it all come down to geopolitics? 0:03:08.440 --> 0:03:11.640 Is that anything that Intel can see a silver lining 0:03:11.680 --> 0:03:12.040 and all. 0:03:11.960 --> 0:03:17.120 Of this wrong anything with chips, electric vehicles, AI, it's 0:03:17.160 --> 0:03:20.120 all very sensitive. It seems like the US and China, 0:03:20.160 --> 0:03:22.640 given all the geopolitical tensions, are in some kind of 0:03:22.720 --> 0:03:26.000 arms race so I would say any deal in that 0:03:26.120 --> 0:03:28.959 space is going to face a lot of scrutiny. Other 0:03:29.040 --> 0:03:32.040 deals that need China approval, maybe things in clothing and 0:03:32.080 --> 0:03:34.800 other sectors, those are probably safe for now and the 0:03:34.840 --> 0:03:39.400 reviews will be more straightforward. But certainly anything in technology, 0:03:39.440 --> 0:03:42.120 it's going to be a really rough road and traders 0:03:42.120 --> 0:03:44.480 are not going to like what happens. 0:03:45.200 --> 0:03:47.600 All right, bluem both Leanna Baker, who leads our deal's 0:03:47.600 --> 0:03:49.840 team in New York, thank you very much. I want 0:03:49.880 --> 0:03:52.280 to get some comments from Intel CEO Pat Gelsinger. In 0:03:52.320 --> 0:03:55.240 this statement, he said, we are executing well on our 0:03:55.320 --> 0:03:59.560 roadmap to regain transistor performance and power performance leadership by 0:03:59.560 --> 0:04:03.760 twenty two five, building momentum with customers in the broader ecosystem, 0:04:04.080 --> 0:04:09.280 and investing to deliver the geographically diverse and resilient manufacturing footprint. 0:04:09.080 --> 0:04:10.320 The world needs. 0:04:10.360 --> 0:04:12.600 What does this mean for the foundry business as bringing 0:04:12.840 --> 0:04:15.520 Daniel Newman the future and group CEO that for me, 0:04:16.000 --> 0:04:19.240 Dan is the story. How does this impact Intel's big 0:04:19.320 --> 0:04:22.560 plan to become a foundry offering of choice. 0:04:23.520 --> 0:04:26.440 We have a global title prize fight right now that's 0:04:26.480 --> 0:04:30.560 going on between China and the US for semiconductor and 0:04:30.720 --> 0:04:33.719 basically global technology leadership. And we'll talk about that in 0:04:33.720 --> 0:04:36.240 a minute, but right now you've got to look at 0:04:36.279 --> 0:04:39.200 the situation for Intel and say there's a silver lining. 0:04:39.560 --> 0:04:43.080 There's nothing against Intel partnering with Tower and moving forward. 0:04:43.520 --> 0:04:46.359 The profits in the foundry space are in the leading 0:04:46.480 --> 0:04:49.280 edge the analog and some of the specific capabilities that 0:04:49.400 --> 0:04:51.000 this would have given them would have certainly made them 0:04:51.000 --> 0:04:54.040 a full service boundry ed. But as I see it, 0:04:54.520 --> 0:04:57.920 there is plenty of opportunity for partnership. China is going 0:04:57.920 --> 0:05:00.760 to be incredibly complex, and as long as we continue 0:05:00.800 --> 0:05:04.520 to posture and put our microaggressions to maintain our technology 0:05:04.560 --> 0:05:07.640 leadership and push China, you can expect deals like this 0:05:07.920 --> 0:05:08.760 are never going to. 0:05:08.760 --> 0:05:09.240 Make it through. 0:05:10.000 --> 0:05:14.880 Well exactly so, I mean, Caroline Pat Gelsinger would tell 0:05:14.920 --> 0:05:17.880 me that they're super confident that Intel will become the 0:05:17.960 --> 0:05:21.200 leader again in manufacturing. One way to get there organically. 