Transcripts For BLOOMBERG Bloomberg 20240704

Asia where we count down to asias major market open. Haidi apples sales disappoint overshadowing record Quarterly Services revenue. Amazon gaming after the bell as the outlook beats the street. A risk off following a slump in u. S. Stocks and bonds focus shifting to fridays jobs report for clues on the feds next steps. Donald trump pleads not guilty in a washington courtroom on charges of trying to obstruct the 2020 president ial election. It election. We are getting news when it comes to singapores ocbc reporting Second Quarter net income of 1. 71 billion sing dollars. A little shy of 1. 7 4 billion. Being declared of 40 sing cents. Net interest margin at 2. 26 , the estimate was for 2. 25 . The common equity tier one ratio sitting at 15. 4 . Noninteresting cover, one point z7 bion sing dollars, a little bit of a beat on expectations, total income at 3. 6 billion be on expectations, profit seems to be increasing based on a year ago based on what we heard from analysts. We had been expecting that rays to the interim dividend as well, but we could see more of a sequential slowdown according to Bloomberg Intelligence. The outlook really for lending to potentially look a little more sluggish in the numbers. Ocbc saying they see the loan book as being resilient, single digit loan growth there and sitting above 2. 2 with that dividend payout being seen at 50 . Kathleen, lets look at the u. S. Markets today. Stocks across the board closed a little bit lower. 2,. 3, and i see some green on the screen. Perhaps the amazon results, the big gains on ecommerce, the facilities to pick your package up and get out in a day, all of that helping to boost sentiment. The bond story, i have to touch on that because that is a big story. The fact that that 10year note is now up to 4. 18 . Its a double top 4. 09 march and july. So we see that pressure from the bond market hitting u. S. Stocks. Maybe not hitting them so much in asia, dollar index is little change. In terms of the after hours trade for apple and amazon, apple is down, iphone sales sagged. Maybe its because the 15 is coming out at the same price of the 14. Thats one of our guests said, you could see a weighing on the stock for today and the after hours trade. Amazon, look at that. Up more than 9 . It wasnt just the ecommerce part. It was in the sales rising, it was the fact that the cloud is looking so good as well. Thats a very important part of their Business Model. It looked very good in their Earnings Report as well. Haidi lets look at how that sets up in asia. Watching apple suppliers in the ecommerce names. Suppliers flag i apple in terms of the downtrend when it comes to the need for more supply, given those more sluggish numbers from the demand side. Sydney futures are looking pretty flat at the moment, about a 10th of 1 lower. Stocks across the region are set for a pretty mixed open. We had the slump in the u. S. Session both across stocks and bonds. The focus on those nonfun payrolls and whether that extends that pain trader because treasuries and global bonds as well and giving a bit more of an outlook as to where the fed and other Central Banks might head from there. We see new zealand trading a little bit off spy to 10th of 1 . Chicago nikkei futures largely unchanged. When it comes to some of these markets really onset for what has been a pretty difficult week, given a number of these markets had their worst day of trading all year earlier this week. Ftse china features up by futures up by 1 as we continue in this ongoing back and forth as to what more measures we could get in terms of stimulus and support the latest thing. Central bank would increase funding support for the private sector after meetings with leaders and executives in the property sector there. Kathleen for more on the amazon and apple results, lets bring in ed ludlow and our chief Technology Correspondent mark gurman. Lets start with amazon, quite a day for that company. For each specific business unit, the court is gone and then the outlook for the fiscal Third Quarter coming in above expectation with that guidance for sales. The ecommerce business is growing 4 in the quarter, but amazon is Getting Better at making money on the more profitable Services Side of amazon. Com, which is offering advertising and Placement Services to independent merchants. Thats a really important part of the story and it goes hand in hand with the andy jassy story who replaces jeff bezos and puts in an era of cost discipline. Its 50 but 50 billion down from 59 billion. Theres a hiring freeze in place. Thats allows them to web the storm. The consumer is being impacted by inflation particularly in north america. I hort i heard you guys allude to it, the cloud unit, which accounts for most of operating income, is stabilize, even at a time when its peers are seeing growth slowdown. Haidi when it comes to consumers being impacted, apple is clearly not immune to the industrywide slowdown. Was this surprising that investors focus on that over the Services Numbers . Clearly investors were not entirely pleased with the apple Earnings Report. One element to look at was they were expecting a similar decline in the Current Quarter, the Fourth Quarter with the new iphones are to go on sale, while you will see an acceleration on the phones and Services Side, you will see a big deceleration that will probably lead to a 1 overall decline yet again. Kathleen can we move on to a little bit more about apple because this was if you look at how much money they make, its funny because they miss some things and things have come down. Assists a one quarter, lets wait for the new iphone, china look good, or