WEBVTT - FTC Sues Amazon, Cainiao Files for IPO

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Brian Curtiz and I'm Doug Krisner. Here are the

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<v Speaker 2>stories we're following today.

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<v Speaker 3>Amazon has been hit with an anti trust lawsuit from

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<v Speaker 3>the Federal Trade Commission the FTC, alleging that the tech

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<v Speaker 3>giant monopolized online marketplace services by degrading quality for shoppers

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<v Speaker 3>and overcharging sellers. Ftcchair Lina Khan is vowing to take action,

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<v Speaker 3>but stopped short of calling for a breakup of Amazon.

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<v Speaker 1>Con spoke earlier with Bloomberg.

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<v Speaker 4>We believe that this lawsuit, if we're successful, will actually

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<v Speaker 4>entirely restore the promise of free competition. Our free enterprise

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<v Speaker 4>system is one where companies should be competing on the

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<v Speaker 4>merits and not be able to protect their monopoly power

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<v Speaker 4>through illegal tactics.

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<v Speaker 3>FTC chair Lina Khan. In the meantime, Amazon is arguing

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<v Speaker 3>that consumers will be the ones that pay the price.

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<v Speaker 3>They'll see prices go up and product selection come down

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<v Speaker 3>if the FTC gets its way.

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<v Speaker 2>We go next to artificial and tells open Ai you

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<v Speaker 2>know it as the creator of chat gpd well. Reportedly,

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<v Speaker 2>the company is talking to investors about a potential share sale.

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<v Speaker 2>The Wall Street Journal is saying the sale would give

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<v Speaker 2>the startup a valuation of between eighty to ninety billion dollars,

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<v Speaker 2>and that would make open ai one of the most

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<v Speaker 2>highly valued startups in the world. Here's Bloomberg, said Ludlow.

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<v Speaker 5>In April, the valuation was around twenty nine billion dollars,

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<v Speaker 5>So this is a significant jump. But part of what

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<v Speaker 5>the Wall Street Journal was talking about is something Bloomberg's

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<v Speaker 5>already reported that open ai is on track to around

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<v Speaker 5>a billion dollars of revenue this year, a lot greater

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<v Speaker 5>than that in twenty twenty four. So while it's a

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<v Speaker 5>jump up in valuation, and this is based on an

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<v Speaker 5>insider share sale, by the way, not issuing new shares

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<v Speaker 5>or a new round of equity with vcs, you know,

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<v Speaker 5>they seem to be doing real business.

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<v Speaker 2>That is Bloomberg's ed Ludlow. Now, separately, we learned today

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<v Speaker 2>that the Central Intelligence Agency is looking to roll out

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<v Speaker 2>its own version of chat GPD. It would be a

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<v Speaker 2>tool able to sift through public data. It's part of

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<v Speaker 2>a broader government push to harness the power of artificial

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<v Speaker 2>intelligence and compete with China.

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<v Speaker 3>Brian well Fed Governor Michelle Bowman says that increased rent

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<v Speaker 3>burdens are spotlighting the significance of the FEDS fighted on inflation.

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<v Speaker 3>Bowman spoke Tuesday at a virtual event hosted by the FED.

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<v Speaker 6>These increased costs and these cost pressures underscore the importance

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<v Speaker 6>of the Federal reserves efforts to fight inflation, which can

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<v Speaker 6>complement efforts to address other factors affecting rent prices, including

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<v Speaker 6>increasing the supply of rental housing.

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<v Speaker 1>FED Governor Michelle Bowman.

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<v Speaker 3>She went on to say that rent increases have outstripped

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<v Speaker 3>wage gains and that increases the share of renters who

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<v Speaker 3>spend thirty percent or more of their income on rent.

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<v Speaker 3>In remarks last week, Bowmen signaled that she favors raising

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<v Speaker 3>interest rates again and likely more than just once we.

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<v Speaker 2>Go to Europe, next to where the European Union's investigation

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<v Speaker 2>into ill doctric vehicle imports from China has expanded beyond

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<v Speaker 2>Chinese automakers, US based Tesla now finding itself in the

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<v Speaker 2>probe's crosshairs. Here is Bloomberg Global Autos editor Craig Trudell.

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<v Speaker 7>This is a company that opened a plant in Germany

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<v Speaker 7>in March of last year, but it continues to supplement

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<v Speaker 7>the output from that plant with production from a lower

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<v Speaker 7>cost facility in Shanghai, and Tesla has been taking advantage

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<v Speaker 7>of that and shipping quite a lot of evs into

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<v Speaker 7>the EU.

