Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is Bloomberg day Break Weekend, our global look at
Speaker 2: the top stories in the coming week from our Daybreak
Speaker 2: anchors all around the world. Straight ahead on the program,
Speaker 2: some big entertainment earnings are coming out this week. We'll
Speaker 2: break down what to expect from Disney and Paramount Sky Dance.
Speaker 2: I'm Nathan Hager in Washington.
Speaker 3: I'm krolyin Hepkea in London, where we're looking ahead to
Speaker 3: Portugal's Web Summit as the country pivots to tech and AI.
Speaker 4: I'm dek Krisner looking ahead to Singles Day in China.
Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
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Speaker 2: Good day to you. I'm Nathan Hager. We begin today's
Speaker 2: program with a look at some upcoming earnings reports in
Speaker 2: the entertainment sector. We get results this week from both
Speaker 2: Walt Disney and Paramount sky Dance. For more on what
Speaker 2: to expect from both these entertainment giants, we are joined
Speaker 2: by Bloomberg Intelligence analyst Geita Ranganathan and Bloomberg Surveillance co
Speaker 2: host Paul Sweeney, who spent a better part of his
Speaker 2: career covering the media. Great to have both of you
Speaker 2: with us on the weekend program. And let's start with Disney.
Speaker 2: Obviously the biggest entertainment company in the world. Gita, what
Speaker 2: are some of the key things we need to watch
Speaker 2: from the House of Mouse this time around.
Speaker 5: Yeah, so, I think, as usual, the big thing that
Speaker 5: we're watching for is the Parks segment. This is the
Speaker 5: biggest segment for Disney, brings in about sixty percent of
Speaker 5: their profits. So obviously, you know, any trends, any consumer trends,
Speaker 5: are very very important. One of the key things that
Speaker 5: you know, people have been concerned about for Disney for
Speaker 5: this year is the competition from the opening of Epic
Speaker 5: Universe in Florida, which happened in May. When they reported
Speaker 5: last they actually showed a really good results. They were
Speaker 5: able to hold their ground despite all of that competition,
Speaker 5: So I think we're expecting to see more of that,
Speaker 5: you know, resilient demand going into the quarter. And then
Speaker 5: the other big thing that we're watching for is really
Speaker 5: the streaming business. So in August, ESPN launched its streaming
Speaker 5: platform for the very first time. We're going to look
Speaker 5: to see if Disney management team provides any numbers in
Speaker 5: terms of early adoption and just to see how that
Speaker 5: launch has been going.
Speaker 2: Paul, you of course follow this company very closely as well.
Speaker 2: I mean, I gotta admit when it comes to Disney streaming,
Speaker 2: I sometimes forget about my Disney Plus subscription. I mean,
Speaker 2: am I part of the problem here? I mean, how
Speaker 2: do you see Disney navigating the very competitive streaming universe.
Speaker 6: Yeah, I think, Nathan, it all comes down, as it
Speaker 6: usually does in the media business, to content, and Disney
Speaker 6: has some of the absolute best content in the world,
Speaker 6: including live sports. So when you put that all together,
Speaker 6: it's just a question of how you deliver that content
Speaker 6: to people. And when I came up into business, it
Speaker 6: was through the cable bundle, it was through satellites like DirecTV.
Speaker 6: Now it's streaming, and so you just got to figure
Speaker 6: out how do you most efficiently get that content to
Speaker 6: your client when they want your customer, when they want
Speaker 6: it where they want it, and charge a price that
Speaker 6: is profitable for you, and Disney's has a great track
Speaker 6: record of doing that. Netflix paved the way and streaming
Speaker 6: and really showed kind of the world how this new
Speaker 6: media models can be. And now what we've seen from
Speaker 6: the legacy media companies over the last ten years or so,
Speaker 6: as Githa writes about with her research, is these legacy
Speaker 6: media companies are trying to catch up. They're trying to
Speaker 6: transition from a model where the cable TV bundle was
Speaker 6: really a way to go to now streaming and Disney
Speaker 6: is really doing a good good job, and I think
Speaker 6: the street believes that they can certainly be a really
Speaker 6: big player in the streaming business.
Speaker 2: Yeah, Githor, we've talked before about how Netflix has expanded
Speaker 2: its own streaming strategy with live events, getting into sports
Speaker 2: as well, and now with Disney introducing its own streaming
Speaker 2: sports platform with ESPN Plus, is it kind of like
Speaker 2: legacy media playing catch up again?
Speaker 5: Yes, a little bit of that, but you know the
Speaker 5: way that they're kind of positioning ESPN, So Disney has
Speaker 5: to be really careful. They're kind of walking a tightrope
Speaker 5: here because remember they have the leading brand when it
Speaker 5: comes to linear TV with ESPN. ESPN generates about fifteen
Speaker 5: billion dollars from the linear TV model ear in and
Speaker 5: ear out. You know, we're talking about affiliate fees. They
Speaker 5: are the highest affiliate fee generator across the industry. They
Speaker 5: charge something like ten dollars per month per subscriber, so
Speaker 5: absolutely way way above competitors who charge maybe you know
Speaker 5: or other channels that are at like one dollar or
Speaker 5: one and a half dollars per month. So obviously they
Speaker 5: have to be very careful to protect that legacy TV model,
Speaker 5: but at the same time, they want to be able
Speaker 5: to appeal to consumers who are outside the PATV ecosystem.
