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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is the Bloomberg Daybreak Aisia podcast. I'm Doug Prisner.

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Speaker 2: You can join Brian Curtis and myself for the stories

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Speaker 2: making news and moving markets in the Apec region. You

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Speaker 2: can subscribe to the show anywhere you get your podcast

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Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the

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Speaker 2: Bloomberg Business app.

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Speaker 3: Shana Sissel, Founder and President Bandery and Capital Management, Shana.

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Speaker 3: Perhaps as it should be with earnings, the results here

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Speaker 3: tend to reflect the idiosyncratic results of the particular companies involved.

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Speaker 3: We're not getting them all moving together. So I guess

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Speaker 3: this makes it a good time to be a stock

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Speaker 3: picker or would you rather see a kind of more

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Speaker 3: consistent theme.

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Speaker 4: No, if you're a stock picker, you want to see

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Speaker 4: stocks reflect earnings, and so when stocks behave as they

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Speaker 4: should after earnings is reported and it's based just on

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Speaker 4: that company, that is a good thing.

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Speaker 5: That's what you want to see.

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Speaker 4: If you don't want to see stocks moving completely not

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Speaker 4: in sync with their fundamentals.

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Speaker 2: We heard from Texas Instruments today and maybe the guidance

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Speaker 2: that we got for the current quarter being in line

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Speaker 2: with estimates was enough to alleviate concern about a downturn

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Speaker 2: in the chip industry. If memory serves. The last time

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Speaker 2: we spoke with you, you were talking about in Nvidia. Are

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Speaker 2: you still holding on to a position in Nvidia?

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Speaker 5: Oh? Yes.

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Speaker 4: So I think it's really important to understand the difference

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Speaker 4: between holding a stock for the long term and then

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Speaker 4: trading a stock. So I am a long term investor,

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Speaker 4: so I look to purchase a stock for the long term.

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Speaker 4: I think at the moment, Nvidia is a little pricey.

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Speaker 4: It's trading out a premium to its historic average and

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Speaker 4: to the market. It does always trade a premium, but

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Speaker 4: it's trading out a bigger premium than normal, and for

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Speaker 4: that reason, I wouldn't be adding to the stock right now.

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Speaker 4: But I am certainly going to continue to hold the

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Speaker 4: shares that I currently have, and if there was weakness

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Speaker 4: in the stock, I might look at that as an

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Speaker 4: opportunity to buy. But as a long term investor, I

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Speaker 4: continue to have a strong bowcase.

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Speaker 5: For the stock.

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Speaker 3: Now you're predicting a mild recession for next year, so

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Speaker 3: that's kind of interesting because a lot of people think

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Speaker 3: we're heading for a so called soft landing. What are

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Speaker 3: some of the driving factors that will get us to

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Speaker 3: that mild recession.

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Speaker 4: Well, I think it's important to note that a soft

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Speaker 4: landing is something that almost never happens. If it does,

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Speaker 4: it's not because the FED did something incredibly right that

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Speaker 4: just got lucky. It just historically, monetary policy tends to

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Speaker 4: overdo whatever it's trying to correct and tends to push

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Speaker 4: the economy either into an overheated state or into now

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Speaker 4: right now, the FED has managed to play this correctly,

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Speaker 4: but we are seeing softening in the economy. And what

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Speaker 4: I think is going to happen is that the FED

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Speaker 4: will cut rates in September, but they're going to do

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Speaker 4: it slowly.

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Speaker 5: This is not going to be a big rate cut.

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Speaker 4: With the economic growth and some of the other economic

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Speaker 4: indicators showing softness in the economy, I do think that

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Speaker 4: by taking it slow like that, it is likely that

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Speaker 4: we will see continued softness, which could result in a

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Speaker 4: mild recession. And it's important to note recessions are healthy things.

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Speaker 4: We like them. It's a normal part of the business cycle,

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Speaker 4: the economic cycle. What we prefer is these mild recessions

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Speaker 4: that get access out of the system we get through

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Speaker 4: fairly quickly with minimal damage. But when we don't have

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Speaker 4: them for a long time, what tends to happen is

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Speaker 4: we end up with a really big one all of

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Speaker 4: a sudden because we've overdone it marketwide.

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Speaker 2: So do you regard some of the recent rotation that

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Speaker 2: we have seen into stocks that may be a little

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Speaker 2: bit more economically sensitive, do you regard that as a

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Speaker 2: little misguided right now? Giving your outlook?

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Speaker 5: Not necessarily.

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Speaker 4: I think what you're seeing is this understanding or belief

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Speaker 4: that the Fed is going to cut rates in September

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Speaker 4: will be positive for companies, however small that may be.