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<v Speaker 2>That is Bloomberg's Craig Trudell. Now, the aim of this

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<v Speaker 2>EU probe is to determine whether China has subsidized not

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<v Speaker 2>only Tesla but the domestic Chinese manufacturers like BYD and Neo,

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<v Speaker 2>and then whether or not to take any necessary measures.

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<v Speaker 3>Brian Well Ali Baba's logistics armed Chiniow has filed for

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<v Speaker 3>a Hong Kong IPO. Bloomberg Juan Wang has the story

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<v Speaker 3>from Hong Kong.

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<v Speaker 8>The Hong Kong Stock Exchange confirmed to thee La ali

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<v Speaker 8>Baba can proceed with a proposed It's High Yell spinoff

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<v Speaker 8>and IPO that will potentially make tinyal the first of

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<v Speaker 8>Alibaba's units to go public. Sources say the IPO could

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<v Speaker 8>raise at least one billion dollars. The stock exchange website

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<v Speaker 8>says CTIC Securities, City Group and JP Morgan are joint

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<v Speaker 8>sponsors of the offering.

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<v Speaker 1>Ali Baba intends to retain.

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<v Speaker 8>More than fifty percent of the unit shares and keep

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<v Speaker 8>Tanyo as a subsidiary in Hong Kong joined Wong Bloomberg Radio, Doug,

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<v Speaker 8>I love.

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<v Speaker 1>It at Bookends. There we have a connection.

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<v Speaker 3>The FTC action on Amazon actually brings to mind what

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<v Speaker 3>happened at Ali Baba in China. Now the FTC chair

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<v Speaker 3>Alina Khan is not calling for a breakup, but that's

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<v Speaker 3>exactly what is happening with Baba.

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<v Speaker 1>We report there today. You just heard that from Juan Wong.

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<v Speaker 3>This would be the first spin off of one of

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<v Speaker 3>the six units tiny how Originally we thought it would

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<v Speaker 3>be Fresh Shippo, but it is SiNW And if you

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<v Speaker 3>go back to the FTC, it hasn't had a great

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<v Speaker 3>track record of late in court in targeting big tech.

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<v Speaker 3>It's different in China where the party and the government

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<v Speaker 3>can push through its dictates. But of course in the

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<v Speaker 3>US you need to pass muster in front of the court.

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<v Speaker 2>Yeah, billion dollar IPO for sign o, that would be

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<v Speaker 2>quite something. Brian, I just want to touch very quickly

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<v Speaker 2>on the fact that I was struck by a report

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<v Speaker 2>today from s and P Global Market Intelligence. We were

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<v Speaker 2>talking about the soft read and consumer confidence earlier. Well now,

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<v Speaker 2>according to s and P, the US banking industries total

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<v Speaker 2>deposits declined year over year for the first time in

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<v Speaker 2>data going back to nineteen ninety four. So we'll have

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<v Speaker 2>to see whether this has a material impact on American

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<v Speaker 2>economic growth. But it's something to be aware of, to

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<v Speaker 2>say the least.

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<v Speaker 3>Yeah, And what's curious is it's another one of these

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<v Speaker 3>cases where you have sort of sentiment maybe a little

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<v Speaker 3>different from action, because consumers have not really peeled back

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<v Speaker 3>their spending that much yet. The last retail sales report

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<v Speaker 3>was pretty firm the reasons we keep squawking about how

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<v Speaker 3>strong US economy remains, but obviously sentiment tells you what

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<v Speaker 3>could be happening in the future.

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<v Speaker 1>So it'll be a very interesting one to watch. Now

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<v Speaker 1>it's time for global news.

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<v Speaker 3>President Biden is backing the w worker demands of a

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<v Speaker 3>forty percent pay hike. Let's get one on that at

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<v Speaker 3>Baxter is tracking this story in others from the nine

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<v Speaker 3>to sixty newsroom in San Francisco.

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<v Speaker 9>Ed.

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<v Speaker 10>Yeah, that's right, Brian.

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<v Speaker 11>Thanks.

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<v Speaker 10>President Joe Biden out with UAW workers today at a

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<v Speaker 10>rally at on the lines that UAW President Sean Fain

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<v Speaker 10>says is very historic.

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<v Speaker 11>You know, this is a historic moment.

