WEBVTT - Tech Stock Headwinds and Apple's Shipment Drop 0:00:01.480 --> 0:00:04.840 From the heart of where innovation, money and power Collie 0:00:05.040 --> 0:00:09.760 in Silicon Valley, NB. This is Bloomberg Technology with Caroline 0:00:09.840 --> 0:00:26.640 Hide and Ed Ludlow. I'm Caroline Hide and Bloomberg's World 0:00:26.640 --> 0:00:29.480 headquarters in New York, and I'm Ludlow in San Francisco. 0:00:29.560 --> 0:00:33.240 This is Bloomberg Technology coming up. Tech stocks facing headwinds 0:00:33.280 --> 0:00:35.960 as we head into earning season. We'll discuss why the 0:00:35.960 --> 0:00:39.519 sector is twenty percent rally may be disconnected from reality. 0:00:40.360 --> 0:00:43.479 Plus a plunge in PC shipment's Apple seeing a forty 0:00:43.520 --> 0:00:47.040 percent drop in shipments. Is the industry grapples with unsold inventory. 0:00:47.080 --> 0:00:49.760 We'll bring you the details next, and mention capital firm 0:00:49.880 --> 0:00:53.320 Eclipse raises one point you billion for two new funds, 0:00:53.400 --> 0:00:57.160 both dedicated to backing startups trying to modernize physical industries. 0:00:57.320 --> 0:01:01.000 Will have an exclusive conversation with Fanning Partner or Susan. 0:01:01.320 --> 0:01:04.000 But first, let's check in on these publicly traded markets 0:01:04.000 --> 0:01:06.360 at the moment, and interesting that we've had a little 0:01:06.400 --> 0:01:08.000 bit of a flip reverse. I think we just want 0:01:08.000 --> 0:01:09.959 to go back to the broader markets. Head I seem 0:01:09.959 --> 0:01:11.399 to be jumping the gun and being trying to tell 0:01:11.440 --> 0:01:13.959 everyone your micro moves. It is a lot about chips. 0:01:14.000 --> 0:01:16.640 We are seeing a focus on the sales that are 0:01:16.640 --> 0:01:19.360 happening at the moment in terms of PCs. What that 0:01:19.400 --> 0:01:21.959 means also for the flood of infantry and chips. But 0:01:22.040 --> 0:01:23.679 let's just move it on to what's happening in terms 0:01:23.720 --> 0:01:25.520 of the broader markets. If we can the nastac off 0:01:25.520 --> 0:01:27.440 by nine tenths of a percent, This is more about 0:01:27.440 --> 0:01:30.080 the jobs print on Friday, more about the economic fundamentals, 0:01:30.120 --> 0:01:32.920 more about the Federal Reserve maybe giving us another twenty 0:01:32.920 --> 0:01:35.600 five basis points hike in May. Two year yield up 0:01:35.640 --> 0:01:38.120 two basis points, so boring cost, justus rising to that 0:01:38.120 --> 0:01:40.640 for all important four percent level. Bloomberg dollar indexts on 0:01:40.640 --> 0:01:42.720 the higher side as we start to price in a 0:01:42.760 --> 0:01:45.000 more hawkish fed. Moving on, because what does it mean 0:01:45.040 --> 0:01:48.200 for the world of crypto? While Bitcoin, even amid this 0:01:48.360 --> 0:01:51.640 dollar strength ed, we're still seeing Bitcoin managing to pull 0:01:51.720 --> 0:01:53.720 up actually more than a percentage point. We're above that 0:01:53.840 --> 0:01:56.600 twenty eight thousand level. We all I, of course, what's 0:01:56.600 --> 0:01:59.000 happening in the world of eth ethereum. We're expecting that 0:01:59.120 --> 0:02:01.480 upgrade come Wednesday. A lot of volatility likely to come. 0:02:01.520 --> 0:02:03.920 What about the micro though. Yeah, when it comes to 0:02:03.920 --> 0:02:06.560 single movers, the markets in the tech sector are trading 0:02:06.800 --> 0:02:09.120 what happened Friday because it was a holiday here in 0:02:09.120 --> 0:02:13.120 the US. Also, you know kind of thin volumes. Samsung, 0:02:13.200 --> 0:02:15.679 the world's biggest maker of memory chips, basically said they're 0:02:15.680 --> 0:02:18.320 going to cut production to meaningful levels get rid of 0:02:18.320 --> 0:02:20.920 the supply glut. You see names like Micron and Western 0:02:20.960 --> 0:02:24.880 Digital trading markedly higher, even though broadly tech is down. 0:02:25.120 --> 0:02:30.200 TSMC also posting numbers second consecutive quarterly sales miss, and 0:02:30.200 --> 0:02:33.160 that is weighing on the US ADRs of TSMC down 0:02:33.240 --> 0:02:35.760 three percent. The other data point we've woken up to 0:02:35.840 --> 0:02:39.880 this Monday morning is the IDC PC tracking data. A 0:02:39.919 --> 0:02:42.519 long story, shortcarrow. We will get into it later in 0:02:42.560 --> 0:02:45.360 the show. With IDC a big drop year on year 0:02:45.440 --> 0:02:48.680 in PC shipment's Apple certainly the worst, more than forty 0:02:48.680 --> 0:02:51.240 percent drop in its shipments. The stop reacting two percent. 