is this something more lasting . This is not a one quarter situation, this is the Third Quarter in a row where apple has had annual declines and that was the First Time Since 2016 where they have declined on an annual basis three quarters in a row in the Current Quarter, q4, they will decline yet again. That will be four quarters in a row of annual declines. One was the last time that happen, 2001, its been over two decades since that happened. Something going on as longlasting. They tried to explain it away with the various comparisons. They said the ipad had a 20 decline because of a tough comparison to an ipad air launch. The launch came out at the beginning of the march, 2020 two. Blaming the decline on the ipad air is pretty disingenuous. Im pretty sure the eye pad decline is because there hasnt been major upgrades in a while. The ipad pro hasnt had a meaningful update in five years since it was redefined in 2018. The ipad air, ipad minis. Clearly the new revamp entrylevel is a little bit too expensive for some peoples likings. I expect price to come down on that in the next year as they phase out the older design of the entrylevel air entrylevel ipad. The mac, not a big revamp in over a year. The 15 inch mac the care is whats in the pipeline for some time. The chip ipo writing about for quite some time, i anticipate them to grow back to growth in q1. From the announcement today, the q3 announcement today because of the iphone 15 sales and an easy comp yearoveryear because of the supply chain issues they made in the holiday. Haidi india was a bright spot, we didnt get much on ai products or investment, so this got really overshadowed. Services was really strong, services have been firing on all cylinders for several quarters going back a few years now, so if you are used to services outperforming, its eventually going to become old news, i think thats what happened in terms of investor reaction for services. They would really only care fit underperformed. India he shouted out as one of the emerging markets to do. Trader china came in a 1. 2 billion yearoveryear as an increase over the year. So that was good. The declines we saw were particularly in japan, the rest of asia pacific. Thats like australia, new zealand and such and america is down a couple billion. China is where a lot of investors are looking in those were two bright spots in terms of geos. I think that was an ok quarter, all things considered. Kathleen for the longest time, people just default to big tech stocks. People are wondering how much further the s p 500 rally goes. When you step back and look at amazon and apple, whats the picture thats painted for investors. I was listening to mark, just have to take it in, but the story year to been about apple and amazon posting big gains. 56 for amazon. A lot of investors we get on Bloomberg Television question the valuation in what sense the stocks higher. They have strong cash balance sheets. There not immune to macro headwinds. Its interesting that mark notes quite clearly, apple puts forward the foreign currency impact each quarter. I think they were noting going into the september quarter, which for them, is the fiscal fourth, that there will be consideration around impact that amazon is more muted. What we are all asking ourselves going into the second half of this year is still on the consumer side for me. You see the overall theme of this earnings time the last 10 days. Investors putting aside the hype of aia and trading on the fundamentals of the business. Amazons fundamentals were strong, apples were not but with guidance that they would accelerate into the fiscal Fourth Quarter. So thats really the way to watch. Its boring but its good macro stuff or how its playing out for a Global Business that sells on dollar terms in its natural markets. Haidi our Bloomberg Technology cohost ed ludlow and mark gurman. All things apple and amazon. Franklin templeton will tell us why traders should still be wary of global inflation despite signs of easing, price pressures will get better. That Market Outlook next. This is bloomberg. The chase ink business premier card is made for people like sam, who make everyday products, designed smarter. Like a smart coffee grinder, that orders fresh beans for you. Oh, genius for more breakthroughs like that i need a breakthrough card. Like ours with 2. 5 cash back on purchases of 5,000 or more. Plus unlimited 2 cash back on all other purchases. And with greater spending potential, sam can keep making smart ideas a brilliant reality the ink business premier card from chase for business. Make more of whats yours. 76 of 23andme Health Customers surveyed threported taking healthierrd from chactions. Business. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. Financial conditions will and are getting more challenging, they are getting more challenging in england and parts of europe, they will get more challenging in Certain Industries in the u. S. That is how we think about the world in 2024 and 2025. Along with the evolution of how capital gets provided, certainly the higher cost of capital and tougher financial conditions are what we would expect as a base case. Kathleen Apollo Global management copresident giving us his outlook for financial conditions. We are happy to bring in our next guest right here in the studio, seeing bright Senior Vice President Portfolio Manager and investment strategist at Franklin Templeton investments. Big picture, fed, peak rates, how much more to they go, inflation coming down. Last year jay powell gave a speech on, basically we will have to be hawkish to bring rates down. As he goes more global in his speech, what is the message for a investors in