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<v Speaker 10>The first time in our country's history that is sitting

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<v Speaker 10>USA president has came out and stood on the pecking line,

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<v Speaker 10>and it's characterized a strike as a battle, akin to

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<v Speaker 10>building bombers for the US and World War Two.

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<v Speaker 3>Today, the enemy isn't some foreign country miles away.

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<v Speaker 1>It's right here in our own in our own area.

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<v Speaker 11>It's corporate greed.

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<v Speaker 10>And the president banking the workers forty percent wage demand increase.

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<v Speaker 8>All Street didn't build the country. The middle class built.

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<v Speaker 1>The country.

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<v Speaker 4>Built the middle class the fact.

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<v Speaker 11>So let's keep going.

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<v Speaker 8>You deserve what you heard.

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<v Speaker 10>And Bloomberg's Jordan Fabian says, an important time for the industry,

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<v Speaker 10>for the economy, and for politics.

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<v Speaker 9>It's important for the UAW, and it's also important for

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<v Speaker 9>Joe Biden. Joe Biden, as you said, his campaign on

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<v Speaker 9>being the most pro union president. Guess what, there's an

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<v Speaker 9>election coming up next year and those union workers are

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<v Speaker 9>going to be crucial for his re election chances in

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<v Speaker 9>a key state like Michigan, and the UAW has yet

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<v Speaker 9>to endorse Biden. So him showing up today, you heard

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<v Speaker 9>Sean Fain speak very positively about the president, saying he's

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<v Speaker 9>standing up for working people and so this could be

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<v Speaker 9>a big thaw in the relations between the President and

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<v Speaker 9>that union ahead of his re election push.

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<v Speaker 10>Jordan says President doesn't really have much leverage to solve it,

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<v Speaker 10>but he can use a bully pulpit. New York judge's

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<v Speaker 10>rule that Donald Trump is liable for fraud for exaggerating

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<v Speaker 10>his net worth by billions of dollars in financial records

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<v Speaker 10>to banks and insurers. South Korea warning Kim Jong On

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<v Speaker 10>that it would end if it uses nukes's regime, President

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<v Speaker 10>EU and Suk Yule saying Korea and the US would

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<v Speaker 10>end the regime in an overwhelming response, House Speaker Kevin

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<v Speaker 10>McCarthy saying today is Caucus will make progress tonight on

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<v Speaker 10>funding the government.

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<v Speaker 12>At night, we're back in session.

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<v Speaker 1>We will vote on a rude to bring up four.

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<v Speaker 12>More appropriation bills that will be a total of five

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<v Speaker 12>more than the sentiments to be able to pass in

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<v Speaker 12>that if we get through these next four, that would

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<v Speaker 12>be seventy two percent of all the discretionaries.

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<v Speaker 10>There and the Senate also working on bills set up.

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<v Speaker 10>Majority Leader Chuck Schumer saying what McCarthy is doing as

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<v Speaker 10>appropriations has nothing to do with avoiding a shutdown.

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<v Speaker 1>So this week the Senate will move forward first.

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<v Speaker 13>We are very close to finishing our work and hope

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<v Speaker 13>to release text very soon.

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<v Speaker 10>We are told it has aid for Ukraine and the

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<v Speaker 10>Senate version that's been rejected by the far right of

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<v Speaker 10>the Republican Party. Global News powered by more than twenty

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<v Speaker 10>seven hundred journalists and analysts in over one hundred and

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<v Speaker 10>twenty countries in San Francisco. I'm Ed Baxter, and this

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<v Speaker 10>is Bloomberg.

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<v Speaker 1>This is Bloomberg Daybreak Asia.

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<v Speaker 3>I'm Brian Curtis in Hong Kong, along with Fonny Quinn

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<v Speaker 3>in New York, and we will be getting updates on

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<v Speaker 3>markets all throughout the hour, including against now.

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<v Speaker 1>Michael Green, who is the chief strategist.

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<v Speaker 3>At Simplify Asset Management, can't wait to hear you simplify

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<v Speaker 3>some of these complicated inputs into the markets, Michael. So,

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<v Speaker 3>we had this little correction that's underway, it's not quite

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<v Speaker 3>to the level of being an official correction outside of tech.

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<v Speaker 3>Does this continue and does it get a lot bigger

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<v Speaker 3>or are we almost at a point where the buyers

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<v Speaker 3>come back in Well.