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Speaker 4: I think in the short term it will be, But

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Speaker 4: I don't think necessarily that it's enough to save us

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Speaker 4: from seeing a downturn in the overall economy. But what

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Speaker 4: you're seeing is them reacting to positive potential monetary policy that.

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Speaker 5: Is related to their businesses.

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Speaker 3: Shane and we heard some musing on this network earlier

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Speaker 3: that people tend to hate inflation more than they like

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Speaker 3: full employment, and hence the average person apparently in the

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Speaker 3: United States is unhappy. Now, why is that and how

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Speaker 3: do you see things moving?

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Speaker 5: Because I think that.

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Speaker 4: Generally speaking, when everybody has a job, they'd like to

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Speaker 4: think that they can live and afford and support their

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Speaker 4: live livelihood, and inflation chips away at that. It makes

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Speaker 4: them feel like they don't have enough, so they feel

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Speaker 4: under employed. It's interesting though, because I think to your

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Speaker 4: point is, even when unemployment rises, the number of people

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Speaker 4: that that actually impacts as a percentage of employed people

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Speaker 4: is actually small, So the overall sentiment isn't necessarily impacted

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Speaker 4: unless everybody is really scared that they might lose their job.

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Speaker 5: So I think that's what you're seeing.

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Speaker 2: Yeah, I was just going to mention the PCEE data

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Speaker 2: that we get at the end of the week, along

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Speaker 2: with the personal income personal spending figures, the economy from

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Speaker 2: a lot of the data points that we've been looking

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Speaker 2: at seems to be downshifting into a lower speed. Does

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Speaker 2: that cause you maybe to consider what's happening in other

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Speaker 2: parts of the world, maybe Asia, maybe Europe. Are you

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Speaker 2: looking at opportunities offshore?

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Speaker 4: So I don't generally play in the space where I'm

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Speaker 4: looking at things from a country level, but I do

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Speaker 4: think that the nations out have been a little quicker

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Speaker 4: to make monetary policy changes that are actually going to

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Speaker 4: be less negative for their economies per se.

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Speaker 5: So there are some opportunities I.

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Speaker 4: Think you can look at fundamentally, especially in Asia, that

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Speaker 4: could make a lot of sense right now. But generally speaking,

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Speaker 4: I'm not going to pretend that I spend a lot

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Speaker 4: of time focusing on a country level because I don't

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Speaker 4: and I don't know that I can necessarily give you

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Speaker 4: anything that's going to be like a GM of information

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Speaker 4: for your listeners.

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Speaker 3: Yeah, let's talk briefly about the strong dollar. It's hurting

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Speaker 3: corporate profits to a certain degree, particularly for North American firms.

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Speaker 3: How do you see the dollar moving? If the Fed,

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Speaker 3: you know, moves very slowly.

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Speaker 4: I think we'll continue to have this issue with the

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Speaker 4: strong dollar. You know, Obviously, just intuitively, when you take

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Speaker 4: economics class, inflation should in some way affect the strength

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Speaker 4: of the dollar.

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Speaker 5: But it's much more complicated than that.

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Speaker 4: So even if inflation slows, it doesn't necessarily mean the

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Speaker 4: dollar weekends because of just the nature of the relationships

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Speaker 4: with other currencies and other things. I think a slower

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Speaker 4: rate cut cycle would be not necessarily something that is

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Speaker 4: going to weaken the dollar compared to the other currencies

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Speaker 4: that are out there.

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Speaker 3: Okay, Shana, thanks very much for taking out the time

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Speaker 3: to be with a. Shanea SISIL founder and president Banary

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Speaker 3: and Capital Management.

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Speaker 2: After the bell, we heard from Google parent Alphabet, with

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Speaker 2: the company reporting quarterly revenue ahead of expectations. Closer look

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Speaker 2: at this story. Now we'll bring in our own Julia

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Speaker 2: Love Bloomberg, a tech reporter who joins us from San Francisco.

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Speaker 2: Thanks for making time for us, aid Julia. So there

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Speaker 2: are two categories here when we look at the top line.

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Speaker 2: There is the cloud computing service and then there's the

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Speaker 2: ad that is tied to the Google search engine. Is

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Speaker 2: one beginning to dominate here or is it pretty much

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Speaker 2: an even split?

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Speaker 1: So Goodle Search still accounts for the lion's share of

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Speaker 1: Goodle's revenue, and I believe that will be the taste

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Speaker 1: for the foreseeable future. But the cloud business is growing

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Speaker 1: and executives and Wall Street are very heartened by that.