the u. S. And around the world going to be . What we want to see from them as they continue to be datadependent because that has been the message of the fed, it has been adopted by the ecb as well. That data dependency gives the market a lot of certainty that the fed is actually going to be adaptive, and youve really seen them do that. You have the hawkish tone last year, but hes also been very, very clear that inflation is a metric they been watching, but we have to remind ourselves its not just a single mandate. They have the employment mandate is well. Thats why we all continue to watch the inflation number and the jobs data. Kathleen what does this mean for other Central Banks and therefore, other economies and markets . So much focus on the bank of japan, this was a yield curve tweak, its not really a policy change yet, but if u. S. Rates are starting to peek, if the fed is closer to the end, what will that mean for the yen, what will that mean for bonds and investors . You need to understand the japanese market and we spend a lot of time over the last year digging deep in understanding that market and i would say that slow and steady and gradual are the words we would use to describe japan. I think that applies in the bond market there and in terms of the pace, which we expect this adjustment, and it applies in terms of how quickly the economy will change. We are seeing a lot of indications that theres real change happening on the ground in japan. Haidi when you take a look at whats going on in treasuries and global bonds, we have this chart, which is one way to look at the surgeon volatility in the shrinking when it comes to broader you liquidity conditions. Not to mention we seen the 5 30 curve breaking above zero, and just kind of a bit of a reminisce it when it comes to the thirtyyear route to what we saw in october to third 2022 when we saw the 75 basis points worth of hikes twice. How does this potentially built implications for other Asset Classes as well . Im in the camp of giving the fed a big pat on the back saying congratulations for having a walk to rope we were in so sure they could walk. The economy has not fallen into recession despite the number of rate hikes. They have been working very hard to control inflation and we are starting to see signs of that happening. But lets talk about equity markets, bond markets inform the equity markets, but what we have been looking at is the differences in multiples across the various markets. You pick the s p, its 17 times. Japan is trading at 17 times. Then you have europe trading at a lower multiple around 12. You then need to put this on the context and we look at the relative to those multiples, the u. S. Is our alltime highs, its close to 17. You look at japan and its a single digit rov. You can pay the same multiple of earnings but you have much different trajectories in terms of the runway for growth in those earnings. Haidi what about the runway for growth when it comes to this potentially structurally normal out of china . Do you think theres having a Better Direct and indirect exposure to opportunities . Most companies are Global Players that have developed strength both in the United States, in europe and interestingly, they have really strong franchises in china as well. The reopening trade was not as strong as everyone anticipated, so youve got some level of pull back on the rate of Earnings Growth in various different markets, but we have been positive on the fact that china is back, and we still see a lot of investment opportunities. Most of our exposure to Chinese Markets happens to be through those global franchises where we get the ability to get that portfolio effect so they have franchises in the u. S. And in europe as well as in china. Kathleen is your bet that we are close to peak inflation, it could happen in brazil, they have come down a lot and they are moving fast, and emergingmarket, and if you are trying to guide investors, the best opportunity going into 2024, where is that or where are they . The best opportunities come out of japan because expectations are so low. I talked about that valuation being in line with the s p, but in r. O. E. , which is half. And if you look at the Tokyo Stock Exchange has sent letters to all of the Companies Trading at less than a one time price look to book multiple. If you look at the japan stock exchange, invested in technology which will allow companies within 24 hours to be able to post english translations of their conference calls. So they are really trying to make their market investable and they are trying to address the concerns that we as western investors have. Kathleen its an exciting time for japan. Emerging markets were a great trade, what are they now . Are there emerging markets in any part of the world you are focused on for investment . Not at the moment are we directly investing in emerging markets. There has been this some massive develop market, i hate to go back to japan again, but it just such a large part of the index and a has been ignored for 35 years. And we just think that this time is different. Kathleen lets keep our fingers crossed for japanese investors. Senior Vice President , Portfolio Manager investment strategist at Franklin Templeton investments. Get a round up of the stories you need to know to get your day going in todays edition of daybreak. Terminal subscribers can find it on dayb and its available in the bloomberg anywhere app. You can customize your settings to get the news on the industries and assets that you most care about. This is bloomberg. The first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com fabulous surroundings. But everyones looking at their phones