Speaker 5: And there are a lot of consumers, by the way,
Speaker 5: outside the PATV ecosystem. We're talking about sixty five to
Speaker 5: seventy million households that do not take a PATV or
Speaker 5: that do not subscribe to a PATV bundle, and so
Speaker 5: it's really important to be able to, you know, provide
Speaker 5: access to sports content and that's exactly what ESPN is
Speaker 5: going after and we think that so far, you know,
Speaker 5: they've done a really good job with that in terms
Speaker 5: of putting their content out there. You talk about catchup
Speaker 5: and are they a little bit late to the game. Yes,
Speaker 5: maybe in terms of Disney Plus, but again with ESPN,
Speaker 5: they had to be really measured, really deliberate, make sure
Speaker 5: that they don't cannibalize, you know, their linear TV business,
Speaker 5: which is really their cash go.
Speaker 2: And Paul, you mentioned the content slate that Disney has
Speaker 2: as well. We haven't even talked about what, you know,
Speaker 2: their traditional business, what's coming in the box office? What
Speaker 2: are we expecting there?
Speaker 6: You know, it's interesting, as Githa writes in her research,
Speaker 6: Disney is just in a phenomenal place from a content
Speaker 6: creation perspective. They've got obviously all the Disney product that
Speaker 6: has propelled the company for decades, but then they also
Speaker 6: have the Star Wars stuff and the Marvel stuff, and
Speaker 6: they just seem if they see something good out there
Speaker 6: over the past ten or fifteen years, they went out
Speaker 6: and bought it. So they have the best content in
Speaker 6: the business and they usually lead box office by a
Speaker 6: wide margin, although Warner Brothers is having a very good
Speaker 6: year this year, so again Disney's at a spot you know.
Speaker 6: You know, they bought the media assets, including the studio,
Speaker 6: from Fox, so they have all of that content as well.
Speaker 6: So from a content perspective, nobody really can compete against them,
Speaker 6: and so they're in a great spot there, and they
Speaker 6: monetize it better than anybody else, whether it's through the
Speaker 6: cable bundle, through the streaming service, you know, making bringing
Speaker 6: some of the content to the theme parks. That's kind
Speaker 6: of been the magic of Disney as a company and
Speaker 6: as a stock over the years, their ability to really
Speaker 6: monetize their content as well or better than anybody else
Speaker 6: out there.
Speaker 2: You know, we haven't even talked about the linear networks yet.
Speaker 2: They've got ABC as well, and I think this is
Speaker 2: going to be the quarter since the controversy surrounding Jimmy Kimmel,
Speaker 2: isn't it. Is this going to be a hindrance potentially
Speaker 2: the traditional broadcast and cable networks.
Speaker 5: Kitha, Yeah, So, I mean, you know, one thing that
Speaker 5: all media companies, this is not just Disney, have to
Speaker 5: contend with is cord cutting. Is a lot of pressure
Speaker 5: with the linear TV networks. Of course, you had the
Speaker 5: Jimmy Kimmel, you know, controversy. One thing that we're going
Speaker 5: to be looking for when they report is whether that
Speaker 5: Jimmy Kimmel's suspension actually hurt their streaming numbers because we
Speaker 5: did get reports that users were kind of canceling, you know,
Speaker 5: their subscriptions. Again, I don't think it's going to be material,
Speaker 5: but this is something that all media companies have to
Speaker 5: contend with. What is the plan that they have for
Speaker 5: their networks? For Disney, ABC is a very important property
Speaker 5: because it shares a lot of the sports rights with ESPN.
Speaker 5: You know, they do show a lot of Monday night
Speaker 5: football games. You know, they have NBA games, There's a
Speaker 5: lot of college football. So you know, ABC is still
Speaker 5: a very very important property to them. Yes, they have
Speaker 5: a whole bunch of other cable TV networks, you know,
Speaker 5: think about the whole Disney suite, you know, National Geographic,
Speaker 5: all of those channels that are definitely insecular decline. But
Speaker 5: so far there are no plans, at least publicly that
Speaker 5: that Disney has said that they want to you know,
Speaker 5: necessarily separate that business or sell that business. So again
Speaker 5: we're kind of contending here with the melting ice cube.
Speaker 6: And Nathan you know, interesting on the subject. Laura Martin
Speaker 6: Research Channels that need them in company came out with
Speaker 6: a really provocative note about a month ago, saying that
Speaker 6: Disney should just shut down the ABC network, make it
Speaker 6: go dark, don't sell it, just shut it down. It's
Speaker 6: a declining business, and it's really the only business business
Speaker 6: that is under federal regulation. And if you want to
Speaker 6: get out of the way President Trump and maybe some
Speaker 6: heavy handed regulation, just sell it and or just shut
Speaker 6: it down. Which I thought was an interesting topic.
Speaker 2: Yeah, I'm really interesting. Indeed, we're speaking with Paul Sweeney,
Speaker 2: host of Bloomberg Surveillance and get the wronganathen of Bloomberg Intelligence.
Speaker 2: Let's shift over to Paramount sky Dance. The first quarter
Speaker 2: that they're going to be reporting as Paramount sky Dance
Speaker 2: under the new ownership with David Ellison at the helm,
Speaker 2: a lot of job cuts, a lot of changes. Getha,
Speaker 2: How could that play into the results?