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Speaker 1: They have long wanted to see Goodle diversify its revenue streams,

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Speaker 1: and cloud is a strong contender.

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Speaker 3: I'm curious what the company said about the push into AI.

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Speaker 3: So the initially had a headstart that it seemed like,

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Speaker 3: oh WHOA is me? You know, for a while, but

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Speaker 3: they've they've been making a comeback here. Did they say

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Speaker 3: much about the progress being made on competing with Microsoft

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Speaker 3: and Open Ai?

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Speaker 1: Yes, so they delivered a bit of a progress report

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Speaker 1: of sorts. Google Search now includes AI overviews, which are

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Speaker 1: responses drafted by generative AI and assum Darpachai said that

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Speaker 1: those overviews are generating increased engagement and that users are

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Speaker 1: very satisfied with the responses. He also said that they

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Speaker 1: have made progress in delivering those responses faster and in

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Speaker 1: controlling the computing costs that it takes to serve up

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Speaker 1: those responses. And in addition, executives said that Google is

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Speaker 1: using AI to drive more sales for its cloud business,

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Speaker 1: although Wall Street is hungry for more specific that.

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Speaker 2: I thought it was interesting that Ruth pour Out, the CIO,

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Speaker 2: was saying that alphabet is looking for acquisition targets at

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Speaker 2: a time when wiz rejected the twenty three billion dollar

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Speaker 2: or offer that Google had made. Do we have guidance

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Speaker 2: on what this company is looking to build out? Is

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Speaker 2: it cyber security? Is that the big area of growth

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Speaker 2: that they that they think it's worth kind of pursuing.

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Speaker 1: Yes, cyber certainly seems like a strong candidate. They acquired

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Speaker 1: Mandian a few years ago, which was one of their

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Speaker 1: biggest acquisitions to date, and they seem to be interested

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Speaker 1: in buying up more companies in that space. You know,

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Speaker 1: in the cloud market, they are number three, so that's

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Speaker 1: seen as a space where perhaps they could do an

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Speaker 1: acquisition without triggering anti trust scrutiny, although certainly there are

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Speaker 1: still anti trust concerns that they'd have to face there

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Speaker 1: as well.

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Speaker 3: Google suffers from the same sort of malady that the

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Speaker 3: broader market suffers from. When you're at all time highs,

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Speaker 3: you know, there's a lot of pressure on the earnings

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Speaker 3: to to get you to go even higher, they have

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Speaker 3: to be almost fallless. And we didn't see a flawless

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Speaker 3: report because we had YouTube missing estimates there. Well, what's

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Speaker 3: the latest with YouTube in terms of its progress.

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Speaker 1: Yes, it's been you know, I think a bumby a

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Speaker 1: few years for YouTube. They've had a strain of disappointing

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Speaker 1: quarters and I think, you know, YouTube is ultimately a

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Speaker 1: social media company, and it's and like Facebook and and

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Speaker 1: X and tit talk, it's much more vulnerable to these

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Speaker 1: swings in advertiser spending. And I think that that's what

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Speaker 1: we saw with this report.

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Speaker 2: Obviously, we're in an election season. I think the Federal

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Speaker 2: Trade Commission, led by Lena Kahan, has been thorn in

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Speaker 2: the side of Alphabet to some extent. Did they talk

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Speaker 2: about regulatory risk at all on the call with analyst?

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Speaker 1: Not on this call, But that is certainly a question

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Speaker 1: that has been just looming over Google and is kind

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Speaker 1: of instapable. We are waiting for a verdict in an

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Speaker 1: antitrust trial about their search business, and another trial will

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Speaker 1: get underway in just a few months about their dominance

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Speaker 1: in the digital ad market. So lots of anti trust headaches.

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Speaker 3: And I'm kind of curious about Ruth Porat and what

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Speaker 3: comes next. Doug mentioned her she's going to be president

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Speaker 3: and chief investment Officer and no longer the CFO. That'll

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Speaker 3: go to an Ashkenazi coming in from Eli Lilly. What

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Speaker 3: is the push there, what's the main thrust of that hire?

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Speaker 1: Yes, well, Ruth Porat was Alphabet's longest serving chief financcial office.

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Speaker 1: Her Wall Street is a huge fan of hers. She's

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Speaker 1: had a lot of success in instituting more financial discipline

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Speaker 1: at the company, and it seems like she was ready

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Speaker 1: for a new challenge. She'll be turning more attention to

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Speaker 1: the portfolio of other bets way Mow. This help driving

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Speaker 1: car company, you know, seems poised for for fortor splash,

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Speaker 1: and she'll be spending time there. As for the new

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Speaker 1: CFO and not asht Nazi. I think that her hiring

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Speaker 1: signals that Alphabet is perhaps going to make a bitter

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Speaker 1: push in in health Verily their life sciences company has

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Speaker 1: is maturing, and we may see her spend We may

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Speaker 1: see her not spending more time with that part of

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Speaker 1: the business than than Ruth has.