0:02:51.480 --> 0:02:53.920 Dell also sort of drop, but it's a little bit higher, 0:02:53.919 --> 0:02:55.840 a little more sangwim when it comes to that name. 0:02:55.880 --> 0:02:58.079 The reason we care is that is not a good 0:02:58.160 --> 0:03:00.960 leading indicator or four bow for what's to come in 0:03:01.000 --> 0:03:03.760 this earning season. Around the quarter for those hardware makers 0:03:03.800 --> 0:03:06.600 carry Yeah, and it is all about now bracing ourselves 0:03:06.639 --> 0:03:09.840 for the earning season. What we anticipate, whether or not 0:03:09.919 --> 0:03:12.480 we can see any real fundamental reason for it, is 0:03:12.520 --> 0:03:14.560 basically a ball market that we've gone back into in 0:03:14.600 --> 0:03:17.000 the NASDAC and it seems as though when you go 0:03:17.040 --> 0:03:19.040 to the m Live pulse, this is a great way 0:03:19.080 --> 0:03:22.240 of getting the Bloomberg user that people who are managing 0:03:22.280 --> 0:03:26.760 money trading these stocks deciding really whether they're optimistic or not, 0:03:26.800 --> 0:03:29.560 and ultimately it feels like they're not particularly they think 0:03:29.760 --> 0:03:32.880 only fourteen percent in fact, think that the earnings are 0:03:32.880 --> 0:03:35.120 going to be strong enough to really vindicate some of 0:03:35.120 --> 0:03:37.480 the rally we've seen it. The other part that we're 0:03:37.480 --> 0:03:39.680 looking at with this is the rotation into tech came 0:03:39.720 --> 0:03:42.000 at the expense of the banks. Right, you think about 0:03:42.040 --> 0:03:44.680 what happened with SVB, So the question we ask ourselves 0:03:44.720 --> 0:03:47.840 going forward is, well, that's a little bit artificial because 0:03:47.840 --> 0:03:50.760 what hurt the banks is also worrying for the tech sector. 0:03:50.800 --> 0:03:53.840 Forty one percent of respondents saying what we saw with 0:03:54.120 --> 0:03:56.800 SVB could spill over in some of the bigger names. 0:03:56.920 --> 0:03:58.720 What does that mean going into earnings? What does that 0:03:58.760 --> 0:04:00.680 mean for the tech sector, Well, we are s our audience. 0:04:00.800 --> 0:04:02.600 And this is what they've had to say in recent weeks. 0:04:02.640 --> 0:04:15.400 Carry the decline in the yields is actually driving tech stocks. 0:04:15.640 --> 0:04:18.880 And if you take a look at the Quintessential Central Fangman, 0:04:19.200 --> 0:04:22.160 they peaked at twenty eight percent of the SMP. They 0:04:22.240 --> 0:04:25.960 trotted around eighteen and they've really inched up recently. And 0:04:26.040 --> 0:04:29.240 that's being because you know that discounting mechanism, which is 0:04:29.320 --> 0:04:32.600 represented by the yield, has resulted in those long tail 0:04:32.680 --> 0:04:35.760 cash flows being worth more. These tech companies, if we're 0:04:35.760 --> 0:04:37.960 talking to some of the bigger ones, I think they're 0:04:37.960 --> 0:04:41.200 defensive and the standpoint of the health of their balance sheets. 0:04:41.800 --> 0:04:45.120 You can see that when the banking crisis erupted that 0:04:45.360 --> 0:04:49.400 even some of the bigger fan companies actually outperformed in 0:04:49.440 --> 0:04:53.240 a relative basis because essentially their balance sheets are stellar. 