Speaker 1: This is Bloomberg Daybreak Asia for this Friday, April twenty
Speaker 1: eighth in Hong Kong, Thursday April twenty seventh in New York,
Speaker 1: and coming up today.
Speaker 2: US economic growth slows during the first quarter, while inflation accelerates.
Speaker 1: Amazon reports strong sales in its cloud division, with quarterly
Speaker 1: profit topping analyst estimates.
Speaker 2: And Snap reports its first ever quarterly drop in revenue
Speaker 2: after making major changes to its ad tools.
Speaker 3: US policy to d risk not decouple, White House says
Speaker 3: major economic address. McCarthy on Bloomberg says he will not
Speaker 3: compromise to clean debt ceiling rise. Fed Share deep faked
Speaker 3: into thinking he was talking to Zelenski. I'm at Baxter
Speaker 3: with Lebel News.
Speaker 4: That's all straight ahead on Bloomberg Daybreak Asia, The business
Speaker 4: news you need to start your day in just one
Speaker 4: fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App,
Speaker 4: and everywhere you get your podcasts.
Speaker 2: Good morning, I'm Doug Chrisner.
Speaker 1: And I'm Brian Curtiz. Here are the stories we're following today.
Speaker 1: Amazon reporting first quote, a revenue that did increase nine
Speaker 1: point four percent to one hundred and twenty seven point
Speaker 1: four billion dollars unless we're projecting one twenty four point seven,
Speaker 1: So about three billion less sales in Amazon's cloud unit
Speaker 1: rising sixteen percent to twenty one point four billion, and
Speaker 1: that beat projections. It's a sign that the retailer's business
Speaker 1: is weathering an uncertain economy. Bloomberg's Punam Goyle tells us
Speaker 1: Amazon is seeing stable online demand.
Speaker 5: It got leaner in term of the promotions from a
Speaker 5: four Q standpoint, so inventory in the retail landscape has
Speaker 5: rationalized a little. There's still more to go, but we
Speaker 5: don't think it's promotions driving that increase. We think it
Speaker 5: is demand and consumers are flocking to Amazon for their
Speaker 5: day to day needs.
Speaker 1: Amazon's results also suggest the company's efforts to reduce costs
Speaker 1: just starting to bear fruit. Operating expenses increased eight point
Speaker 1: seven percent in the quarter. That was the slowest pace
Speaker 1: in at least a decade. So the stock had a
Speaker 1: big gain during the regular session of four point six percent.
Speaker 1: I mentioned the jump in after hours, but it's given
Speaker 1: all of that back, illustrating flat here.
Speaker 4: At the moment.
Speaker 1: The stock had gained thirty one percent so far this year,
Speaker 1: as part of a big rebound in tech firms.
Speaker 2: We also heard from Snap after the bell. The company
Speaker 2: reported first quarter revenue fell seven percent. This is the
Speaker 2: company's first ever decline in quarterly revenue, and it comes
Speaker 2: after Snap made some major changes to its advertising tools.
Speaker 2: This includes tweaking the design of its distinct direct response ads.
Speaker 2: We heard earlier from Bloomberg's Alex Sparinka to have Snap.
Speaker 6: Kind of playing around with those direct response ads. A
Speaker 6: lot of marketers have backed away, and it's clear that
Speaker 6: they're not sending on the platform now. The company will
Speaker 6: say they had to make these changes. This will improve
Speaker 6: their business in the long run, but it does seem
Speaker 6: like there are quite a bit of impatience for investors
Speaker 6: in terms of the story that they're telling today.
Speaker 2: That is Bloomberg's Alex Sparenka. By the way, Snap said
Speaker 2: the continued disruption and demand for advertising is expected to
Speaker 2: continue into the current quarter. The stock right now is
Speaker 2: down seventeen percent in late US trading.
Speaker 1: US economic growth slowed in the first quarter. The GDP
Speaker 1: was at one point one percent on an annualized rate.
Speaker 1: Bloomberg economists were projecting one point nine percent growth. Business
Speaker 1: investment and equipment posted the biggest drop since the start
Speaker 1: of the pandemic. There was also a pullback in inventories,
Speaker 1: which subtracted the most from GDP in two years. It
Speaker 1: comes despite a pickup in consumer spending, which rose three
Speaker 1: point seven percent. We got reaction earlier from Lindsay Piggs,
Speaker 1: a chief economist at Stefel.