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Speaker 2: Best far, Julia, good stuff. Thank you so much for

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Speaker 2: making time to chat with us. Julia love their. Bloomberg

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Speaker 2: Tech reporter.

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Speaker 3: Danny Lee Bloomberg Asia Transport reporter Danny let me just

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Speaker 3: sort of set the tone here for listeners that are

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Speaker 3: just joining us. Tesla had disappointing profits that he announced.

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Speaker 3: It also announced no Robotaxi until October, and that will

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Speaker 3: only be a prototype. Also, the low cost car is

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Speaker 3: being delayed, The plan factory in Mexico is on pause

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Speaker 3: at least until after the election, and a humanoid robot

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Speaker 3: that Musk claims will send Tesla's valuation, soaring won't be

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Speaker 3: ready anytime soon either, So this was a round of disappointments.

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Speaker 6: Yeah, where's the good news in order this? Yeah, and

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Speaker 6: the earnings. The future, I mean the future clearly is

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Speaker 6: important and investors wanted to hear more concrete detail about

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Speaker 6: future projects, future projects which will define Tesla in future

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Speaker 6: to be more like an AI stock rather than just

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Speaker 6: an EV company. So clearly there's a lot of detail

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Speaker 6: that investors were looking for, but it doesn't seem more

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Speaker 6: too given we are only a few more quarters away

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Speaker 6: from having an affordable car, having more detail on the

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Speaker 6: robotaxi for example. But clearly the here and now and

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Speaker 6: what was always going to be a difficult year for

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Speaker 6: Tesla is weaker deliveries and an impact on earnings in

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Speaker 6: its core business.

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Speaker 2: So, Danny, how is business in China for this company?

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Speaker 6: For China Tesla, it's been a tough one given the

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Speaker 6: competition is getting even more intense from Chinese players who

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Speaker 6: are becoming more aggressive on price. They're being more in

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Speaker 6: bolden with their war chest to take on Tesla head on,

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Speaker 6: and Tesla has seen that impact in the impact on

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Speaker 6: its China deliveries. So it's inevitable that it has to

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Speaker 6: look further afield for more growth, but clearly that has

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Speaker 6: been tough where on all sides, whether it be in

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Speaker 6: Europe in the US, there are challenges which are hinting

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Speaker 6: or hindering its ability to sell, whether it be high

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Speaker 6: interest rates or with even more competition. So clearly the

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Speaker 6: challenge for MSCER is to look at or talk up

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Speaker 6: rather the future, which you know, for the stock which

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Speaker 6: had been down as much as forty percent earlier this year,

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Speaker 6: it's still largely trading flat.

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Speaker 3: I think we always knew that tougher competition was coming,

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Speaker 3: and as a kind of microcosm, China shows that when

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Speaker 3: there's a lot of competition, the going can get pretty rough.

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Speaker 3: And we've also had this development from General Motors saying no,

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Speaker 3: it would not hit its target of a million shares

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Speaker 3: this year, So that kind of shows you that demand

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Speaker 3: is not so strong either. It doesn't seem like a

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Speaker 3: good combination for Tesla.

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Speaker 6: I think for Tesla, if anybody can can double down

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Speaker 6: and focus on specific items or specific targets, it will

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Speaker 6: be them. You know, el Musk is very determined and

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Speaker 6: even if they do miss on expectations, typically they're not

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Speaker 6: necessarily by much. And so when you look at some

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Speaker 6: of the legacy players who have less experience, they've just

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Speaker 6: thrown money good after ad at certain things such as

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Speaker 6: like what GM has. Clearly for them it's more of

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Speaker 6: a struggle. But for Tesla, you know, working around the clock,

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Speaker 6: and you know Elil Musk is notorious for his work ethic.

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Speaker 6: I think for Musk he can probably get things done

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Speaker 6: given his will and his determination.

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Speaker 2: You were talking a moment ago about the ev price

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Speaker 2: wars in China, and I find it's interesting that Tesla

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Speaker 2: is going to be again manufacturing a newer, low cost

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Speaker 2: card in Austin, Texas. I mean, I've always associated Tesla

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Speaker 2: as being, you know, somewhat of a premium brand in

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Speaker 2: a way that Apple is. And here you have maybe

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Speaker 2: a move to go a little bit down market. But

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Speaker 2: perhaps that's what's required given the competition globally, right.