0:04:53.640 --> 0:04:57.600 The cost cutting once that started happen, the bottom and tech, 0:04:57.720 --> 0:04:59.920 in my opinion, was done, and that's why I believe 0:05:00.480 --> 0:05:03.240 there is still another ten to fifteen prison upside tech. 0:05:03.279 --> 0:05:05.000 If you look at the seven biggest tech stocks in 0:05:05.040 --> 0:05:07.920 the US, I think they make up almost more than 0:05:07.960 --> 0:05:09.760 ten percent of the SMP. Five hundred in terms of 0:05:09.760 --> 0:05:12.239 market cap, and that's only going to grow as people 0:05:12.240 --> 0:05:14.800 find that that's the only place to hide. But once 0:05:14.880 --> 0:05:17.760 earnings start to slow down, you should see that. You 0:05:17.760 --> 0:05:20.719 should see this segment start to start there. You should 0:05:20.720 --> 0:05:27.720 see their share prices start to fall a breadth of 0:05:27.800 --> 0:05:30.560 viewpoints their head. But actually, what hasn't there been in 0:05:30.600 --> 0:05:33.400 breadthin is the market rally in the first quarter. It 0:05:33.480 --> 0:05:35.320 was all down to some of these big tech names. 0:05:35.320 --> 0:05:37.919 That's why it's important for the broader market, right, And 0:05:37.960 --> 0:05:39.160 you look at the run up and then as that 0:05:39.240 --> 0:05:41.200 one hundred the first three months of this year, the 0:05:41.360 --> 0:05:45.800 rotation into tech, it's completely odds with earnings expectations. The 0:05:45.960 --> 0:05:47.520 data shows that we think it's going to be a 0:05:47.520 --> 0:05:50.599 pretty rubbish season, particularly for megacap tech. So how do 0:05:50.600 --> 0:05:53.440 you tally those two things? And also how expensive? Therefore 0:05:53.520 --> 0:05:55.880 tech has become twenty four times on the NASA one 0:05:55.960 --> 0:05:59.039 hundred in terms of forward earnings. That's more than we've 0:05:59.040 --> 0:06:00.960 seen over the last Hey, let's get straight to it 0:06:01.000 --> 0:06:02.920 with all. The woman has a few ancess for us, 0:06:03.000 --> 0:06:05.159 Gina Mouston Adams. We're so prettied to say she's coming 0:06:05.160 --> 0:06:07.880 to us. Of course, you know, our Broombag intelligence Gina, 0:06:08.000 --> 0:06:12.200 we are seeing a lot of adam more basically, how 0:06:12.200 --> 0:06:14.599 we've set ourselves up for the earning season. People bracing 0:06:14.600 --> 0:06:16.680 for the numbers to come down and actually what there 0:06:16.760 --> 0:06:20.120 since two thousand and six. Yeah, it should be a 0:06:20.120 --> 0:06:22.279 pretty rough earning season, not just for tech but really 0:06:22.279 --> 0:06:24.640 for the SMP five hundred at large. And indeed it's 0:06:24.640 --> 0:06:27.640 expected to be a pretty rough first half altogether. Analysts 0:06:27.640 --> 0:06:30.400 are now forecasting greater than seven percent decline in the 0:06:30.440 --> 0:06:32.920 first half. Remember at the beginning of the year, they 0:06:32.920 --> 0:06:35.760 were expecting only a two percent decline, So in the 0:06:35.800 --> 0:06:38.520 matter of just a few weeks, analyst expectations have been 0:06:38.560 --> 0:06:41.360 plumbing techs a big part of that. Both the tech 0:06:41.480 --> 0:06:45.840 and communication sector, which of course houses stuck like Alphabet 0:06:46.240 --> 0:06:49.120 and meta stocks that we generally think of as tech. 0:06:49.560 --> 0:06:51.760 Both of those segments of the SMP five hundred are 0:06:51.760 --> 0:06:54.400 anticipated to produce double digit declines and earnings for the 0:06:54.480 --> 0:06:57.799 first quarter on the heels of a really rough fourth quarter. 0:06:57.960 --> 0:07:00.640 So not much good news anticipated to come with the 0:07:00.640 --> 0:07:04.480 first quarter earning season. It's the only thing that from 0:07:04.480 --> 0:07:09.080 a fundamental perspective, may be enabling some better performance from 0:07:09.080 --> 0:07:12.280 these stocks on the communication side is the valuations are 0:07:12.400 --> 0:07:14.720 very very low. This is a group that has been 0:07:14.760 --> 0:07:16.400 trading off for the better part of a year and 0:07:16.400 --> 0:07:18.160 a half, so at least on that side of the 0:07:18.200 --> 0:07:22.040 space where the Googles and that rather alphabet and Meta 0:07:22.280 --> 0:07:25.400 Netflix disneys of the world are trading at relative discounts. 