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<v Speaker 14>I think the key thing to remember is is that

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<v Speaker 14>the equities are a side show to this event. What

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<v Speaker 14>we're really seeing is an increasingly worried response to the

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<v Speaker 14>behavior the bond market, where ten year yields thirty year

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<v Speaker 14>yields have sold off sharply in the past couple of weeks.

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<v Speaker 11>Until that question is resolved, I.

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<v Speaker 14>Think it's going to be challenging for equity markets to

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<v Speaker 14>take the lead again and move higher.

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<v Speaker 13>Michael, you're going to be hosting these fireside chats at

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<v Speaker 13>your entering the Fall your ETF conference at the NYSE

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<v Speaker 13>this coming week. I'm curious as to what your question,

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<v Speaker 13>your main question is for somebody like Boas Weinstein who

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<v Speaker 13>runs a hedge fund, and who you know, maybe among

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<v Speaker 13>those that are not in the market anymore or like

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<v Speaker 13>at least sort of cutting back.

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<v Speaker 14>Well, so, first, I think there's very few who actually

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<v Speaker 14>fit that description. I think the evidence is that we

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<v Speaker 14>continue to have high levels of investment. Most investment programs,

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<v Speaker 14>you know, when you consider for oh, one K programs

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<v Speaker 14>or pension plans, et cetera, they largely adopt a policy

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<v Speaker 14>that is fully invested at all times under a fixed

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<v Speaker 14>portfolio construction. The good news is that actually that we

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<v Speaker 14>actually had the event today. I know exactly the key

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<v Speaker 14>question that I have both, which which was and by

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<v Speaker 14>the way, it is available on the Blueberg terminal and

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<v Speaker 14>on the simplified website. But the real key question that

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<v Speaker 14>I was focused on with both is the dynamics of

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<v Speaker 14>what's happening with credit spreads and the high yield market

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<v Speaker 14>and general pricing of risk and fixed income, which he

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<v Speaker 14>obviously is extraordinarily facile and known for the work in

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<v Speaker 14>and he comes to some of the same conclusions I

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<v Speaker 14>do in my work, which is that you're being compensated

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<v Speaker 14>very little for taking additional risk, either in high yield

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<v Speaker 14>or in equities, and that you know, the very high

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<v Speaker 14>level of interest rates that we're actually experiencing right now

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<v Speaker 14>tells you that cash is a pretty attractive place to be.

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<v Speaker 14>Some components of the long end are becoming really, really attractive.

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<v Speaker 14>But I think we both see and are mystified by

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<v Speaker 14>the behavior of credit spreads in an environment that looks challenging.

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<v Speaker 13>But then just how do you then square that with

0:11:57.880 --> 0:11:59.000
<v Speaker 13>being fully invested?

0:11:59.400 --> 0:12:01.120
<v Speaker 11>Well, I think is actually pretty straightforward.

0:12:01.160 --> 0:12:05.640
<v Speaker 14>That's exactly why we're seeing those levels of relatively tight

0:12:05.679 --> 0:12:08.440
<v Speaker 14>credit spreads and relatively high levels of equities is that

0:12:08.480 --> 0:12:12.920
<v Speaker 14>people are by and large fully invested so very little

0:12:12.960 --> 0:12:15.880
<v Speaker 14>discretion and available to most people today.

0:12:16.080 --> 0:12:19.280
<v Speaker 3>Michael, outside of the Magnificent seven, or even if we

0:12:19.320 --> 0:12:22.480
<v Speaker 3>stretch it to say, the top twelve to fifteen tech stocks.

0:12:22.480 --> 0:12:28.079
<v Speaker 3>So where are you seeing, you know, wild enthusiasm or overvalue.

0:12:27.440 --> 0:12:28.480
<v Speaker 1>In the equity market?

0:12:28.679 --> 0:12:31.559
<v Speaker 14>Well, I think you actually just described it extraordinarily well, right,

0:12:31.600 --> 0:12:34.120
<v Speaker 14>which is is that we're actually seeing as an index

0:12:34.240 --> 0:12:36.360
<v Speaker 14>led market. So when you buy the S and P

0:12:36.480 --> 0:12:39.360
<v Speaker 14>five hundred, or you buy the Nasdaq one hundred, the QQQ,

0:12:40.240 --> 0:12:44.000
<v Speaker 14>you're effectively leveraging into the magnificent seven those names that

0:12:44.040 --> 0:12:47.679
<v Speaker 14>have worked extraordinarily Well, you're one hundred percent correct in

0:12:47.760 --> 0:12:50.440
<v Speaker 14>your observation. By the way, I mean, the majority of

0:12:50.480 --> 0:12:52.640
<v Speaker 14>stocks on a year today basis are now actually down.