0:05:21.240 --> 0:05:23.440 The other is to go shopping. Shopping seems to be 0:05:23.480 --> 0:05:24.040 off the table. 0:05:24.320 --> 0:05:27.359 And to that point, Dan, it's so interesting is shopping 0:05:27.400 --> 0:05:29.640 off the table in the US as well. We don't 0:05:29.640 --> 0:05:31.760 want to see big tech chance get ever more bigger, 0:05:31.960 --> 0:05:35.279 but then equally international, and particularly when it comes to 0:05:35.600 --> 0:05:37.400 any sort of hot topic for China. 0:05:38.640 --> 0:05:41.120 Yeah, I mean, China's going to be a problem for 0:05:41.160 --> 0:05:44.560 the US for some time, and the US is gaining leadership. 0:05:44.640 --> 0:05:46.600 It's the moves it's made. 0:05:46.360 --> 0:05:49.520 With ASML, with EUV and these are the leading edge 0:05:49.520 --> 0:05:52.400 process capabilities have certainly put China on the defense. And 0:05:52.880 --> 0:05:55.400 you know, they've used some of the you know, different 0:05:56.000 --> 0:06:00.679 you know, components for semiconductors to hold against the US. 0:06:00.839 --> 0:06:05.200 But I see this move as something that's largely gonna 0:06:05.240 --> 0:06:07.080 be okay for Intel. 0:06:07.560 --> 0:06:08.880 Like I said, I see the partnership. 0:06:08.920 --> 0:06:10.640 And by the way, you can't take something like a 0:06:10.680 --> 0:06:14.279 Global Founderies deal, at least the consideration of something of that, 0:06:14.320 --> 0:06:18.960 because you remember Global Founderies exited a significant participation in China, 0:06:19.120 --> 0:06:22.160 so there's another opportunity there. And if Intel really wanted 0:06:22.200 --> 0:06:26.040 to go shopping, that could happen without necessarily needing China's approval. 0:06:26.160 --> 0:06:29.200 So I don't see this. I think Intel is going 0:06:29.240 --> 0:06:32.520 to win the markets. You know, they're going to adore 0:06:32.680 --> 0:06:34.520 Intel more if Intel. 0:06:34.240 --> 0:06:36.640 Can win at the leading edge. The lagging edge has 0:06:36.680 --> 0:06:37.279 been a problem. 0:06:37.279 --> 0:06:39.520 It has caused issues in the supply chain, but I'm 0:06:39.520 --> 0:06:42.080 not as negative about this. I do see this as 0:06:42.120 --> 0:06:44.480 maybe a cash flow benefit for the company, and the 0:06:44.560 --> 0:06:46.240 right partnership could end up being a winner. 0:06:47.600 --> 0:06:52.040 Dan the benchmark that Intel sets itself, the benchmark is TSMC. 0:06:52.360 --> 0:06:56.159 They're pretty candid about it. Do you still think they 0:06:56.200 --> 0:06:58.799 can get there in the end of catching out with TSMC? 0:07:00.320 --> 0:07:03.760 A one step approach, the acquisition of Tower is not 0:07:04.000 --> 0:07:09.200 going to immediately make Intel on the same plane as 0:07:09.240 --> 0:07:12.760 TSMC as a global foundry. Having said that it was 0:07:12.800 --> 0:07:15.239 a step forward, it did give them a more complete 0:07:15.280 --> 0:07:18.560 set of capabilities. I think if you even speak to 0:07:18.680 --> 0:07:21.120 and I have spoken to Pat Gelsinger, he will say 0:07:21.160 --> 0:07:25.080 it's a multi step process. The company providing more resiliency 0:07:25.160 --> 0:07:29.000 option for fabulous companies here like in Nvidia and Qualcomm 0:07:29.800 --> 0:07:32.880 AMD in the United States, to help us reduce the 0:07:32.960 --> 0:07:36.120 risk of future supply chain issues that we saw during COVID. 