0:07:26.120 --> 0:07:28.800 So that has emerged. And then also we have seen 0:07:28.840 --> 0:07:31.760 a tremendous amount of cost cutting. So the consensus is 0:07:31.800 --> 0:07:34.880 anticipating that within the first half of this year these 0:07:34.920 --> 0:07:38.680 companies will prove enough cost cutting, rationalization of expenses and 0:07:38.720 --> 0:07:41.520 the like that they can produce a margin turnaround by 0:07:41.560 --> 0:07:44.960 the end of twenty twenty three. Gina, we talked about 0:07:44.960 --> 0:07:47.680 the rotation into tech they kind of gained and then 0:07:47.720 --> 0:07:50.200 as that one hundred, this sort of starkist example of 0:07:50.200 --> 0:07:52.400 that you have megacat tech in that indatex. You also 0:07:52.480 --> 0:07:55.880 have very high multiple software names, some of them preprofit 0:07:55.920 --> 0:07:59.440 as well. Why is there such a why are they 0:07:59.440 --> 0:08:02.280 so odd? The sort of outlook for a poor earning 0:08:02.320 --> 0:08:05.840 season and the performance of that index, Well, I think 0:08:05.840 --> 0:08:08.600 there's a combination of things going on. The first is, 0:08:08.800 --> 0:08:11.840 even though outlook the alok for earnings is relatively negative, 0:08:11.880 --> 0:08:15.000 we did price in a very negative outlook for earnings 0:08:15.000 --> 0:08:17.080 by the end of twenty twenty two. Really, as of 0:08:17.160 --> 0:08:20.280 the early part of October twenty twenty two, the market 0:08:20.320 --> 0:08:23.160 was pricing for a significant decline in earnings to come. 0:08:23.640 --> 0:08:26.880 We did see the relative momentum and analyst revisions reach 0:08:26.920 --> 0:08:29.200 a low at the point as well, So even though 0:08:29.240 --> 0:08:32.400 revisions are still going lower, they're not going lower as 0:08:32.440 --> 0:08:35.240 fast as they were in the fall of last year, 0:08:35.720 --> 0:08:38.760 so that has created some degree of stability. I think 0:08:38.800 --> 0:08:41.000 another thing to consider is at the start of this year, 0:08:41.080 --> 0:08:44.080 some of these stocks were incredibly discounted. Again, these are 0:08:44.080 --> 0:08:47.160 the communications segments of tech, not the traditional tech, but 0:08:47.160 --> 0:08:51.360 the communication stucks were trading at very extreme discounts relative 0:08:51.400 --> 0:08:54.560 to their long term history, which would imply they were 0:08:54.600 --> 0:08:57.480 relatively prepared for very negative earnings news. And then many 0:08:57.480 --> 0:09:00.880 of these companies came out and announced cost cutting measures 0:09:00.920 --> 0:09:04.559 that allowed for the consensus to start to think about 0:09:04.559 --> 0:09:08.480 a potential margin finally forming for this segment of the index. 0:09:08.960 --> 0:09:11.439 And then the whilest I would say really did support 0:09:11.440 --> 0:09:14.000 the rotation was about interest rates. We've seen a pretty 0:09:14.080 --> 0:09:18.280 big rally and interest rates, which naturally results in improvement 0:09:18.360 --> 0:09:21.160 in some of the longer duration, higher growth segments of 0:09:21.240 --> 0:09:25.040 the index in terms of valuation expansion. So it's not 0:09:25.120 --> 0:09:27.600 been about earnings really, it's more about a lot of 0:09:27.640 --> 0:09:30.880 other factors that have helped some near term recovery in 0:09:30.880 --> 0:09:35.720 this group. Caroline, you mentioned earlier the valuation question. You 0:09:35.760 --> 0:09:38.559 know later in the show we're going to pass over 0:09:38.640 --> 0:09:41.120 the IDC data with IDC. I'm looking forward to that. 0:09:41.360 --> 0:09:44.360 How much is that a crystal ball for the trouble 0:09:44.440 --> 0:09:47.120 macro environment we're in right now for technology? Yeah, Gina, 0:09:47.360 --> 0:09:49.760 to that point, you used to always come on around 0:09:49.800 --> 0:09:51.520 earnings in the clothes when I was lucky enough to 0:09:51.559 --> 0:09:54.600 be in those hours as well, and thinking about when 0:09:54.640 --> 0:09:57.280 you get about earnings from For me, the canary in 0:09:57.320 --> 0:10:00.240 the coal mine was nearly always snap and it was 0:10:00.280 --> 0:10:03.000 about advertising. But now all were starting to think more 0:10:03.040 --> 0:10:08.640 about well, inventory, about consumer, about demand, about the chip sector. Yep. 0:10:08.760 --> 0:10:11.559 And I think this is a really important distinction between 0:10:11.600 --> 0:10:14.120 This is why I keep talking about the communication stocks 0:10:14.280 --> 0:10:17.880 versus the tech stocks. Communication stocks are a different group 0:10:17.960 --> 0:10:21.200 intentionally because fundamentally they trade on a slightly different cycle. 