Speaker 7: This sets the tone for what the expectation of the
Speaker 7: US economy was at the start of the year, and
Speaker 7: it tells us two things. One, we're losing momentum from
Speaker 7: what we saw at the end of last year, but two,
Speaker 7: the economy is still proving resilient.
Speaker 1: On a more concerning note, for the FED core PCEE,
Speaker 1: inflation for the quarter rose four point nine percent. That
Speaker 1: was higher than the four point seven percent that analysts
Speaker 1: had estimated. And again this is the quarterly number. We'll
Speaker 1: get the March number coming up tomorrow. It may strengthen
Speaker 1: the case for another FED rate hike next week.
Speaker 2: Well later today, the Bank of Japan is expected to
Speaker 2: leave its policy unchanged this as Governor Hueita will chair
Speaker 2: his first meeting of the Bank of Japan. We have
Speaker 2: more from Bloomberg's Bonni out.
Speaker 8: Bloomberg Survey says the short term rates will likely be
Speaker 8: held at minus zero point one percent, and that the
Speaker 8: target yield for the ten year JGB will stay at
Speaker 8: zero percent, with a wiggle room on either side of
Speaker 8: half a percentage point. The governor's recent public comments have
Speaker 8: been dubvish, but surprises from the previous governor, Harohiko Kuroda,
Speaker 8: mean traders will be on high alert. Some economists are
Speaker 8: flagging for a possible tweak in youth curve control, but
Speaker 8: Bloomberg Economics say Ueita may call for a policy review
Speaker 8: that could prepare the ground for a shift in course.
Speaker 8: Further out in Hong Kong, I'm Bonniel Bloomberg day Break Asia.
Speaker 1: I'm Brian Curtis, along with Doug Krisner. Rashad's Sam will
Speaker 1: join us in a few moments, So, Doug, I have
Speaker 1: to say that among the questions that I would want
Speaker 1: to be putting to guests today is does this rally
Speaker 1: that we're having in the equity market feel shaky or
Speaker 1: on solid ground, particularly in light of that rather disappointing
Speaker 1: GDP report. Although consumer spending was pretty solid, but that
Speaker 1: one point one percent print surely is disappointing, and it
Speaker 1: comes at a time when you've got inflation not only
Speaker 1: sticky but actually gaining.
Speaker 2: Yeah, it's difficult to make sense of how the equity
Speaker 2: market was responding to the weak data and also inflationary
Speaker 2: pressures that remain persistent in the economy and that may
Speaker 2: keep the FED from cutting rates as soon as the
Speaker 2: market had been expecting. But I want to touch on Intel, Brian,
Speaker 2: because we also heard from Intel after the bell, and
Speaker 2: the stock right now is up by more than seven
Speaker 2: percent in the late US session. If you look at
Speaker 2: the revenue from the data center chips and those chips
Speaker 2: that are used for AI, well above the average estimate.
Speaker 2: But the forecast for the current quarter in terms of
Speaker 2: revenue solid, yes, but not overwhelming, and I think a
Speaker 2: little more troubling though maybe gross margin forecast was a
Speaker 2: little disappointing. But here again, difficult to see why the
Speaker 2: stock is up about seven percent right now.
Speaker 1: Well, see, here's the thing. It seems like investors are
Speaker 1: looking at earnings that they're just that good compared to
Speaker 1: what was expected that they can set aside the macro
Speaker 1: and everybody realizes that this is an extremely unusual environment.
Speaker 1: We have falling GDP at a time that jobs stay strong.
Speaker 1: So how do you actually put that into your figure out,
Speaker 1: you know what comes out the other side. It's a
Speaker 1: good question to put to Anthony Doyle, who be coming
Speaker 1: up in a few moments out of investment strategy at
Speaker 1: Fire Trail Investments. Now it's time for Global news US
Speaker 1: National Security Advisor Jake Sullivan saying that the operative word
Speaker 1: when thinking about the relationship with China is de risking. A.
Speaker 1: Baxter has Global News from IT nine and sixty newswomen
Speaker 1: in San Francisco.
Speaker 3: Edward, Yeah, exactly. Brian Sullivan says d risk, not decouple,
Speaker 3: and remarks today at the Brookings Institution in DC. Sullivan
Speaker 3: said the interest in protecting US security against China's use
Speaker 3: of US technology.