0:07:36.520 --> 0:07:38.960 I think the immediate opportunity is for Intel to be 0:07:39.000 --> 0:07:43.239 a foundry here, to lessen the United States and parts 0:07:43.240 --> 0:07:47.000 of the world's dependency on Asia and TSMC to compete, 0:07:47.200 --> 0:07:49.840 and of course, to help its own balance sheet and 0:07:49.840 --> 0:07:53.720 income statement with a new source of higher margin revenue. 0:07:53.720 --> 0:07:56.440 We've seen the pressure on Intel's margins and if it 0:07:56.440 --> 0:07:58.400 can win more at the leading edge, that's where the 0:07:58.400 --> 0:07:59.560 margin opportunity is. 0:08:00.160 --> 0:08:02.600 I think it can be a number two. 0:08:02.920 --> 0:08:05.960 I think it's a long way from being on TSMC's 0:08:06.320 --> 0:08:08.240 level as a global foundry and provider. 0:08:08.840 --> 0:08:12.000 I'm talking of global foundry. Just go back to global foundries. 0:08:12.080 --> 0:08:13.880 I mean you say that there's some sort of partnerships 0:08:13.960 --> 0:08:16.120 or a need deals that could be done, but can 0:08:16.160 --> 0:08:18.160 they be done even internally in the US at the 0:08:18.160 --> 0:08:19.000 moment down do you think? 0:08:19.920 --> 0:08:22.920 Yeah, the US environment is complex with what Lena Khan 0:08:23.000 --> 0:08:24.760 has been looking at, and of course the DJ looks 0:08:24.800 --> 0:08:26.880 at some of these deals. Having said that, a lot 0:08:26.920 --> 0:08:29.880 of the deals ultimately have been able to be completed. 0:08:30.040 --> 0:08:33.000 We've seen China stop big deals in the past before 0:08:33.040 --> 0:08:35.679 this one. NXP is a good example. Of course, we're 0:08:35.679 --> 0:08:39.480 seeing the US go through a high amount of scrutiny. However, 0:08:39.640 --> 0:08:42.080 if you stop M and A, you could be putting 0:08:42.080 --> 0:08:45.480 at risk the United States technology leadership. And remember the 0:08:45.559 --> 0:08:48.000 Chips and Science Act, and the whole purpose behind this 0:08:48.080 --> 0:08:50.520 Act was to make sure we were defending the United 0:08:50.520 --> 0:08:54.360 States global technology leadership in semi so, a strong INTEL 0:08:54.559 --> 0:08:57.079 is good for the world, and it's certainly good for 0:08:57.120 --> 0:08:57.960 the United States. 0:08:58.840 --> 0:09:01.959 Daniel, real quick, We've been tracking thirteen f's. In the deadline, 0:09:02.360 --> 0:09:05.760 Intel saw the second biggest decrease in aggregate shares held 0:09:05.760 --> 0:09:06.640 by hedge funds. 0:09:07.120 --> 0:09:09.440 Your reaction to that Intel. 0:09:09.120 --> 0:09:14.040 Has been under continuous pressure. I mean, look, I don't see. 0:09:14.160 --> 0:09:16.160 I haven't had a chance to review the exact positions 0:09:16.160 --> 0:09:17.839 and the changes in the positions. What I would say 0:09:17.880 --> 0:09:21.160 is Intel's had a nice run. It's shown some promise. 