Speaker 5: Yeah, we really expect the upcoming results to be a
Speaker 5: big reset in the whole Paramount sky Dance outlook. I mean,
Speaker 5: this will be the new management team's first big reveal
Speaker 5: off its operational of its financial plans. As you just mentioned,
Speaker 5: there's to be a mix of major cost cuts to
Speaker 5: improve efficiency and there'll probably be some major investments that
Speaker 5: they announced to support you know, long term growth, especially
Speaker 5: on both on the content side as well as on
Speaker 5: the tech side. We have to remember that this was
Speaker 5: a company that was undermanaged, underinvested in for years, so
Speaker 5: you know, really looking forward to see what they have
Speaker 5: to say. But of course, the big looming question other
Speaker 5: than results is are they going to make or are
Speaker 5: they going to increase their bid for Warner Brothers Discovery.
Speaker 7: That is really the big.
Speaker 5: Big question.
Speaker 2: Absolutely I wanted to get into that with you, Paul.
Speaker 2: Is Paramount Skydance is going to have to become Paramounts Skiddance,
Speaker 2: Warner Brothers Discovery or whatever other names they're going to
Speaker 2: have to put at the end of their title.
Speaker 6: Yeah, you know, it's interesting they have an enterprise value
Speaker 6: of thirty billion dollars in at one point in time
Speaker 6: that was a big media company. In today's world, it
Speaker 6: really is not, and I think, you know, it's kind
Speaker 6: of a lot of folks will call it, you know,
Speaker 6: substandard in size, but you take a look at Warner
Speaker 6: Brothers Discovery, it is three times the size of Paramount
Speaker 6: at ninety billion dollars of enterprise value.
Speaker 8: So it's it's.
Speaker 6: Really a big something, a big pill to swallow there.
Speaker 6: So they're going to need some help.
Speaker 5: Now.
Speaker 6: It's nice when Larry Elson is the CEO's father that
Speaker 6: lends some support there, But they're going to need some
Speaker 6: partners probably if they want to pursue this. Here so
Speaker 6: be aching to see how it plays. And as Githa
Speaker 6: well knows, this is a company that is now officially
Speaker 6: in play. I mean the CEO said it, the board
Speaker 6: has said it, and so it's just a question of
Speaker 6: who and when, I think at what price.
Speaker 2: Yeah, it would be fascinating to see. I given the
Speaker 2: merger between Disney and Fox just a few years ago,
Speaker 2: if we see yet another major media entertainment merger like this,
Speaker 2: where could that position Paramount against Disney with competing giant
Speaker 2: content slates.
Speaker 6: KEITHA.
Speaker 5: Yeah, I think it puts them really within striking distance
Speaker 5: of Disney. It puts them within striking distance of even
Speaker 5: I would say in Netflix, because they're going to have
Speaker 5: a fantastic content. They're going to have some best best
Speaker 5: in class, I would say IP so really really puts
Speaker 5: them on the map because right now, if you kind
Speaker 5: of look at Paramount, they have about eighty million streaming subscribers.
Speaker 5: You put that together though with HBO, Max which has
Speaker 5: about one hundred and thirty million. You already get to
Speaker 5: two hundred million, which is above what Disney has in
Speaker 5: terms of streaming subscriptions, So definitely makes them a major player,
Speaker 5: you know, somebody that you have to take note of,
Speaker 5: and gives them a lot of firepower in terms of
Speaker 5: growing both the studio business as well as the streaming platforms.
Speaker 2: Yeah, really busy entertainment earnings week on tap Forest. Thanks
Speaker 2: to both of you for this. That's Paul Sweeney, co
Speaker 2: host of Bloomberg Surveillance and geta ronganath and media analyst
Speaker 2: from Bloomberg Intelligence, and coming up on Bloomberg Daybreak Weekend
Speaker 2: will preview Portugal's Web Summit, one of the largest of
Speaker 2: its kind in Europe. I'm Nathan Hager, and this is Bloomberg.
Speaker 2: This is Bloomberg day Break Weekend, our global look ahead
Speaker 2: at the top stories for investors in the coming week.
Speaker 2: I'm Nathan Hager in Washington. Up later in our program,
Speaker 2: Singles Day in China is coming up. We'll get a preview.
Speaker 2: But first Portugal. It's looking to accelerate the growth of
Speaker 2: its AI, technology and startup industries. For more than a decade,
Speaker 2: the country's been louring top international business talent through its
Speaker 2: Golden Visa program, but now it's also playing host of
Speaker 2: billion dollar investments from the likes of Microsoft and Nvidia
Speaker 2: in new AI data centers. With the Web Summit in
Speaker 2: Lisbon taking place in the next few days, we want
Speaker 2: to get more from Bloomberg Daybreak Europe Banker Caroline Hepger
Speaker 2: in London.
Speaker 3: Nathan Portugal's Web Summit, which Bloomberg once dubbed the Davos
Speaker 3: for Geeks, is one of the largest tech summits in Europe.
Speaker 3: In the next few days, the forum in Lisbon will
Speaker 3: hold discussions on topics ranging from AI to cybersecurity to fintech,
Speaker 3: whilst playing host to speakers from Meta all the way
Speaker 3: to tennis legend Maria Sharapova. It comes as the country
Speaker 3: looks to consolidate its status as a tech haven and
Speaker 3: to court investment in its burgeoning AI and startup industries.