Speaker 9: We'll keep investing in our own capacities, in insecure, resilient
Speaker 9: supply chains. We'll keep pushing for a level playing field
Speaker 9: for our workers and companies and defending against abuses. Our
Speaker 9: export controls will remain narrowly focused on technology that could
Speaker 9: tilt the military balance. We're simply ensuring that US and
Speaker 9: allied technology is not used against US.
Speaker 3: Now, he says, not d couple.
Speaker 9: We are not cutting off trade. In fact, the United
Speaker 9: States continues to have a very substantial trade and investment
Speaker 9: relationship with China. Bilateral trade between the US and China
Speaker 9: set a new record last year.
Speaker 3: And Sullivan says all measures are tailored and measured. US
Speaker 3: House Speaker Kevin McCarthy today is saying his redline on
Speaker 3: the sand regarding the debt ceiling is he definitely will
Speaker 3: not negotiate a clean debt ceiling increased proposal exclusively on
Speaker 3: Bloomberg's balance of power. McCarthy says, both just a.
Speaker 10: Debt ceiling vote cannot pass the floor without dealing with
Speaker 10: the budget. We're at a thirty two trillion dollar deficit.
Speaker 10: When are we ever going to take this up? The
Speaker 10: Democrats had added six trillion dollars. The President wants to
Speaker 10: spend more money than he spent during.
Speaker 3: COVID now Bloomberg's Chot Fitzpatrick says President Biden's position is
Speaker 3: seeming to lose a bit of traction.
Speaker 11: Realistically, they can either play an endless game of chicken
Speaker 11: and the President can refuse to talk to them, or
Speaker 11: this vote in the House that demonstrated the Republicans do
Speaker 11: have a functioning majority can actually get him to the table.
Speaker 11: It seems the most likely thing is that Biden has
Speaker 11: to talk to McCarthy.
Speaker 3: And the White House has reiterated that it will go
Speaker 3: along with anything but a clean bill, FED Chair or
Speaker 3: will not go along with anything. I should say now
Speaker 3: FED Chair Jerown Powell held a call with a pair
Speaker 3: of Russian pranksters posing as you and President Vladimer Zelensky.
Speaker 3: A video posted on the Internet shows Powell answering questions
Speaker 3: on topics ranging from the outlook for inflation to the
Speaker 3: Russian Central Bank. It's unclear if the video was altered.
Speaker 3: Now the FED has confirmed it has no confidential information
Speaker 3: being discussed. The two pranksters are well known. It's not
Speaker 3: their first video or rodeo. They did one with JK.
Speaker 4: Rowling.
Speaker 3: They did one with former President George W.
Speaker 4: Bush.
Speaker 3: Now Bloomberg, Kylie Lynd says this has to be getting
Speaker 3: people's attention.
Speaker 12: This is just something we have to think about in
Speaker 12: the age of deep fakes and AI and the ability
Speaker 12: to manipulate information and how it's perceived on the Internet. Clearly,
Speaker 12: central banks and governments around the world have to be
Speaker 12: paying attention.
Speaker 3: And Wendy Whitmore of Palo Alto Networks on Bloomberg technologist
Speaker 3: says always morphing into the deep fake.
Speaker 13: We're going to see much more sophistication coming from them,
Speaker 13: and you've already seen that over the course of the
Speaker 13: past year, with cyber criminals really getting in the game
Speaker 13: in an effective way. So generally technology fuels the offense
Speaker 13: a bit more faster than it's going to feel the defense.
Speaker 13: But I think we also feel very well premiered on
Speaker 13: the defensive side.
Speaker 3: And says it will always be a cat and mouse game.
Speaker 3: Global News powered by more than twenty seven hundred journalists
Speaker 3: and analyst number one hundred and twenty countries. In San Francisco,
Speaker 3: I'm Ed Baxter, and this is Bloomberg.
Speaker 1: I'm Brian Curtis in Hong Kong, along with Rashad Salamat,
Speaker 1: and we say good morning to Anthony Doyle, head of
Speaker 1: investment strategy at Fire Trail Investments. On with this from Sydney. Anthony,
Speaker 1: we know that we need to respect the price action.
Speaker 1: We talked about how difficult it is to really get
Speaker 1: risk assessment done here, and it's not like investors are
Speaker 1: not discerning. They've traded Snap down eighteen percent here after
Speaker 1: the bill and Amazon was up twelve percent. Now it's
Speaker 1: actually down one point two percent. So people are out
Speaker 1: there making educated guesses on what's going on. What does
Speaker 1: Anthony Doyle think is going on?