0:09:21.240 --> 0:09:24.880 It did have a better quarter, but the outlook, the 0:09:24.920 --> 0:09:27.760 complexity and of course China as a whole, China's economy 0:09:27.800 --> 0:09:30.440 as a whole continues to make a lot of the 0:09:30.440 --> 0:09:33.080 technology plays a little bit risky in the near term. 0:09:33.480 --> 0:09:37.320 Current standing and what fifteen percent of all the ratings 0:09:37.320 --> 0:09:40.440 from analysts on Intel are currently a cell. We keep 0:09:40.440 --> 0:09:40.880 an eye on that. 0:09:40.920 --> 0:09:41.160 Stop. 0:09:41.240 --> 0:09:43.720 Meanwhile, Dan Newman, we thank you as always. Fear analysis 0:09:43.840 --> 0:09:46.560 is of course some future and group. Meanwhile, speaking of chips, 0:09:46.559 --> 0:09:48.720 we've got to stick on end because we're watching shows 0:09:48.720 --> 0:09:52.840 a Samsung. Look the ADR's at the moment company cutting 0:09:52.920 --> 0:09:56.000 its stake in European giant ASML by more than half 0:09:56.120 --> 0:09:57.960 in the second quarter. Look at selling out of this 0:09:58.000 --> 0:09:59.800 because it actually wants to use the proceeds of those 0:10:00.240 --> 0:10:02.840 that chip equipment maker to invest in itself in chip 0:10:02.840 --> 0:10:06.200 production lines, as the world's well currently largest miomrii maker 0:10:06.320 --> 0:10:08.600 is trying to beef up its own guess what chip 0:10:08.600 --> 0:10:18.640 making business. So quite the theme. Hey, we've got to 0:10:18.679 --> 0:10:21.680 talk China because you know the rising economic turbulence currently 0:10:21.679 --> 0:10:25.079 in the country and it's actually weakening the consumer demand. 0:10:25.440 --> 0:10:27.280 All of that weighing are some of the key tech players. 0:10:27.320 --> 0:10:29.080 We keep an eye on ten Cent, for example, the 0:10:29.120 --> 0:10:33.040 giant reported revenue that missed and assessments. We're looking at 0:10:33.040 --> 0:10:35.480 the ADRs currently having well down three and a half 0:10:35.480 --> 0:10:38.240 percent and the lowest we've seen since May thirty. First, 0:10:38.640 --> 0:10:40.840 all of this as we see yet more Chinese tech 0:10:41.280 --> 0:10:43.160 firms coming out, and we want to see who's winning, 0:10:43.160 --> 0:10:44.560 who's losing. We want to get to it with Henry 0:10:44.600 --> 0:10:46.640 Wren in London and Isabel Lee here in New York. 0:10:46.720 --> 0:10:48.360 We can do a great round table, and Henry, I 0:10:48.440 --> 0:10:51.920 go to you first because the details the nuances within 0:10:52.000 --> 0:10:55.840 ten Cent, Where was outperforming, where was lackluster? 0:10:57.160 --> 0:11:01.439 Yes, so two elements are in play here. Advertising, So 0:11:01.520 --> 0:11:05.160 Tensent is seeing gains in advertising basically because it's pushing 0:11:05.200 --> 0:11:09.800 through its TikTok like video stream and its super app 0:11:09.920 --> 0:11:14.240 called Rechat. So basically that's the gaining part. But so 0:11:14.280 --> 0:11:18.559 the disappointing part is in gaming. So when we talk 0:11:18.600 --> 0:11:22.240 about gaming, it's about domestic games, it's about international games. 0:11:22.360 --> 0:11:26.320 So both gaming revenues at home and at abroad or 0:11:26.880 --> 0:11:30.199 lower than analyst estimates. So Tansent was saying, like, this 0:11:30.280 --> 0:11:34.520 is a temporary phenomenon and they should these revenue should 0:11:34.559 --> 0:11:38.760 rebound in the third quarter because they're pushing They're less 0:11:38.800 --> 0:11:42.600 pushy about in game commercialization for these gamers, for these 0:11:42.640 --> 0:11:46.280 players during the quarter to protect the game longevity. But 0:11:46.559 --> 0:11:48.920 it remains to be seen obviously for the third quarter. 