Speaker 3: Now in the last few weeks, investors have grown increasingly
Speaker 3: concerned though, about the prospect of stretchtech, dot valuations and
Speaker 3: maybe even an AI bubble. In Vidias, Jensen Wong spoke
Speaker 3: to Blueberg's Ed Ludlow and tried to calm the market's nerves.
Speaker 8: I don't believe we're in an AI bubble, and the
Speaker 8: reason for that is we're going through a natural transition
Speaker 8: from an old computing model based on general purpose computing
Speaker 8: to accelerated computing. We also know that AI has now
Speaker 8: become good enough because of reasoning capability, research capabilities, its
Speaker 8: ability to think. It's now generating tokens and now generating
Speaker 8: intelligence that's worth paying for to the point where I'm
Speaker 8: paying lots of it.
Speaker 3: That was Nvidia's Jensen Won speaking to Bloomberg's Ed Ludlow,
Speaker 3: well as tech CEOs, then seek to reassure investors that
Speaker 3: AI spending shows no signs of abating. Portugal is positioning
Speaker 3: itself as one of the beneficiaries of Europe's AI build out.
Speaker 3: How far, though, can the country's growing tech scene thrust
Speaker 3: its economy into the twenty first century? Joining us now
Speaker 3: is Bloomberg's Portugal bureau chief, Sofia Auto Ecosta. Sofia, good
Speaker 3: to speak to you. So shall we start with the
Speaker 3: Web Summit, which is one of the largest of its
Speaker 3: kind in Europe? What do the main themes this year
Speaker 3: that they'll be talking about actually kind of tell us
Speaker 3: about Portugal's priorities.
Speaker 9: It's kind of the greatest hit of the biggest talking
Speaker 9: points across AI and tech at the moment. So we
Speaker 9: do have AI and ethics really exploring how to govern
Speaker 9: this increasingly important industry in Europe and how really to
Speaker 9: kind of align it with human values. We also have
Speaker 9: the future of work climate, tech growth and startups, you
Speaker 9: name it. And we do have the Finance Minister from
Speaker 9: Portugal attending and expected to speak. So that really shows
Speaker 9: you where the priorities life for this new government that
Speaker 9: followed the elections earlier in May this year.
Speaker 7: That's really kind of.
Speaker 9: Throwing investment and subsidies at this industry, trying to position
Speaker 9: Portugal as one of the forefront economies to invest in
Speaker 9: in the European Union.
Speaker 3: Sophia, you've been writing about the town of Scenes, which
Speaker 3: is on Portugal's dramatic Atlantic coast. Then actually this could
Speaker 3: be a data center, a tech hub, not just for
Speaker 3: Portugal but maybe for Europe. Tell us about what's been
Speaker 3: happening there in terms of deals and breaking ground.
Speaker 9: So this is really interesting because this is a very
Speaker 9: small town, about fifteen thousand residents. I went down there.
Speaker 9: It's about an hour and a half's drive from our
Speaker 9: Lisbon office. And what's happening there is investment from Chinese,
Speaker 9: US European investors and.
Speaker 7: Quite a lot of it.
Speaker 9: So my interest was, you know, why are billions of
Speaker 9: dollars pouring into this really small Portuguese town And one
Speaker 9: of them is what's set to be one of the
Speaker 9: biggest data center projects in the European Union. And it's
Speaker 9: one point two gigawatts. Now, Karlyn, I have no idea
Speaker 9: what what one point two gigawatts is, So just to
Speaker 9: put it in context, that's about as much as the
Speaker 9: entire metropolis of Lisbon consumes, so it's quite a lot
Speaker 9: of energy. Now why does this matter? I mean, this
Speaker 9: is a big investment. It's a ten billion dollar data center.
Speaker 9: This is huge for Portugal, and Portugal is really trying
Speaker 9: to say, hey, we're not just tourism, even though it
Speaker 9: accounts for about a quarter of GDP and a lot
Speaker 9: of jobs. So incredibly important of this still for the economy,
Speaker 9: but that was important to bring the economy out of
Speaker 9: the crisis, out of the not just the financial crisis,
Speaker 9: but the sovereign deck crisis. But now, okay, let's invest
Speaker 9: in the future. This is where it's at. The government
Speaker 9: is making it easier for these companies to come here.
Speaker 9: I spoke to the Stark Campus Data Center CEO and
Speaker 9: he said, you know, we were welcomed with open arms.
Speaker 9: And the Chinese battery maker calb is the fourth largest
Speaker 9: battery maker in the world, so this is quite significant
Speaker 9: as well. That's a two billion euro investment. They just
Speaker 9: broke ground on their first battery factory outside of China.
Speaker 9: They picked seeing this tiny, tiny town as the gateway
Speaker 9: into the European Union and this was really heralded by
Speaker 9: both sides of the political spectrum as a big step
Speaker 9: forward for Portugal in terms of the green energy transition.
Speaker 3: Yeah, lots of visit is bit of population in Portugal
Speaker 3: only just about ten million people. But the focus on
Speaker 3: data centers, you know, raises the same question for Portugal
Speaker 3: as across Europe, which is that the AI boom is
Speaker 3: power hungry. There will be growing power demands. There's a
Speaker 3: worry about whether it's going to strain Portugal's energy system.