0:10:21.600 --> 0:10:25.120 Communication stocks led this down draft. Remember that's where you 0:10:25.160 --> 0:10:28.679 saw a tremendous amount of margin weakness. That's where Snap 0:10:28.800 --> 0:10:32.240 was absolutely a good leading indicator. Now we're moving into 0:10:32.240 --> 0:10:34.760 a slightly different portion of the cycle, which you would 0:10:34.800 --> 0:10:38.400 expect would probably hammer away at some of the tech 0:10:38.480 --> 0:10:42.520 strengths and tech specific strengths, which is really more about 0:10:42.600 --> 0:10:45.480 not only software and services, but those hardware names, the 0:10:45.480 --> 0:10:49.840 communications equipment names, the semiconductor's names. The areas of the 0:10:49.880 --> 0:10:53.160 index that are really traditional tech they're subject to an 0:10:53.160 --> 0:10:57.400 inventory cycle, are the areas where, unfortunately valuations are still 0:10:57.440 --> 0:11:01.360 a little bit overpriced. Earning's weakness is emerging, has emerged 0:11:01.440 --> 0:11:04.000 over the last year, certainly with an inventory crisis that 0:11:04.080 --> 0:11:10.080 has emerged but is likely reaching more critical levels. And frankly, 0:11:10.120 --> 0:11:12.679 I think the investor base is really captivated by the 0:11:12.720 --> 0:11:14.920 idea of a cycle, and in particular with Apple and 0:11:14.960 --> 0:11:18.720 Microsoft really being able to shrug off risks fast quickly 0:11:18.720 --> 0:11:21.199 and recover quickly. Yeah, and that's a notion that we're 0:11:21.200 --> 0:11:23.040 going to really question over the course of the next 0:11:23.080 --> 0:11:25.640 earning season is how much of this is a short 0:11:25.720 --> 0:11:28.559 term weakness versus a long term weakness. How rapidly can 0:11:28.640 --> 0:11:32.520 these companies to recover strength into twenty twenty four that 0:11:32.720 --> 0:11:34.839 is likely to frame. I think the outlook for these 0:11:34.920 --> 0:11:38.000 ducks and how many times can they mention artificial intelligence 0:11:38.040 --> 0:11:40.640 to get people on sited Gina Marston Adams, I mean, 0:11:40.720 --> 0:11:52.160 thank you so much opening meg Intelligence. IDC out with 0:11:52.200 --> 0:11:55.560 its latest report showing PC demand is plunging, with Apple, 0:11:55.880 --> 0:11:58.880 for example, seeing a more than forty percent decline in 0:11:58.960 --> 0:12:02.200 shipments year year in the first quarter, joining us an 0:12:02.200 --> 0:12:05.760 now I DC Group Vice President for Consumer Device Trackers 0:12:05.840 --> 0:12:08.439 Ryan Reith, and Ryan, you know, Apple is the kind 0:12:08.440 --> 0:12:11.120 of headline here that across the industry we're back below 0:12:11.240 --> 0:12:14.520 early twenty nineteen levels for shipments. What is the principal 0:12:14.559 --> 0:12:18.240 cause really demandsload? Good to talk to you guys, by 0:12:18.280 --> 0:12:21.800 the way, it's nice like going on again put on. Honestly, 0:12:21.920 --> 0:12:23.880 it's really a demand story at this point. You know, 0:12:23.920 --> 0:12:26.480 I think you know the way we're looking at the 0:12:26.679 --> 0:12:30.640 entire market is we're basically at a correctional standpoint, and 0:12:30.760 --> 0:12:33.400 the correction is not just going to be this Q 0:12:33.520 --> 0:12:36.760 one that we just put out a report this morning. Realistically, 0:12:36.800 --> 0:12:39.320 the correction is going to be probably most of this 0:12:39.440 --> 0:12:43.360 year or the industry sees some growth around PCs. But 0:12:44.320 --> 0:12:46.080 so yeah, that's kind of where we're at at this stage, 0:12:46.080 --> 0:12:48.720 it's not a supply issue. It's not anything there. It's 0:12:48.760 --> 0:12:51.880 really a demand issue. And Ryan, the reasoning behind the 0:12:51.920 --> 0:12:56.320 demand issue. Is it that well, some of these computers 0:12:56.320 --> 0:12:59.360 haven't been upgraded of late, with silantipitating Apple to do 0:12:59.400 --> 0:13:01.440 that in the second half of the year, everyone already 0:13:01.480 --> 0:13:04.040 over indexed on purchasing