0:11:49.840 --> 0:11:52.800 At the company level, JD with a very different story 0:11:52.880 --> 0:11:54.760 sales b estimates and Henry will go to you in 0:11:54.800 --> 0:11:57.880 a second on the specifics. But you look at the ADRs, 0:11:57.920 --> 0:12:01.480 the US listed shares of both, they're both markedly lower. 0:12:01.880 --> 0:12:02.320 Is a bell. 0:12:02.720 --> 0:12:06.880 Investors are basically very concerned here about the strength of 0:12:06.920 --> 0:12:10.360 the Chinese consumer and the Chinese economy exactly. 0:12:09.880 --> 0:12:12.199 Like Tencent is one of the biggest companies in China. 0:12:12.240 --> 0:12:17.600 It's business portfolio spence, finance, entertainment, and because it's seen 0:12:17.640 --> 0:12:19.480 as a barometer of China. What does it tell us 0:12:19.520 --> 0:12:22.559 and China's China's growth has really spotted us of late. 0:12:22.600 --> 0:12:24.280 It's almost kind of a be careful. 0:12:24.080 --> 0:12:25.880 What you wish for a kind of situation, because in 0:12:25.920 --> 0:12:28.000 the beginning of the year, everyone was hoping for this 0:12:28.120 --> 0:12:30.880 big rebound to spur global growth. But then when that 0:12:30.920 --> 0:12:33.560 didn't happen, investors were hoping that, Okay, maybe we can 0:12:33.600 --> 0:12:36.120 wish for a little weakness so that the Chinese Central 0:12:36.120 --> 0:12:39.280 Bank will inject liquidity and spur the economy. But now 0:12:39.480 --> 0:12:42.280 we have data after data showing weakness in China, and 0:12:42.320 --> 0:12:45.080 obviously investors aren't liking that. And I think these two 0:12:45.200 --> 0:12:47.840 tencent and even Ali Baba which reported last week, are 0:12:47.880 --> 0:12:51.600 just really a concrete example or the epitome of the 0:12:51.679 --> 0:12:54.119 Chinese growth in general, which has been lackluster. 0:12:55.160 --> 0:12:57.760 Henry, the story with JD is one about e commerce 0:12:57.920 --> 0:13:00.560 and the six eighteen or June eighteen festival. 0:13:00.840 --> 0:13:01.680 What were the numbers? 0:13:02.880 --> 0:13:06.280 The numbers are looking pretty good, so seal speed estimates 0:13:06.760 --> 0:13:11.600 for headline financials, so JD dot com definitely beating estimates, 0:13:11.600 --> 0:13:16.240 beating expectations here, Remember it's just Isabelle said the expectations 0:13:16.280 --> 0:13:21.240 has been pretty low so far because the consumers UH data, 0:13:21.320 --> 0:13:24.280 the retail sales haven't been doing so well out of China. 0:13:24.360 --> 0:13:27.960 But so when you drill deeper, it's actually another picture. 0:13:28.080 --> 0:13:33.040 So JD dot COM's retail margin actually was below estimates. 0:13:33.040 --> 0:13:35.920 So that's why JD's stock is trading down in US 0:13:35.960 --> 0:13:39.840 trading today as we see. So basically the concern has 0:13:39.840 --> 0:13:43.200 been the competition has been pushing higher because Ali Baba 0:13:43.280 --> 0:13:45.679 is pushing its market share. 0:13:45.800 --> 0:13:47.680 It's definitely losing market share. 0:13:47.480 --> 0:13:51.880 To some other players like Bytdowns, like JD, like Pindord. 0:13:51.920 --> 0:13:57.800 Also it's going heavy on its value for money investing campaigns. 