Speaker 3: I mean, we did see blackouts in Portugal earlier this
Speaker 3: year and that was blamed on a number of factors,
Speaker 3: but one of them was you know the green and
Speaker 3: clean energy system, there is the infrastructure going to be
Speaker 3: able to cope.
Speaker 9: So that's the big question, and there's been a lot
Speaker 9: of discussion at the government level but also at the
Speaker 9: company level over who really should take the lead on
Speaker 9: investing in the grid infrastructure here.
Speaker 7: We actually had EDP that's.
Speaker 9: Portugal's biggest utility today, saying that it plans to allocate
Speaker 9: a significant amount of money into investing in the grid
Speaker 9: here in Portugal, but.
Speaker 7: Also in Spain where they have a market.
Speaker 9: And I'll just tell you that number three point six
Speaker 9: billion euros in electricity, grids and infrastructure through twenty twenty eight.
Speaker 7: That's a big number, Caroline. So the problem here, or
Speaker 7: I mean, I.
Speaker 9: Guess the issue I wouldn't call it a problem, is
Speaker 9: that Portugal uses renewable energy for about seventy percent of
Speaker 9: its energy consumption, so that's a pretty big proportion, and
Speaker 9: it still also imports a bit of energy, a lot
Speaker 9: of that from Spain. So whether to kind of reduce
Speaker 9: the reliance on the Spanish grid, that's one question. Whether
Speaker 9: to improve the infrastructure here and whether it makes sense
Speaker 9: for private companies to do that and share the load
Speaker 9: with the government these are all still questions and there's
Speaker 9: still a lot of looking into what happened around that blackout.
Speaker 9: The Portugal does like to blame its neighbors in Spain
Speaker 9: for that.
Speaker 3: Indeed, in terms of startups, Portugal's also got an interesting
Speaker 3: scene there Sword Health, this startup that uses AI for
Speaker 3: medical rehabilitation, for example, that has raised quite a lot
Speaker 3: of money and is now more valuable than everything other
Speaker 3: than about five listed companies in Lisbon. Is that part
Speaker 3: of a kind of growing scene as well? If you're
Speaker 3: seeing data centers, you're seeing all of this interest. Is
Speaker 3: there also a bit of a growing startup scene in Portugal?
Speaker 9: Yeah, there is, and you know, there has been an
Speaker 9: attempt for the past decade or so to really nurture
Speaker 9: startups in Portugal. But I think this one really grabbed
Speaker 9: my attention, Caroline, because it was valued at three billion
Speaker 9: dollars in a financing round last year, and this year
Speaker 9: in June it was valued at four billion dollars, and
Speaker 9: as you said, this is this is pretty significant for Portugal.
Speaker 9: It's one of the most valuable private companies for sure,
Speaker 9: and one of the most valuable companies you know, full
Speaker 9: stop in Portugal and It's also backed by Founders fund,
Speaker 9: so very high profile investors looking at this company and.
Speaker 7: What it does is obviously quite interesting.
Speaker 9: It's looking at pain management solutions and physical rehabilitation using AI,
Speaker 9: obviously a buzzword for investors at the moment. But you know,
Speaker 9: the fact that you can found these companies in Portugal,
Speaker 9: you can also stay here not necessarily have to go
Speaker 9: all the way to Silicon Valley to scale suggests that
Speaker 9: the country is taking these things more seriously, is understanding
Speaker 9: that these companies need more of an infrastructure around them,
Speaker 9: and the government actually just recently said it would cut
Speaker 9: taxes for companies, which would be a big help as well.
Speaker 3: Okay, that's interesting in terms of what the government is
Speaker 3: hoping for and what the public in Portugal make of
Speaker 3: all of this. Portugal still got a GDP per capita
Speaker 3: that is amongst the lowest in Western Europe, so there
Speaker 3: must surely be a desire for the economy to do
Speaker 3: you well, But what is the government's political ambition, what's
Speaker 3: the response from the public.
Speaker 9: So there's always a tension between the foreign money that's
Speaker 9: coming into Portugal, which has obviously been hugely important for
Speaker 9: the economy, not just these kind of investments into tech,
Speaker 9: but also from overseas residents coming to live here. Portugal
Speaker 9: has seen a big rise in American, Chinese, Russian citizens
Speaker 9: coming to live here. There's a tension between that and
Speaker 9: what it can do for the country and the country's economy.
Speaker 9: But actually, you know what that means for the locals
Speaker 9: who have always been here and are seeing the price
Speaker 9: of real estate go up beyond affordable levels. The housing
Speaker 9: affordability in Portugal has actually seen the worst decline in
Speaker 9: the European Union in the past decades. So it's a
Speaker 9: huge tension point for the Portuguese public here. When I
Speaker 9: went down to Size and spoke to locals there, you know,
Speaker 9: they said, it's all good and we respect what the
Speaker 9: government's trying to do in bringing Chinese and American investment here.
Speaker 9: But our buildings are, you know, crumbling. We only have
Speaker 9: one healthcare center, the hospitals far away, the roads are cracking.
Speaker 9: You know, where is the investment actually in locals and
Speaker 9: in what we care about, and in creating jobs for
Speaker 9: people who really still struggle to pay the rent and
Speaker 9: their rising energy bills and send their children to school.
Speaker 9: So there's always that tension between local interests and what
Speaker 9: the government is doing at the macro level, which is
Speaker 9: attrapped as much foreign investment as it can.