for Financial Insights from merrill. Is he hailing a ride to the concert hall . No. Hes making sure his portfolio and retirement plans work in harmony. They want to adopt a child and build a new home. So theyre talking numbers with their merrill adviser. Shes not researching her next role. Shes learning how to handle market ups and downs without the drama. Personalized advice so impressive your money never stops working for you with merrill. A bank of america company. Kathleen former President Donald Trump lead and not guilty to charges of conspiring to obstruct the 2020 president ial election. Kailey leinz has the details from washington. Former President Donald Trump was arraigned for a third time on a rainy thursday afternoon here in washington, d. C. Where he pleaded not guilty to four criminal counts related to efforts to overturn the results of the 2020 election. Those counts including conspiracy to defraud the u. S. And conspiracy against rights. At the hearing the magistrate judge set the date for the next hearing, the first before the judge will oversee the case. That day is set for august 28 at 10 00 a. M. Eastern time. The former president will not be required to appear, thats when the judge will set the date for trumps trial in this case. As for what this means for the former president , his Ongoing Campaign to seek the white house in 2024, after he left this he did say this is persecution of a political opponent. In has we have stash as we have seen in his prior to indictments, the charges brought against them hat gives him the opportunity to boost in the polls. The hush money a to the pornography star stormy daniels, is pulling has gone up since he was indicted the first time federally and for the related to the classified documents case. We will wait and see how it affects his campaign as he sees trial dates in the primary season of 2024 and mounting legal bills as he fights all these different challenges. Kathleen lets look at some of the major Market Movers in currencies today, im going right to the brazilian riyal. The cut their basis points yesterday. Theyve got inflation down sharply over the past few months and they had more 50 basis point cuts. There currency against the dollar down more than 2 , worstperforming currency in the world. Theyd given back a big chunk of that. Likewise, the british is up in the opposite direction because its opening the door to more hikes in the future. Thats continuing to boost the currency now. Japanese yen looking like its a little bit weaker dollar a little stronger. Theres a big question mark over the yen over japanese bond yields as the tweaking of the yield curve ban has forced the boj to buy bonds. More of that today as the trading week comes to a close. Plenty more to come on daybreak asia. This is bloomberg. Hi, im jason and ive lost 202 pounds on golo. So the first time i ever seen a golo advertisement, i said, yeah, whatever. Theres no way this works like this. And threw it to the side. A couple weeks later, i seen it again after getting not so pleasant news from my physician. I was 424 pounds, and my doctor was recommending weight loss surgery. To avoid the surgery, i had to make a change. So i decided to go with golo and its changed my life. When i first started golo and taking release, my cravings, they went away. And i was so surprised. You feel that your body is working and functioning the way it should be and you feel energized. Golo has improved my life in so many ways. Im able to stand and actually make dinner. Im able to clean my house. Im able to do just simple tasks that a lot of people call simple, but when youre extremely heavy theyre not so simple. Golo is real and when you take release and follow the plan, it works. I dont see us at a hundred dollars yearend. May be 86 on the high side and we just throughout a report that its being optimistic. Behaving high 70s, low 80s is probably where we are going to be. Haidi Continental Resources chairman on oil markets. Take a look at where were sitting when it comes to wci at the moment. We are seeing crude a little that higher at 3 10 of 1 . We have seen that steady and sessions of gains when it comes to crew prices and societies extended that oil output cut, hinting at a deeper extended reduction as well. We have seen those previous losses being raised in it comes to wci, that uniroyal outlook reduction being pushed into september, potentially more deeper cuts on the way there. We also saw gasoline futures 70 little lower for the fourth straight day. U. S. Demand informing for a fourth week there. Lets get more when it comes to the oil rally, but before we get to that, we do have lets get you to the latest when it comes to what we are expecting from oil markets Going Forward. Lets bring in the managing director at haitong international. Scott, great to have you with us. Is this sort of a structural recovery you see as a result of the supply in prices . I think this year the oil price would really be driven around demand. That hasnt really changed, and although weve had a sluggish first half. If you look at leading indicators like refining margins, in asia they are actually up 25 quarter on quarter. And you wouldve thought maybe that says we are in the driving season here in the u. S. That couldve been driven by gasoline, but if you look, diesel cracks, the difference between diesel prices and crude oil are actually up double digits. That shows underlying industrial activity might be as bad might not be as bad Going Forward as the market thinks and the demand is sort of reasonably robust. Haidi not so much when it comes to overall demand out of china. Its been flagged by how much lower demand is expected to come