0:13:57.840 --> 0:14:00.720 So basically that's the concern here. So the margin is 0:14:00.760 --> 0:14:03.000 a bit disappointing and is. 0:14:03.040 --> 0:14:06.120 Well, we ain't done yet. There's gonna be other telltale 0:14:06.200 --> 0:14:09.520 signs other companies giving us their earnings and what more 0:14:09.559 --> 0:14:11.520 could we glean? Do you think from mage one on 0:14:11.559 --> 0:14:12.080 the life? 0:14:12.400 --> 0:14:14.040 I think people are just really going to look at 0:14:14.040 --> 0:14:16.160 the other tech companies because there are many big players 0:14:16.200 --> 0:14:19.400 in China and it's an economy that's largely very domestic. 0:14:19.560 --> 0:14:21.160 But if you think that this doesn't matter in other 0:14:21.200 --> 0:14:23.400 economies like the US, you may want to think again. 0:14:23.480 --> 0:14:26.680 We have Bloomberry Economics saying that, Okay, yes, if it's 0:14:26.680 --> 0:14:29.360 a cushion growth, it may not affect the US so much. 0:14:29.440 --> 0:14:32.200 But if China really underdelivers and stimulus, and if growth 0:14:32.320 --> 0:14:35.600 really spirals down, then it may tip the FED to 0:14:35.680 --> 0:14:38.680 cut rates sooner than expected. So it's really China's a 0:14:38.680 --> 0:14:41.600 big player. It's the second largest economy, and whatever happens 0:14:41.640 --> 0:14:44.960 in that nation is really something the whole world closely watches. 0:14:46.640 --> 0:14:50.280 Wow, team covered a lot of ground there. As Carrie said, 0:14:50.320 --> 0:14:52.440 we ain't done yet. More to come this week. Bloomberg's 0:14:52.480 --> 0:14:55.200 Isabel Lee and Henry Wren thank you coming up here 0:14:55.200 --> 0:14:59.160 on today's Bloomberg Technology. Why recruitment companies are pulling back 0:14:59.200 --> 0:15:02.640 their annual guide because well, the labor market is squeezing 0:15:02.680 --> 0:15:06.480 its clients. Plus Nick mac ceo Rachel Tippograph is joining 0:15:06.520 --> 0:15:08.840 us to discuss the biggest takeaways from the retail sector. 0:15:08.840 --> 0:15:12.520 We've had target, we get Walmart, the e commerce story continues. 0:15:12.600 --> 0:15:28.200 This is Bloomberg all right. 0:15:28.320 --> 0:15:30.600 Time for work shifting, where we look at the changing 0:15:30.680 --> 0:15:34.240 landscape of the labor market amid advances in technology. First 0:15:34.360 --> 0:15:38.400 up recruitment companies are abandoning annual earnings forecasts. Amit a 0:15:38.440 --> 0:15:41.240 squeeze which has been spurred by a softening labor market 0:15:41.400 --> 0:15:44.960 in which employers are paying for fewer job listings. Zip 0:15:44.960 --> 0:15:49.240 recruiter withdrew its annual guidance, citing atypical hiring patterns in 0:15:49.280 --> 0:15:51.560 the first half after cutting twenty percent of its own 0:15:51.600 --> 0:15:54.720 staff in May, and the owner of Indeed and glass 0:15:54.800 --> 0:15:58.280 Door warned it was not sure yet whether growth would return, 0:15:58.560 --> 0:16:01.920 despite expecting five hundred million dollars of annual cost savings 0:16:01.920 --> 0:16:05.600 after chopping about twenty four hundred jobs, including about fifteen 0:16:05.720 --> 0:16:09.480 percent of Indeed's workforce, and in an effort to narrow 0:16:09.480 --> 0:16:12.720 the gap between operations in China and India, Fox con 0:16:12.920 --> 0:16:16.320 will begin production for the iPhone fifteen in its plant 0:16:16.440 --> 0:16:19.520 in southern India. Sources say the factories preparing to deliver 0:16:19.760 --> 0:16:23.320 the newest devices only weeks