them. Or is it actually when 0:13:04.040 --> 0:13:05.920 I worried about our finances, we don't want to make 0:13:05.960 --> 0:13:10.000 big purchases. It's probably more of the ladder. I think 0:13:10.000 --> 0:13:11.920 it's uh, you know, you've got sorry about that. I 0:13:11.960 --> 0:13:15.480 just pumped the table here. Um, you've got the you know, 0:13:15.480 --> 0:13:18.080 you've got the ongoing you know, inflation concerns that are 0:13:18.200 --> 0:13:20.960 rising costs of goods already, you know, the global recession 0:13:21.040 --> 0:13:23.920 fear has not gone away. It's been tempered a little 0:13:23.920 --> 0:13:25.520 bit in some regions. So I think it's probably more 0:13:25.520 --> 0:13:30.800 of the ladder that both consumers, companies and education institutions 0:13:30.840 --> 0:13:33.040 are sort of holding onto their purse strings a little 0:13:33.040 --> 0:13:35.440 bit tighter than they would And it makes sense. And 0:13:35.640 --> 0:13:38.640 I think a lot of the industry, from supply chain 0:13:38.679 --> 0:13:42.520 all the way up to the OEMs, they foresaw this coming. 0:13:43.640 --> 0:13:45.840 I think the question was really what's the magnitude going 0:13:45.880 --> 0:13:49.080 to be, And nobody wanted to, you know, over sort 0:13:49.120 --> 0:13:51.280 of correct on the downside because they didn't want to 0:13:51.280 --> 0:13:54.120 miss an opportunity like many did throughout the pandemic. So 0:13:54.160 --> 0:13:56.479 I think we're at that point now where you're gonna 0:13:56.559 --> 0:13:58.319 you know, we already heard a little bit from Samsung 0:13:58.679 --> 0:14:01.720 around memory, but we've got some really important tech earnings 0:14:01.760 --> 0:14:03.079 coming up in the next couple of weeks. Would you 0:14:03.120 --> 0:14:05.480 guys know very well? I think we're going to start 0:14:05.520 --> 0:14:07.440 to hear a little bit more, probably hear a little 0:14:07.480 --> 0:14:11.360 bit more. You know, the storm's not over, more so 0:14:11.520 --> 0:14:14.520 than the positives. But you know, I just want to 0:14:14.520 --> 0:14:16.920 sort of just preface by sort of saying that we 0:14:17.000 --> 0:14:19.600 still believe that, you know, we get into next year, 0:14:19.680 --> 0:14:22.280 that we're going to be at at or a little 0:14:22.320 --> 0:14:24.920 above pre pandemic level. So there is some positive in 0:14:25.000 --> 0:14:27.040 all this, but we're going to hear some negativity not 0:14:27.080 --> 0:14:29.880 only from what we put out today but realistically probably 0:14:29.920 --> 0:14:32.080 through the next couple of course. And ed, I mean, 0:14:32.120 --> 0:14:35.880 we already heard the warnings. The CFO of Apple himself, 0:14:35.920 --> 0:14:38.440 Luca was saying we're going to see double digit declines 0:14:38.520 --> 0:14:40.400 in the map part of the business. But it's not 0:14:40.640 --> 0:14:44.280 just Apple being affected. Yeah, And we were saying earlier, Ryan, 0:14:44.320 --> 0:14:46.520 you know, how much is your data set a crystal 0:14:46.560 --> 0:14:48.960 ball ahead of earning season? But I wonder if we 0:14:48.960 --> 0:14:51.560 can actually get even more granularity. Right, it's not Apple. 0:14:51.880 --> 0:14:54.960 You look at Dell greater than thirty percent, decline HP 0:14:55.160 --> 0:14:58.000 greater than twenty four percent. Is there any geographic or 0:14:58.040 --> 0:15:06.200 demographical breakdown you can see real pullback from the consumer. Yeah, well, 0:15:06.200 --> 0:15:08.600 it's happening across the board. I would say the pullback 0:15:08.640 --> 0:15:11.400 that we're seeing now, the shift is probably more angled 0:15:11.400 --> 0:15:14.080 towards the developed markets in the last six months, and 0:15:14.120 --> 0:15:16.960 the reason for that is because more of the developing 0:15:17.160 --> 0:15:20.400 markets around the world had already sort of corrected for 0:15:21.320 --> 0:15:24.080 consumer pullback, you know, hit a little bit harder on 0:15:24.200 --> 0:15:27.760 the wallet and so forth, and businesses sort of followed 0:15:27.880 --> 0:15:31.000 in sort of in that same segue, meaning, you know, 0:15:31.040 --> 0:15:34.480 businesses in these emerging markets sort