through for the rest of the year. Will that have a meaningful difference when it comes to the big sure given expectations for china demand will be managed anyway . I think there was a lot of comments around double digit Oil Demand Growth in china this year , and that may well be near that case. They recently did an energy torture china talking to refiners there. They arent quite positive that they seen a bit of a recovery from april, may onwards. We will see that when the Big Energy Companies in china report later on this month. Kathleen when you look at whats going to happen, when you look at Companies Like halliburton, i know you follow them closely, what do you see happening with them . It seems like demand is holding up, china may turn around and do better. At the same time we have Central Banks look at the fed, they could hike more. They may not be at peak rates but that could hit the consumer in other countries as well. How does that shape up for a company like halliburton . The Oil Service Business in the oil business is multiyear. So from the three big u. S. Service Companies Reporting in the comments from management, i think they reiterated we are in the double spending growth cycle not just for this year, for next year, so you had price signals and oil last year, and therefore, the industry is actually spending, but of course investment in the projects are multiyears. So we are still positive on the all service cycle. We started it last year. Its not easy for us to say we are anywhere at the peak, it could be next year or even the year after. Kathleen theres so much focus on green, anything that has to do with oil seems to be immediately in question. You are looking very closely at that in the cycle there because some have argued that you cant go from energy driven by some form of oil or Oil Derivative or gas, you have to have some. With the outlook, is the fact that you cant go green immediately going to continue to help that trade . I think there is some transition. I think a lot of the Big Energy Companies are looking at natural gas and shell is a good example of this as a driver this decade, and that can be a transition fuel. We are positive on the outlook for lng, we see in the longer term, potentially at 10 or 20 supply deficit at the end of this decade, certainly the way demand is recovering. I know spot prices are weak, but if you look, the industry is definitely taking more sanctioning on projects, but they are not going to come to the market for another few years. We are positive on lng prices in the longer term. Haidi do you still like china oil Services Despite the weakness on a macro level . China all Services Trade i could fill you versus the global peers. Certainly some of them are for just as good margins, and you would expect around the seasonal time of 2q and 3q for China Services to when you do a lot of your drilling. So yes, we certainly prefer a lot of the all China Service names. Haidi great to have you with us, managing director at haitong international. We have breaking newss when it comes to the deal, the chilean consumer and Consumer Commission has decided to not grant authorizations for the Banking Group to require, saying they are not satisfy the acquisition is not likely to substantially lessen competition in the supply of home loans nationally,s multimedia medium in the thats according to the eight triple c deputy chair in a statement. That deal for the banking being blocked by the australian regulator, we will continue to follow that. Postal payout forces them to go into the second half numbers and that really puts into question with the regulator here in australia blocking the deal for the proposed purchase on their banking arm. Kathleen lets move on to bank of america ceo saying proposed new Capital Requirements for the u. S. Biggest lenders could ship more financial activity outside of wellregulated sectors. We spoke exclusively to Brian Moynihan who told us it would make you less competitive globally. I think if you step back, this industry has well capitalized. Its wellmanaged, its wellregulated, you had success of fed chairs and people working in the supervision of vice chair over the years who say the capital is adequate industry and is wellmanaged. Banks will fail. They fail throughout history, that happens. But since the financial crisis, more people it was in. If you get the cap regulations of Banking Systems to tighten, you put stuff back outside and thats a concern. One given set of rules will live with it. Bank of america will adjust its Business Model to make it work. Whats interesting is its Competitive Position in the United States versus others. This makes the Banking Industry and all banks less competitive than foreign banks and Midsize Companies participating in single and supply chains in those countries. Thats more of a trade question and a balance of power question. Im surprised by the amount of dissent. April working on Federal Reserve stuff for my whole career. I was just surprised that the amount of debate that shows you mortgage loans, whether its tax benefits or treatment for Clean Energy Investments are whether its basic training training and things like that. Theres a lot that has to go over to get the rules right. They may even run the governors themselves about what the right answer is. David what is the problem thats being addressed . Thats what i dont understand. You talk about the crisis back in march, im not sure this addresses that. Thats the debate. Strong regulation is important. Rapid growth in banks tends to come from things that turn out not to be so interesting after the fact. Thats the thing, they need to come to a common agreement across the world. We