after they start shipping from 0:16:23.400 --> 0:16:27.440 factories in China. Before the iPhone fourteen, Apple with only 0:16:27.480 --> 0:16:30.480 a sliver of its iPhone assembly in India, which lagged 0:16:30.560 --> 0:16:33.840 China output by six to nine months. That delay was 0:16:34.400 --> 0:16:37.800 drastically reduced last year, and Apple produced seven percent of 0:16:37.800 --> 0:16:40.600 its iPhones in India at the end of March, and 0:16:40.720 --> 0:16:44.520 Amazon is imposing a new fee on merchants who don't 0:16:44.720 --> 0:16:47.760 use the company's logistics services. It is to change many 0:16:47.760 --> 0:16:51.120 of these sellers consider surprising, since the US government is 0:16:51.200 --> 0:16:54.720 poised to file an antitrust lawsuit against the e commerce giant. 0:16:54.800 --> 0:16:58.280 Thousands of third party sellers whose ship products themselves will 0:16:58.320 --> 0:17:01.880 start paying a two percent fee on each sale starting 0:17:01.880 --> 0:17:05.240 in October. That is, according to documents reviewed by Bloomberg. 0:17:05.240 --> 0:17:07.040 Were going have more on that story later in the 0:17:07.040 --> 0:17:08.040 out of Caroline we Ah. 0:17:08.160 --> 0:17:11.560 Meanwhile talking about Amazon that's drill into commerce, shall we? 0:17:11.640 --> 0:17:14.359 Because the news has been thick, has been fast July, 0:17:14.520 --> 0:17:17.840 the retail sales coupling and pretty strong, and today we've 0:17:17.880 --> 0:17:21.360 had earning from target profit gain for the company. We're 0:17:21.440 --> 0:17:23.720 really trying to understand where is the consumer, how is 0:17:23.760 --> 0:17:26.400 it shifting, how is it spending in this inflationary environment. 0:17:26.640 --> 0:17:28.560 Please to say we've got an expert for you. Rachel 0:17:28.600 --> 0:17:31.120 Tibograph is with US founder CEO of the e commerce platform, 0:17:31.160 --> 0:17:33.600 mickmac who just has such a bird sye perspective with 0:17:34.119 --> 0:17:37.119 how well ultimately companies are feeling right now and how 0:17:37.160 --> 0:17:39.800 people are spending, are you surprised by the resilience of 0:17:39.960 --> 0:17:40.520 the US. 0:17:40.480 --> 0:17:45.240 Consumer, I'm not because Americans love to spend, they don't 0:17:45.320 --> 0:17:46.040 like to see. 0:17:46.520 --> 0:17:47.359 So what we're. 0:17:47.240 --> 0:17:50.119 Seeing play out is exactly that you know. To quote 0:17:50.119 --> 0:17:53.400 my dear friends Shutrita Kodali, who's the lead analyst at Forrester, 0:17:54.520 --> 0:17:56.880 what we're seeing in the market is that consumers still 0:17:56.920 --> 0:18:01.159 have half a trillion dollar still pent up from the 0:18:01.200 --> 0:18:04.720 pandemic to spend through and they're doing it, and they're 0:18:04.720 --> 0:18:08.480 doing it in despite that the brands and retailers are 0:18:08.560 --> 0:18:12.200 raising prices. So what we're seeing happen in these earnings 0:18:12.720 --> 0:18:16.440 is that retailers have incredible margins right now because consumers 0:18:16.480 --> 0:18:20.240 are spending at a higher rate and they're keeping the margin. 0:18:20.760 --> 0:18:23.879 And that. It's interesting, isn't it? Because Target everyone seems 0:18:23.880 --> 0:18:26.840 to focus on, for example, that profit beaten. This calls 0:18:26.920 --> 0:18:29.840 are just gone, but they look still nervous looking forward. 