Speaker 14: Yeah, I mean the market action that we've seen of
Speaker 14: life really reflects around the end game of monetary policy,
Speaker 14: interest rates and the extent to which inflation may not
Speaker 14: moderate as quickly as central banks would like. So in
Speaker 14: this type of environment where for so long macro has
Speaker 14: dominated the narrative and we start to revert back to
Speaker 14: a more normal regime where central bank rates may be
Speaker 14: on hold for an extended period of time, obviously the
Speaker 14: stock specific idiosyncratic factors start to come to the fore
Speaker 14: and that's why you're seeing the price action on a
Speaker 14: couple of names that you've just mentioned there. But also
Speaker 14: the market is highly discerning as to which companies are
Speaker 14: likely to thrive in a more difficult environment and may
Speaker 14: may be less reliant upon economic growth, and those companies
Speaker 14: that will find an operating environment much tougher, which could
Speaker 14: be a possible recession, global recession within the next felve months.
Speaker 15: So tell me something, Anthony, Is it discernment or is
Speaker 15: it actually skittishness in terms of the investors way of
Speaker 15: looking at things?
Speaker 14: I mean, the conversations that I have with our clients
Speaker 14: here in Australia, certainly, I think many recognize the opportunity
Speaker 14: that exists in global equity markets in terms of valuations
Speaker 14: are compelling following the price action that we've seen over
Speaker 14: the course of the last four months or so, even
Speaker 14: with the rally we've seen in twenty twenty three, particularly
Speaker 14: in medicap growth style stops. But there is I think
Speaker 14: you're quite right, apart from being discerning and an environment
Speaker 14: for obviously trying to sort the week from the chat.
Speaker 14: It is a growing consensus that it is no longer
Speaker 14: the case that central bank liquidity will bail investors out.
Speaker 14: And so this is where investors becoming more discerning really
Speaker 14: comes to the fourth it's no longer a case of
Speaker 14: simply only market beta that you do have to be
Speaker 14: active in your approach.
Speaker 1: Well, you have so much to actually put into the calculations.
Speaker 1: I mean, you look at Amazon's earnings, they weren't really
Speaker 1: all that great, but then the stop was down more
Speaker 1: than fifty percent last year. So you've got high valuations
Speaker 1: but a lot lower than they used to be, and
Speaker 1: then you've got earnings that coming in. You know, maybe
Speaker 1: not as bad as expected, And so how do you
Speaker 1: figure that. I'm not asking you about Amazon in particular,
Speaker 1: but you know what I'm saying is that it's very
Speaker 1: complex now to figure out how to maneuver through the
Speaker 1: next six to nine months.
Speaker 2: Yeah, and I think it comes down to your.
Speaker 14: Investment time horizons. So more recently, yes, ala Qualia, we've
Speaker 14: added Alphabet, we've added Beta, we own Microsoft, and we've
Speaker 14: earned Microsoft for quite some time. So if you are
Speaker 14: willing to take that longer term perspective and potentially look
Speaker 14: through the volatility that we're going to experience within the
Speaker 14: sixth night, six to nine months, you know, these are
Speaker 14: businesses that are very well run, high quality companies. They
Speaker 14: can sustain long term growth despite that short term volatility.
Speaker 15: Tell me something, what you know we've been seeing of
Speaker 15: late low volumes, low volatility. You know, the market has
Speaker 15: been in a kind of torpa here. You know, how
Speaker 15: much is effectively what is the case exactly? Do investors
Speaker 15: as you look at what's going on with the equity
Speaker 15: markets and go, well, should I really bother when I
Speaker 15: can just put my money into money market fund instead?
Speaker 14: Yeah, it's a relatively high hurdle when you do have
Speaker 14: the risk free rate relatively higher, certainly over the course
Speaker 14: of the last decade, much higher than than what we've
Speaker 14: become used to in terms of ultra low interest rates.
Speaker 14: And couple with that, obviously a more uncertain outlook and
Speaker 14: even you know, some geopolitical concerns, particularly around the US
Speaker 14: debt ceiling, and obviously the issues we've seen in terms
Speaker 14: of the war in Ukraine. It is are relatively high
Speaker 14: hurdles for investors to potentially move out of that risk
Speaker 14: reasset or money market fund, as you say, into a
Speaker 14: higher risk asset. I think that's what we're seeing, and
Speaker 14: that's reflected in the live volume.
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Speaker 1: Mhm