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Speaker 6: Tesla was always going to go more downmarket. What they

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Speaker 6: wanted was at the beginning to price high to be

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Speaker 6: able to afford all the investments it wanted to make,

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Speaker 6: and then slowly trickle down so it could be a

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Speaker 6: more affordable kind of driving experience for everybody. So with

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Speaker 6: this about time. Frankly, this this new affordable, lower cost

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Speaker 6: TV will be more I'm sure for strict back kind

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Speaker 6: of Tesla offering. It is something that should in theory

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Speaker 6: help it spur demand and growth once again without having

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Speaker 6: to compromise on the prices it's having to do in

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Speaker 6: the near term and has been doing.

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Speaker 3: It's kind of interesting too that Musk has come in

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Speaker 3: with such full support for Donald Trump, and if the

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Speaker 3: Republicans get in, that probably means the subsidies will be

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Speaker 3: heading heading out the door, right, So I'm kind of curious, how, Delegate,

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Speaker 3: how what is the nuanced handling of this for Elon

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Speaker 3: Musk that makes him happy to support Donald Trump.

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Speaker 6: It's really a fascinating position because once we saw, you

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Speaker 6: know clearly that the views of what Donald Trump wants

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Speaker 6: to do with the with taffs, with the EV sector

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Speaker 6: buy and large, it doesn't necessarily sound very good for

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Speaker 6: us someone like Tesla, for Elon Musk, but with with

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Speaker 6: his full support for Trump and clearly very interesting how

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Speaker 6: it affects his business and you know, the views on

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Speaker 6: the board or on Mexico. How Tesla has announced that

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Speaker 6: it's going to slow down its plans on making decision

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Speaker 6: or taking action on its Mexico factory until after the election.

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Speaker 6: All of these things for whether it be Tesla or

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Speaker 6: for other businesses who have invested billions in building battery

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Speaker 6: factories in parts of America. Clearly there's a lot of

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Speaker 6: what happens next if Donald Trump becomes the next US president.

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Speaker 2: Yeah, well, battery factories. And I'm curious about the situation

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Speaker 2: in China where batteries are being in very much in

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Speaker 2: high demand. Now, given the explosion that's happening in the

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Speaker 2: ev industry, what is is Tesla doing to try to

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Speaker 2: make sure that it has adequate supply of batteries in

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Speaker 2: the Shanghai production line.

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Speaker 6: Well, Tesla has always had very good supply, and namely

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Speaker 6: from one very key supply in c at l c

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Speaker 6: ATL is the world's biggest batory maker and Tesla is

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Speaker 6: its most important customers, so there's no shortage of supply there.

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Speaker 6: And it's just a question of where someone like Tesla

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Speaker 6: finds demand, not just in China, but for where it

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Speaker 6: exports out of China to other parts of the world.

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Speaker 6: And clearly, when things have been slowing down in sales,

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Speaker 6: it takes a bit of an effort to try and

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Speaker 6: stoke up that demand again. So whether we see Shanghai,

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Speaker 6: for example, becoming a useful tool in building the more

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Speaker 6: affordable taxi later on down the line. You know, they've

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Speaker 6: been very efficient and very proactive in building cars for

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Speaker 6: Tesla at a phenomenal rate. So it's a watcher space

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Speaker 6: to see how someone like Shanghai becomes a key part

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Speaker 6: for the future of Tesla once again.

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Speaker 3: And if there is less regulation, for instance, if the

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Speaker 3: Republicans win, is there chance that that could actually help

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Speaker 3: Tesla because the the other car made might suffer more

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Speaker 3: than Tesla in that environment.

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Speaker 6: It's an interesting one because Tesla giving it all in

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Speaker 6: on electric vehicles. The summation is, well, does the rules

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Speaker 6: or the policies of the future benefit more the ice

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Speaker 6: makers such as your general motors such as your forts.

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Speaker 6: So it's interesting to see what happens in terms of

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Speaker 6: future policies just to see where Tesla ends up.

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Speaker 3: Danny Lee is with us. He's a big man. He's

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Speaker 3: a sort of hulking guy with a big voice on transport.

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Speaker 3: He's our Asia Transport reporter.

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Speaker 2: This has been the Bloomberg Daybreak Asia podcast, bringing you

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Speaker 2: the stories making news and moving markets in the Asia Pacific.

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Speaker 2: Visit the Bloomberg Podcast channel on YouTube to get more

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Speaker 2: episodes of this and other shows from Bloomberg. Subscribe to

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Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen,

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Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the

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Speaker 2: Bloomberg Business App.

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Speaker 1: Two