0:18:30.119 --> 0:18:32.840 What are e commerce players seeing and how much are 0:18:32.840 --> 0:18:36.040 we spending of our wallet online or experientially instead? 0:18:37.359 --> 0:18:40.800 Yeah, I think Target's nervous for all the right reasons. 0:18:41.359 --> 0:18:44.040 What we're seeing right now is that consumers are spending 0:18:44.080 --> 0:18:49.600 on essentials. They're spending on groceries, on alcohol, on personal care, 0:18:49.760 --> 0:18:54.680 pet care, beauty. They're not spending on non essentials so fashion, 0:18:54.800 --> 0:18:59.600 consumer electronics. That discretionary spend is going towards travel and 0:18:59.640 --> 0:19:00.280 dining out. 0:19:01.080 --> 0:19:03.400 So for Target, if they. 0:19:03.280 --> 0:19:06.760 Want to be optimistic about their future, the big question 0:19:06.800 --> 0:19:08.520 that they need to answer is how are they going 0:19:08.600 --> 0:19:10.720 to beat Walmart at grocery? 0:19:10.840 --> 0:19:11.280 Exactly. 0:19:11.440 --> 0:19:13.600 That's really the name of the game right now. It's 0:19:13.600 --> 0:19:17.640 a focus on grocery to drive that habitual weekly shopping behavior. 0:19:18.920 --> 0:19:20.960 So I spotted something on that note that I think 0:19:21.000 --> 0:19:23.520 is relevant. I was going through the Earning school transcript 0:19:23.560 --> 0:19:27.199 because I love it and getting the magnifying out glass 0:19:27.200 --> 0:19:28.639 out and getting closed. But they said there was a 0:19:28.680 --> 0:19:33.359 favorable mix of same day services through the digital channel, 0:19:33.359 --> 0:19:35.880 in other words, people logging on buying something for there. 0:19:35.960 --> 0:19:39.119 And then is that something that Target can use to 0:19:39.160 --> 0:19:42.000 take on a Walmart because I know having covered that company, 0:19:42.160 --> 0:19:44.600 the e commerce strategy is definitely like in the moment 0:19:44.680 --> 0:19:45.199 pick it up. 0:19:46.440 --> 0:19:49.280 Yeah, absolutely, So it's what the industry likes to call 0:19:49.480 --> 0:19:53.280 buy online, pick up in store, and it's really profitable. 0:19:53.920 --> 0:19:57.960 So the retailers want to encourage consumers to shop that way, 0:19:58.600 --> 0:20:00.120 and Target is trying. 0:19:59.920 --> 0:20:00.479 To to do that. 0:20:00.800 --> 0:20:03.000 You know, they're encouraging people to come into store with 0:20:03.280 --> 0:20:07.719 Starbucks pickup, but Walmart has made a major push. A 0:20:07.960 --> 0:20:12.639 big perk of becoming a Walmart Plus subscriber is essentially 0:20:13.160 --> 0:20:18.480 having even faster pickup, even faster delivery. So Target again 0:20:18.640 --> 0:20:20.879 has to answer the question, how are they going to 0:20:20.920 --> 0:20:23.840 beat Walmart at buy online pickup in store? 0:20:25.080 --> 0:20:26.720 Nick Maxio rage with Tippo Grab. 0:20:26.720 --> 0:20:31.760 Always great to have you here. 0:20:35.560 --> 0:20:37.840 Welcome back to Blueback Technology. I'm Caroline Hyde in New 0:20:37.920 --> 0:20:38.840 York and a. 0:20:38.880 --> 0:20:41.480 Med lovelow here in San Francisco. Carry quick check on 0:20:41.520 --> 0:20:43.240 the markets. There's a little bit of red on the screen. 0:20:43.240 --> 0:20:46.040 I'm afraid now's that one hundred software by six tens 0:20:46.040 --> 0:20:48.640 of one percent. It's a really tech heavy index. It's 0:20:48.640 --> 0:20:50.359