Speaker 3: Very interesting. Sophia, thank you so much for spending some
Speaker 3: time with us. That is blimpag's Portugal bureau chief, Sofia
Speaker 3: auto Ecosta. Of course, this comes ahead of the Web Summit,
Speaker 3: which takes place in Portugal in the next few days,
Speaker 3: and we'll continue our full coverage and analysis of Europe's
Speaker 3: AI build out here on Bloomberg Radio. I'm Caroline Hepga
Speaker 3: in London. You can catch us every weekday morning for
Speaker 3: Bloomberg Daybreak. You at beginning at six am in London.
Speaker 3: That's one am on Wall Street.
Speaker 2: Nathan, Thanks Caroline. Man coming up on Bloomberg day Break. Weekend.
Speaker 2: Singles Day in China is approaching. We'll check in on
Speaker 2: what's become the largest shopping day in the world. I'm
Speaker 2: Nathan Hagar and this is Bloomberg. I'm Nathan Hager in
Speaker 2: Washington with your global look ahead at the top stories
Speaker 2: for investors in the coming week. Now we want to
Speaker 2: head to China, where Singles Day will be celebrated in
Speaker 2: the coming week. It's the unofficial holiday that's become the
Speaker 2: largest shopping day in the world, and it's spreading across
Speaker 2: Southeast Asia. Let's get to the host of the Daybreak
Speaker 2: Asia podcast, Doug List for a preview.
Speaker 4: Nathan, retailers in China are not taking any chances this year.
Speaker 4: Many have stretched their sales to as long as five weeks. Now,
Speaker 4: we know the Chinese economy has been struggling. Weak domestic
Speaker 4: demand has become call it a characteristic and so e
Speaker 4: commerce giants like Ali, Babajd dot Com are working to
Speaker 4: entice shoppers. The question is whether they'll succeed. For a
Speaker 4: closer look, I'm joined by Bloomberg analyst Katherine Limb. She
Speaker 4: covers the retail and e commerce industries in Asia from
Speaker 4: our bureau in Singapore. Catherine, thank you so much for
Speaker 4: making time to chat with me. Can we talk about
Speaker 4: the big picture? First? Talk to me about expectations and
Speaker 4: the extent to which these big retail names are concerned,
Speaker 4: perhaps about underperforming.
Speaker 10: We had a very week third quarter in China and
Speaker 10: that's really pushing retailers to bang the book and try
Speaker 10: to get more out of singles Day and in fourth quarter.
Speaker 10: And the reality is, as I speak to retailers over
Speaker 10: the last two weeks itself, Singles Days off to a
Speaker 10: fairly weak start. You know, we're halfway through the shopping
Speaker 10: festival right now. I do see more promotions coming up
Speaker 10: and keeping the fingers crossed that that's enough to really
Speaker 10: try and push thing ahead.
Speaker 4: So, Catherine, I'm wondering about the role of the government
Speaker 4: in trying to make Singles Day a success. What steps,
Speaker 4: if any, has Beijing taken.
Speaker 10: Well, we've seen the offer of you know, vouchers perks.
Speaker 10: They are also supporting e commerce platforms and retailers to
Speaker 10: try and come up with better service levels. But at
Speaker 10: the end of the day, it's really the confidence of
Speaker 10: the consumers right now, particularly if property prices as at
Speaker 10: value still says very low incomes outlooks still stay uncertain,
Speaker 10: it's going to be hard for consumers to want to
Speaker 10: spend more in you know, an environment of uncertainties.
Speaker 4: About US brands like Apple and Nike, what are the
Speaker 4: expectations for these brands?
Speaker 11: Now?
Speaker 10: What isn't just thing is that you know, for these
Speaker 10: two brands, you know, they were off to a very
Speaker 10: week start since the beginning of the year, and we'll
Speaker 10: actually start to see things coming up better for them
Speaker 10: different fundamental reasons. Off a lower base, but they are
Speaker 10: creeping up. And I'll take Nike for instance. On the
Speaker 10: first day of Ali Baba sale, they were off to
Speaker 10: a very weak start. They did not lead the sportswear
Speaker 10: sales ranking as they did before in the last two years.
Speaker 10: And you know, two weeks down the road, they've actually
Speaker 10: creep up to being the third, nowhere near the first,
Speaker 10: but you know, still a good you know, improvement, and
Speaker 10: again I'm hoping to actually see more over the next
Speaker 10: two years.
Speaker 4: So do you think it's more likely that Chinese consumers
Speaker 4: will favor the local brands this year, perhaps more so
Speaker 4: than they have in the past.
Speaker 10: I don't think it's going to be that this thing
Speaker 10: this year. It's moll about, you know, the value proposition
Speaker 10: that on the table for the consumers. We are at
Speaker 10: a somewhat balance point between nationalism, being very nationalistic about
Speaker 10: local brands itself and foreign brands. At the end of
Speaker 10: the day, it is what is on the table at
Speaker 10: a good price, you know, for the consumers, and they
Speaker 10: will be willing to take that if it comes to Not.
Speaker 4: A day goes by when we're not discussing artificial intelligence,
Speaker 4: and I'm curious about the way in which companies like
Speaker 4: JD and Baba are using AI to drive sales this year.