are just supplying it with much more rigidity and requirements. If you look at the largest bank in france, u. K. In germany, they have half the Capital Requirements. That gets into the competitive question. I think people have to look at it seriously and relative to what we are trying to do, we want the Strongest Bank industry. Better returns and better things. Our multiples are half the last of the s p multiples. If the capital demands dont stop, we arent sure we can continue. Theres a counter veil that people have to Pay Attention to in every hundred basis point of capital is 150 billion less loans bank of america can do. This cant be done in other places. Those companies are that size. Kathleen thats Brian Moynihan speaking exclusively to david westin. Plenty more to come on daybreak asia, this is bloomberg. Reported taking healthier actions. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. Sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh the chase ink business premier card is made for people like sam, who make everyday products, designed smarter. Like a smart coffee grinder, that orders fresh beans for you. Oh, genius for more breakthroughs like that i need a breakthrough card. Like ours with 2. 5 cash back on purchases of 5,000 or more. Plus unlimited 2 cash back on all other purchases. And with greater spending potential, sam can keep making smart ideas a brilliant reality the ink business premier card from chase for business. Make more of whats yours. Kathleen shares in south korea into that diet who in trading opens after its secondquarter profit exceeded analyst estimates. Lets get more details from our asia stocks reporter joining us now from seoul. Profit beat, its a tough time for a lot of companies, but they are doing well. What drove this profit outperformance . There seems to have been at least three key reasons behind this solid performance, which was a beat of expectations. Number one, it looks Like Neighbors acquisition of u. S. Secondhand fashion marketplace pooch mark has been paying off. Its an interesting turn of event because i remember at the end of last year when it announced it is acquiring postmark for more than one million u. S. One billion u. S. Dollars, the share price plunged at investors reacted with nervousness. Six months later we are seeing is actually shoring up and helping the reverse bottom line. The second reason behind this strong earnings may be that Ecommerce Company is increasingly becoming an importantly large player in ecommerce space in south korea and the demand also helps. The last reason is content in business related to on line comics. Haidi 26 , is there a downside given the microeconomic weakness . There is definitely Downside Risk but what investors seem to be focusing on now is the upcoming launch of the campaigns generated Artificial Intelligence service, and thats probably behind the Strong Performance of the neighbors share price recently. It looks like the head of the ai race, which hasnt given them exact timing that generated ai model where neighbors say it is going to discloses on august 24 and the expectation seems to be driving the share price rally we have seen lately. This is interesting because it has been moving in relations for a while, but now we see those share price running ahead of her cow and thats probably for the upcoming ai Service Launch due later this month. Haidi our asia stocks reporter joining us from seoul. We will be watching as we get into the start of trading in australia and on the back of this denial by the australian regulators. They have proposed deal to buy the banking arm. On the back of competition concerns we are hearing from the treasury saying the respect for dependents in terms of decision has plans to comment further when it comes to this proposal. We have already seen them delay their decision on the 4. 9 billion aussie dollar merger to have a little bit more time to make that decision, which has now come out through. This still has the support of the queensland government, but has come under increasing criticism for rivals including adelaide banks. They are saying that the deal were hurt competition in the market will become better off as it became part of its operation. In terms of some of the issues signed by the a triple see, they were concerned about the competition in the supply of hormones, as well as the provision of blending to smes incurring queensland and the Agricultural Center in that state as well. Kathleen the manufacturing giant became a symbol of corporate japans decline when it posted the biggest loss ever. But the company has reinvented itself, focusing on growth, globalization and shares at an alltime high. They told us exclusively about their plans to put ai at the center of their Business Model. Over the past 10 years we have continued Structural Reforms by revamping our portfolio and moving businesses in and out. We also have a portfolio in green and digital areas with huge growth potential. I think it will continue to grow organically from now on. I think the stock price reflects Investor Expectations of our growth based on this portfolio. Many people seem to not really understand what its about. Can you help us understand what the concept behind it is and how they are planning to use it Going Forward . It is a business framework used when customers want to transform and improve their businesses using digital technologies. The docking provides various capabilities. For example, we have the Digital Engineering Company called global logic. We have hitachi energy, a power grid company. Both of these companies will solve all kinds of problems hates by utility companies. It combines digital with