of said, hey, look, 0:15:34.480 --> 0:15:37.360 if we needed a PC, maybe we could do another 0:15:37.400 --> 0:15:40.320 six months without buying that PC. Or if people were 0:15:40.320 --> 0:15:42.800 going to refresh every five years, maybe we can get 0:15:42.800 --> 0:15:45.080 them to six years now. And that sort of prolongs 0:15:45.120 --> 0:15:48.720 the cost. So again, I know, developed market versus emerging 0:15:48.760 --> 0:15:50.920 market doesn't really sort of break down the geographies. But 0:15:51.120 --> 0:15:53.720 you know, I think when you look at things, you know, 0:15:54.000 --> 0:15:57.920 our expectation is that, you know, the the North American 0:15:57.920 --> 0:16:01.120 market has still been doing good in comparison to the 0:16:01.160 --> 0:16:05.800 global market. You know, we've seen pockets of again I 0:16:06.000 --> 0:16:09.040 use the word strength very lightly because it's really not 0:16:09.120 --> 0:16:11.320 strength but a little bit better sort of opportunity in 0:16:11.360 --> 0:16:13.640 some of the European markets. China seeing a little bit 0:16:13.640 --> 0:16:15.920 of recovery. Going to take a little bit more time there, 0:16:16.000 --> 0:16:18.720 especially on the consumer side. So it's really spread out, 0:16:18.760 --> 0:16:22.360 but it's probably hitting the pullbacks and the developing markets 0:16:22.400 --> 0:16:24.120 a little bit more just because of the cost. Ran 0:16:24.200 --> 0:16:27.320 reath great breakdown, thank you of IDC Group, and he 0:16:27.400 --> 0:16:29.320 led us there. He started talking about China and the 0:16:29.400 --> 0:16:31.960 demand from that country. Let's stick with Apple and in fact, 0:16:31.960 --> 0:16:34.920 it's relationships with China, and you know that it's one 0:16:35.080 --> 0:16:37.800 US business that's facing some of the steepest challenges. So 0:16:37.880 --> 0:16:41.920 we say to selective decoupling as it's been called from China. 0:16:42.000 --> 0:16:44.640 It's a key lawmaker has been saying after a series 0:16:44.640 --> 0:16:47.080 of meetings with executives and experts in Hollywood and Silicon 0:16:47.120 --> 0:16:49.560 Valley over the last week or so. Let's go for 0:16:49.600 --> 0:16:52.640 more on this from the most Economics Tom Orlick and Tom, 0:16:52.640 --> 0:16:57.200 we're talking about Mike mcgallagher in particular, discussing this selective decoupling. 0:16:57.240 --> 0:17:02.000 What does he mean exactly? So we've got Mike Gallagher, 0:17:02.440 --> 0:17:06.520 the chair of a new House committee on US China 0:17:06.560 --> 0:17:11.480 relations heading over to California, meeting with Tim Cook of Apple, 0:17:12.119 --> 0:17:18.919 meeting with Bob Iger of Disney, and talking about this 0:17:19.040 --> 0:17:23.560 concept of selective decoupling. Now, the idea here is that 0:17:23.600 --> 0:17:26.560 there are some aspects of the US China relationship which 0:17:26.600 --> 0:17:30.920 are strategically important. Most here in Washington, DC, for example, 0:17:31.240 --> 0:17:34.440 don't want China to get the edge in artificial intelligence, 0:17:34.680 --> 0:17:37.480 and that's why there's now a ban in selling China 0:17:37.680 --> 0:17:42.200 the leading edge semiconductors which are required to do leading 0:17:42.280 --> 0:17:47.440 edge AI work. Other parts of the relationship, though, snapping 0:17:47.480 --> 0:17:53.920 together iPhones, watching Disney movies, cooperating on climate change, there's 0:17:53.960 --> 0:17:57.560 a desire to keep those relationships on an even keel. 0:17:58.280 --> 0:18:01.719 The big question, of course, is well, in practical terms, 0:18:02.040 --> 0:18:05.040 for a company like Apple, for a company like Disney, 0:18:05.280 --> 0:18:08.399 what does that selective decoupling look like, and is it 0:18:08.440 --> 0:18:12.440 in fact possible to have intense colastetition, intense rivalry over here, 0:18:12.840 --> 0:18:17.679 but normal relationships over there. Tomorlick of Bloomberg Economics, who, 0:18:17.720 --> 0:18:20.480 of course, Caroline spent many years in China at the 0:18:20.480 --> 0:18:23.040 heart of that economy, so knows both sides. All right. 