0:12:52.679 --> 0:12:54.560
<v Speaker 14>If you look at something like the Russell three thousand

0:12:54.640 --> 0:12:57.160
<v Speaker 14>on an equal weighted basis, Yep.

0:12:57.000 --> 0:12:58.440
<v Speaker 11>It's actually down, right.

0:12:59.000 --> 0:13:02.120
<v Speaker 3>I mean, but you're in the business I would think

0:13:02.200 --> 0:13:07.520
<v Speaker 3>of advising clients on where they can find value to

0:13:07.640 --> 0:13:11.920
<v Speaker 3>be overly cautious in this kind of environment. I mean,

0:13:12.040 --> 0:13:14.400
<v Speaker 3>I think anybody can understand it. But if there are

0:13:14.480 --> 0:13:18.080
<v Speaker 3>opportunities with undervalued stocks, take a company like Cisco at

0:13:18.120 --> 0:13:21.120
<v Speaker 3>seventeen times earnings with a dividend a three percent, it's

0:13:21.200 --> 0:13:23.040
<v Speaker 3>really hard to feel like it's about ready to fall

0:13:23.040 --> 0:13:26.440
<v Speaker 3>off the cliff. The thing just turns out money.

0:13:26.720 --> 0:13:29.319
<v Speaker 14>So I think you're one hundred percent correct that when

0:13:29.360 --> 0:13:31.920
<v Speaker 14>you look at these companies that they, particularly the large

0:13:31.960 --> 0:13:35.080
<v Speaker 14>technology companies, that they're generating an unbelievable amount of cash,

0:13:35.120 --> 0:13:37.720
<v Speaker 14>but there's also very little growth behind something like that.

0:13:37.760 --> 0:13:40.640
<v Speaker 14>So trading at eighteen times with a three percent dividend yield,

0:13:40.720 --> 0:13:42.760
<v Speaker 14>when you get five and a half percent out of

0:13:43.040 --> 0:13:47.040
<v Speaker 14>cash in a money market fund or a thirty year

0:13:47.120 --> 0:13:49.880
<v Speaker 14>tip that's currently offering a real yield north of two percent,

0:13:49.920 --> 0:13:53.520
<v Speaker 14>which would be a historically unusual level, it seems to

0:13:53.520 --> 0:13:55.920
<v Speaker 14>me that you're not actually being particularly well compensated for

0:13:56.000 --> 0:13:59.320
<v Speaker 14>taking that additional risk of is Cisco actually going to

0:13:59.360 --> 0:14:02.720
<v Speaker 14>be the continued network, you know, continued preferred network provider,

0:14:02.840 --> 0:14:07.320
<v Speaker 14>particularly in a world in which it's becoming very you know,

0:14:07.400 --> 0:14:11.000
<v Speaker 14>very questionable what the additional tech spend actually looks like

0:14:11.080 --> 0:14:11.720
<v Speaker 14>in that space.

0:14:12.040 --> 0:14:14.400
<v Speaker 13>All right, Michael, we're almost out a time, but best

0:14:14.400 --> 0:14:16.000
<v Speaker 13>idea then for all of us out there.

0:14:16.480 --> 0:14:19.000
<v Speaker 14>I got to tell you one of the craziest things

0:14:19.040 --> 0:14:20.840
<v Speaker 14>to have to stay is that you can get a

0:14:21.040 --> 0:14:23.560
<v Speaker 14>you can get a really attractive yield on CAF right now,

0:14:23.600 --> 0:14:26.320
<v Speaker 14>And I honestly think that you're reasonably well compensated to

0:14:26.480 --> 0:14:27.840
<v Speaker 14>sit by the sidelines and wait.

0:14:27.960 --> 0:14:30.240
<v Speaker 3>All right, Michael, thanks very much. I don't own Cisco,

0:14:30.360 --> 0:14:33.480
<v Speaker 3>I never owned Cisco. I just like to challenge the guests,

0:14:33.520 --> 0:14:35.960
<v Speaker 3>and thanks very much for joining us. A good session,

0:14:36.000 --> 0:14:41.640
<v Speaker 3>Michael Green, Chief Strategist, Simplify Asset Management. This is Bloomberg

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