different themes such as green. Could you explain what is the overall strategy when it comes to ai related technology and how big the position is in the next five to 10 years within the companys business . Ai has been used to solve customer problems and has produced results. Generative ai is making extreme rapid progress. The way to improve is dramatically a race the engineering labor. Software engineering is very important, so raising productivity will directly lead to improving our profit margins. Five to 10 years from now i think that Technology Focused on generative ai will really become the core of hitachi. What is your macroeconomic view when it comes to the Central Banks Monetary Policy and inflation . The pandemic is finally over in japan and raised wages are being raised. We are on the trajectory of growth. Central bank will continue with these policy for a a while. We shouldnt pay too much attention to centralbank moves but we will go ahead and invest in areas where we see growth coming. Its also my opinion that we should go ahead without waiting. I have high hopes that japan will finally break out of the deflationary spiral. Haidi hitachis ceo speaking exclusively to bloomberg. Japan is not through its earnings season with results out from 118 companies. Of those nearly two thirds have been profit expectations. Seeing more than 7 after announcing a buyback of 16. 7 percent of shares for ¥200 billion. Investors are treating this earnings season with a portion of a month into the Third Quarter. Nikkei is down 2. 8 reflecting on calling optimism after that world beating rally. More analysis on japan to come and much more on daybreak asia. This is bloomberg. upbeat music awww. Awww. Awww. Nope. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. Haidi hopes for improving. More economic stimulus from china could help asian stocks shake off their poor season record. Lets bring in are seeing asian stock reporter who joins us out of tokyo. Asian stocks often do quite poorly in august and september, should investors be waiting for a better entry point . Good morning. That is the question you should be asking right now. It is hard to ignore, asian stocks have done very poorly in september over the past 20 years. Having said that, theres a reason to be optimistic this time. The Investor Sentiment index based on the flows, they became positive on risk assets for the first time in four months this week. And that is a good sign because they are basically falling on longterm investors of investment flow. When they change the stance, that tense allows for a long time. Kathleen why are investors becoming more pause on risk assets . Theres a lot of different markets we are talking about. A guest on our show earlier, who was hugely positive on the japanese stock market, is there a common factor driving this are Different Things in different places . By far, the most important thing is u. S. Recession is seen as less likely than before. I think the bulk of america would basically drop the forecast of the u. S. Recession, and that is a very important thing for asian markets because if you do not expect a global slowdown, then asian equities look very cheap at the moment. Their valuation is about the historical average, and if you compare that to u. S. Stocks, treated at the very high evaluation, suddenly asia looks very attractive. Haidi seeing asia stock reporter with some good news for the outlook. Lets look at some of the stocks we are watching when trade opens injury appear japan and australia in five minutes time. Apple suppliers front and center. We could see weakness with lower than anticipated quarterly sales. Decline of the Third Quarter for the iphone. Watching the alpine. Australian competition has decided not to grant merger authorization. Competition concerns, those are the ones to watch. Coming up in the next hour we will speak to Morgan Stanleys chief asia strategist the telus by they should be taken profits on china now, plus a former World Bank Country director for china will be joining us to talk through. What options are left for the weak economic recovery to be supported . Market opens in sydney, tokyo and seoul are next. This is bloomberg. Sleepovers just arent what they used to be. A house full of screens . Basically no hiccups . You guys have no idea how good youve got it. How old are you . Like, 80 . Back in my day, it was scary stories and flashlights. We dont get scared. Oh, really . Mom can see your search history. Thats what i thought. Introducing the next generation 10g network. Only from xfinity. Haidi this is daybreak asia. We are counting down to the asian market openings. We are on the watch for potentially a third time depending on what happens with bond yields. So much to focus on with what has been a busy week. Tech earnings tell us two stories for apple and amazon. That will weigh into how we see the asian session. Kathleen treasuries, how will they move ahead of the big jobs report . How will jay powell react . All of these things will be weighed opens. Haidi lets get you straight to the market open. We have seen a little bit of a pullback after the world beating rally for japanese equities. Whether it is investors taking a breather given the rest of the broader risk environment, it is looking tenuous at the moment. When it comes to japan, earnings have not looked bad. We have gotten halfway through the session. When it comes to a lot of the tech heavy engagements in seoul, tokyo and when taiwan opens letter in the day, watching the applesupplier stocks, we could see witness. This is the Third Straight quarter of weakness we have seen. That overshadowed what was very Robust Services revenue for another