0:18:23.240 --> 0:18:25.399 Coming up, We're going to talk Tesla, which is building 0:18:25.440 --> 0:18:29.040 a large new battery factory in China in Shanghai, further 0:18:29.119 --> 0:18:32.240 cementing China's place at the top of the global energy 0:18:32.280 --> 0:18:35.439 storage supply chain. More with that next, sickem of the 0:18:35.440 --> 0:18:38.480 world of mask. Twitter has changed its description tag for 0:18:38.680 --> 0:18:44.000 MPR to government funded Media from state affiliated media following 0:18:44.000 --> 0:18:46.719 criticism last week. You probably saw this one. The company 0:18:46.760 --> 0:18:50.640 rewrote the label on Saturday, following pushback from MPR, which 0:18:50.640 --> 0:18:54.080 hasn't used the platform itself since April fourth. MPR CEO 0:18:54.200 --> 0:18:58.760 had called the state affiliated media label quote unacceptable. This 0:18:59.000 --> 0:19:12.320 is Bloomberg time now for Talking Tech. Open AI sending 0:19:12.359 --> 0:19:14.679 its eyes in Japan. The co found Racio some altman 0:19:14.720 --> 0:19:17.240 who's here. He says, the organization is looking at opening 0:19:17.240 --> 0:19:20.560 an office there and expanding Japanese language services. After meeting 0:19:20.560 --> 0:19:22.960 with the country's prime Minister, let's move to Uber now 0:19:23.040 --> 0:19:25.320 because it's Middle East unit is selling a fifty percent 0:19:25.320 --> 0:19:28.520 stake worth four hundred million in its Kareem super app 0:19:28.560 --> 0:19:31.720 to Emirates Telecom. Now, that's an Aberdabi based firm trying 0:19:31.720 --> 0:19:35.240 to reinvent itself as a global tech investor. And Tesla 0:19:35.400 --> 0:19:38.760 will build a large new battery factory in Shanghai the 0:19:38.800 --> 0:19:42.719 ev Makawar manufacturer those megapacks, those large scale energy storage 0:19:42.760 --> 0:19:45.240 units in the new facility, adding to its factory for 0:19:45.320 --> 0:19:47.239 evs in the area, and ed you're going to talk 0:19:47.280 --> 0:19:49.800 about that more. Yeah, I've got DNA Hole who covers 0:19:49.800 --> 0:19:52.040 all things Tesla for us here in San Francisco with 0:19:52.119 --> 0:19:54.280 me on set. You and I always talk about when 0:19:54.280 --> 0:19:56.440 we're trying to report out these things. It's not a surprise. 0:19:56.520 --> 0:19:58.919 Elon Musk has always said long term, we need more 0:19:58.960 --> 0:20:01.880 giga factories all over the world. But this one's quite 0:20:01.880 --> 0:20:04.800 interesting because it's in China. Yeah, I mean, Tesla is 0:20:04.840 --> 0:20:07.280 really doubling down on its investment in China at a 0:20:07.320 --> 0:20:10.000 time when the like tensions between Washington and Beijing are 0:20:10.040 --> 0:20:12.359 kind of at an all time high. And this is 0:20:12.400 --> 0:20:15.800 not super surprising. At Investor Day, last month, Tesla talked 0:20:15.840 --> 0:20:19.120 about the energy transition. They've always made it very clear 0:20:19.119 --> 0:20:21.359 that they are more than a car company. You know, 0:20:21.440 --> 0:20:24.760 for years energy storage took a backseat to the cars, 0:20:24.840 --> 0:20:27.399 but now we're seeing Tesla talk a lot more about 0:20:27.440 --> 0:20:29.720 the energy storage products. A lot of news from tests 0:20:29.720 --> 0:20:32.520 are over holiday weekend, which often happens. They cut prices 0:20:32.520 --> 0:20:35.520 again in the United States. Where and how and why? 0:20:36.000 --> 0:20:39.240 So they changed the prices on their website late Thursday 0:20:39.280 --> 0:20:43.040 night Friday as a market holiday, cut the X and 0:20:43.040 --> 0:20:46.760 asked quite a bit, you know, shipped off some prices 0:20:46.800 --> 0:20:49.600 of the three and the why. Musk has said that 0:20:49.640 --> 0:20:52.280 they're going to chase volume over margins, and I don't 0:20:52.280 --> 0:20:54.119 know if investors are super thrilled with that, but I 0:20:54.119 --> 0:20:56.320 mean he's made it very clear that in the short term, 0:20:56.320 --> 0:20:58.760 this is the way to go. We saw prices rise 0:20:58.880 --> 0:21:01.119 up quite a bit because of the chip shortage. Now 0:21:01.160 --> 0:21:04.280 they're coming back down and he's determined to maintain that 0:21:04.320 --> 0:21:06.640