Speaker 10: Well, there's lots of you know AI shopping assistanms, lots
Speaker 10: of marketing push, you know, just based on what you
Speaker 10: are browsing. It's a lot more back end rather than
Speaker 10: you know, what we see as consumers itself. But clearly,
Speaker 10: you know, they know what we are looking at and
Speaker 10: they are pushing these items, you know, repeatedly to the
Speaker 10: face of the consumers to try and get the conversion
Speaker 10: rates to actually go up. So you know, this is
Speaker 10: definitely a good period during Singles Day to test start
Speaker 10: some of these algorithms as well as these programs, because
Speaker 10: that's where they're going to actually try and improvise on
Speaker 10: that for twenty twenty six.
Speaker 4: So as long as we're talking about technology, how has
Speaker 4: the smartphone business been performing on the mainland.
Speaker 10: Well, you know, definitely we are still seeing some form
Speaker 10: of subsidies coming through from the government, so that's actually
Speaker 10: helping iphoned seventeen model. So far, the platforms, whether it's
Speaker 10: JD dot Com, Ali Baba's team, or they've been actually
Speaker 10: pushing for more sales of it, and I'll actually like
Speaker 10: to throw in that mate one which has actually ventured
Speaker 10: into speedy delivery or quick commerce for that matter. They
Speaker 10: are also now being able to actually deliver new iPhones
Speaker 10: to you, like, you know, within an hour.
Speaker 4: So we know, Singles Days started in China and since
Speaker 4: then it's spread to many parts of Southeast Asia. So
Speaker 4: I'm curious away from the mainland when you look at
Speaker 4: other jurisdictions. I know you're in Singapore, I'm also thinking
Speaker 4: about Hong Kong, even Taiwan. Are there other jurisdictions that
Speaker 4: are expected to perform, let's say, better than the mainland.
Speaker 10: I think if we actually look firstly at Singles Day,
Speaker 10: Singles Days no longer about China, and I think you're
Speaker 10: right on that that we're also seeing Ali Express, you know, Talubau, Globo,
Speaker 10: JD dot Com Global also launching promotions and campaigns for
Speaker 10: this Singles Day outside of China. So are they doing better?
Speaker 10: I think yes for certain jurisdiction like Singapore for Southeast Asia,
Speaker 10: And it's really because we're off from a very low
Speaker 10: base and we're starting to actually see more of those
Speaker 10: value propositions coming through from Maidi and China products, and
Speaker 10: you know they are actually very decent for the price
Speaker 10: that you're actually paying for them.
Speaker 4: So Catherine, what about experiences, whether it's entertainment or even
Speaker 4: visiting a restaurant? Are these industries expected to do well?
Speaker 10: That has actually taken off during d long National Day holiday.
Speaker 10: And you know, when you talk about restaurants the consumption itself,
Speaker 10: let's not forget that. You know, there is now the
Speaker 10: counter coming in from takeaways, food deliveries. And again, you know,
Speaker 10: I'll go back to what I've just mentioned about the convenience,
Speaker 10: you know, the east of it. You know, we've actually
Speaker 10: seemed the latest catering or restaurant services sales continue to
Speaker 10: actually slowe down. That may be a bit of uptick
Speaker 10: in October. The overall scheme of things, I think more
Speaker 10: people are actually you know, doing food deliveries rather than
Speaker 10: going to the restaurants.
Speaker 4: Catherine, we'll leave it there, Thank you so very much.
Speaker 4: Bloomberg's Katherine Lim our senior analyst covering both retail and
Speaker 4: e commerce across the APAC. From our bureau in Singapore,
Speaker 4: we go to Hong Kong next, where the Global Financial
Speaker 4: Leaders Investment Summer took place over the last week. That's
Speaker 4: where we caught up with Goldman Sachs CEO David Solomon.
Speaker 4: He spoke with Bloomberg TV host Yvonne Mann and David Nglace.
Speaker 4: The conversation started with a question about the US China
Speaker 4: trade truths.
Speaker 11: I think at the moment, you know, a de escalation
Speaker 11: is a good thing, but there's obviously a lot of
Speaker 11: work to do to really arrive at a real stable.
Speaker 12: Deal that can endure, you know, over a period of time.
Speaker 11: I'm encouraged by the prospect of a potential visit from
Speaker 11: the US President that was telegraphed in the fall. But
Speaker 11: for the moment, you know, I did not think the
Speaker 11: escalation on either side was constructive, and so you know,
Speaker 11: I much prefer a de escalation.
Speaker 12: I think both both sides.
Speaker 11: Really had a purpose in that meeting to talk constructively,
Speaker 11: to have a more de escalated environment, and that allows
Speaker 11: now for constructive conversations as.
Speaker 12: They move forward.
Speaker 13: One year truce though between the two is that a
Speaker 13: good or bad thing? I mean, what did to do
Speaker 13: in terms of business sentiment when there was a twelve
Speaker 13: month time frame?
Speaker 11: Now it's better then, it's better than an escalation at
Speaker 11: on reasonable levels, which is kind of where we were,
Speaker 11: you know, over the most recent time. Trade negotiations are
Speaker 11: complicated and there are a lot of issues on the table.
Speaker 11: They need thoughtful responses and responses that can be durable. Yes,
Speaker 11: there's some uncertainty because it's a one year delay at
Speaker 11: all of this, but it's also a realistic period of
Speaker 11: time to try to get the right kind of deal
Speaker 11: done so both economies can move forward in a constructive way.
Speaker 11: And look, these are the two most important economies in
Speaker 11: the world. I think it's very important that you know,
Speaker 11: we arrive in a better place where we can both
Speaker 11: participate constructively with each other in the global growth of
Speaker 11: the world.
Speaker 14: I mean, speaking of let me borrow your phrase, participate.
Speaker 14: There's been a resurgence in equity capital market raising here.
Speaker 5: In Hong Kong.
Speaker 14: A lot of the Chinese companies, tech or otherwise are
Speaker 14: raising capital for the future. I want to get your
Speaker 14: sense as someone who sits in New York, you travel,
Speaker 14: of course all around the world. Is there a lot
Speaker 14: of appetite now from US based investors to participate by
Speaker 14: giving that capital to Chinese companies right now? In order
Speaker 14: to do there's you know, I realize there.
Speaker 11: An sure, there's.
Speaker 12: More appetite for it than there was twelve months ago.
Speaker 11: I remember actually last November sitting in a dinner in
Speaker 11: the United States with a group of US investors and
Speaker 11: this topic came up, and there were a couple of
Speaker 11: investors that basically said, we all should be looking to China.
Speaker 12: And the reason, the reason that had evolved that way
Speaker 12: is if you look.
Speaker 11: Last fall, the prices had gotten so cheap, the capital
Speaker 11: flows had moved so in the other direction that you
Speaker 11: just knew that things would come more into balance and
Speaker 11: there'd be a recycling.
Speaker 12: And we've seen that recycling.
Speaker 11: You've seen a big move and prices year over year,
Speaker 11: you've seen more foreign capital come in.
Speaker 12: And start to participate.
Speaker 11: That's a fundamentally different question about the big capital allocators
Speaker 11: really fundamentally shifting their allocations up to be higher again.
Speaker 12: So far, direct.
Speaker 11: Investment in China has come down, and I think one
Speaker 11: of the big questions is until we understand kind of
Speaker 11: the trade and the geopolitical landscape, it's harder see significant
Speaker 11: shifts back to higher levels of foreign direct investment and.
Speaker 12: More capital allocation.
Speaker 11: But for the moment, those flows are making for a
Speaker 11: better IPO market here and more opportunities here.
Speaker 12: How do you look at that?
Speaker 13: I mean, the whole competition has kind of changed into
Speaker 13: the dynamics, right. You have so many of these Chinese
Speaker 13: banks now that are doing some of these deals with
Speaker 13: Chinese companies. When it comes to going public, how does
Speaker 13: Goldman Sachs compete.
Speaker 11: Well, you know, goldmin Sex competes just fine, thank you
Speaker 11: very much. When it comes to taking public companies public
Speaker 11: on a global stage, Golden Sex is a leading position.
Speaker 12: We've had a leading position for fifty years.
Speaker 11: And there's always competition in the business, and you know,
Speaker 11: we'll continue to compete, so we welcome competition. But we
Speaker 11: have a pretty active footprint out here, as you well know.
Speaker 11: They have a pretty active footprint around the world. And look,
Speaker 11: one of the big advantages. I just had breakfast with.
Speaker 12: A company here that.
Speaker 11: It's actually a Chinese company, but the you know, the CEO,
Speaker 11: the founder was here and why does he value Golden Sex.
Speaker 11: He values Golden Sex because we have a sess to people, information,
Speaker 11: capital markets all over the world, you know, not just
Speaker 11: in a narrow portion of the world.
Speaker 12: And so it's a competitive business. It always will be.
Speaker 12: But I'm comfortable that we have the resources in the
Speaker 12: position to compete.
Speaker 14: Effectively, right and you know, you know I've been greeting up,
Speaker 14: of course, and I understand your history. You guys have
Speaker 14: been doing business in China very long time. You guys
Speaker 14: took the big banks public back twenty plus years ago.
Speaker 14: So I mean you're headed there in my understanding, after here,
Speaker 14: you're going to China. Of course you speak with regulators,
Speaker 14: what have you? What's your long term vision for difranchise
Speaker 14: in Greater China? What do you want what do you
Speaker 14: want your franchise to become longer?
Speaker 11: I think you have to look at Goldman Sachs and
Speaker 11: just think strategically that as a global firm, that when
Speaker 11: you think about our businesses, what are our two big
Speaker 11: businesses global banking and markets, the investment banking and trading
Speaker 11: business and asset and wealth management. And so if you
Speaker 11: think about how we think strategically about the firm, what
Speaker 11: advantages does the firm have besides the fact that we
Speaker 11: have at scale businesses, we're very good at the those activities,
Speaker 11: we're leaders of those activities, and we have a right
Speaker 11: to compete and win, you know with those activities.
Speaker 4: That was David Solomon, CEO of Goldman Sachs, speaking with
Speaker 4: Bloomberg TV host Vonn Men and David Nglace at the
Speaker 4: Global Financial Leader's Investment Summit in Hong Kong. I'm Doug Krisner.
Speaker 4: You can catch us weekdays for the Daybreak Asia podcast.
Speaker 4: It's available wherever you get your podcast.
Speaker 2: Nathan, Thanks Doug, and that does it for this edition
Speaker 2: of Bloomberg Daybreak Weekend. Join us again Monday morning at
Speaker 2: five am Wall Street Time for the latest on markets
Speaker 2: overseas and the news you need to start your day.
Speaker 2: I'm Nathan Hager. Stay with us. Top stories and global
Speaker 2: business headlines are coming up right now.