quarter. The dollar saw pretty moderate gains. Coming off those gains of. 3 when it comes to the bloomberg dollar index or holding pretty steady. Look at korean stocks. The first year of trading. Kospi up. 2 . We had the Korea Exchange escalating a warning on two specific stocks that spiked in recent days. There have been concerns over a claim of a Semi Conductor breakthrough. There is vulnerability and potential volatility with the stocks that have driven a part of the mania recently. Lets take a look at the apple suppliers. It could go either way given that we have seen the weakness in demand. Samsung electronics wavering between flat and modest gains. Alpine seeing a bit more weakness as the sluggish iphone sales overshadow services growth. An optimistic view on how the india market was going. Lets take a look at the australian session as we get into the staggered trading about 2. 5 minutes into the start. About. 1 higher when it comes to broader markets. Watching the aussie Dollar Holding Steady at aussie bonds facing a shrinking deal premium. Payrolls will be key going into how the premium gap continues to move. One stock we are watching, anz, 3. 2 billion deal to try to buy suncor Banks Banking arm. The australian competition and Consumer Commission deciding not to grant merger authorization for the acquisition. They reached the deal in july of last year to buy the queens landbased companys banking operations. Now very much in question. Kathleen i would say it looks very much in question and that is an understatement. No question markets around the world and traders around the world are watching the market. The 10 year up to 4. 18 . It traded as high as 4. 19 . When you want to look at technicals, what you find is the 10year note has topped a double top at 4. 09 . This is something signaling that perhaps after get the jobs report tomorrow if it comes in strongerthanexpected, what will be with the treasury market . You have the green for the short end, it is a long end that we will continue to see increaseds in yields. It reverberates through all bond markets. How can i forget oil . It had a big move today. Closing up more than 2 . The opecplus has said they will extend their output cut through september and they even indicated that might extend longer. This is what is behind the oil move. Another question, is this link to recession or dover session . Recession or no recession . If jobs look good, the need to boost the bond market could fade. Haidi in terms of things that need a boost, the chinese economy comes to mind. Morgan stanley has cut its rating on stocks saying profit have been spurred by government stimulus pledges. Lets bring in jonathan garner. Does this suggest that you see recent gains will have no longevity or this is the turning point in terms of where we go from here . Jonathan i think if you go back to last october, we had a trough in the equity markets and china trough a little bit after some of the others like taiwan and korea. We are up a healthy percentage for most asian markets. Off the bottom, taiwan, who we also downgraded, up 40 . China, up 30 . When we look at the earning revisions we think it is time to adjust the portfolios. We took down china, taiwan and australia to an outright underweight and put india as a major overweight, which is the market we are most excited about right now. Haidi do you expect further inflows to a market like india at the expense of china . I guess addition or alternative when it comes to the growth plate . Jonathan there is an interesting pattern to flows in asia. The standout winner is japan with 70 billion u. S. Dollars of inflow. For india versus china, we are getting some profound changes in performance relative that we have not seen in the prior two decades. India began to outperform china 18 months ago on the equity side and that has to do with superior earnings performance in dollar terms. More interesting is the currency , the indian rupee, is strengthening against the chinese portfolio flows and equity flows, also fbi and private equity. Kathleen in terms of this china versus india argument, to what extent has Investor Confidence and therefore the ability for china to recover and keep growing and maybe not have lets take our profits how much is that the governments fault and to what extent does the government have the power to change that now . Jonathan equities by their essence are driven on return on equity. Return on equity has been falling in china for 10 to 12 years. That is an interesting development. Very different from the previous period. It has to do with individual performance. Economic growth in china has reduce structurally. While the nominal gdp growth is healthy and japan or india, it is really cry really quite weak in china. The core inflation in china is zero. Sustained Earnings Growth has become impaired in china. Kathleen a lot of people are saying japan is a good place to invest. How much is being driven by the kinds of growth policies, the kind of steps that have been taken in india because there was doubt in india for a long time that investors can count on to continue to create this landscape for companies to grow . Jonathan india has always been demographically advantest with a young population. It is the classic em story of household formation, industrialization. What was missing until the last 10 years or so is structural improvement in the budget and a change in the mix of Government Spending to deliver on infrastructure. I was in india in june and you can see the transformation going on in indias big cities. That infrastructure allows private investment and loud multinationals locating a plant in india because the power system is more reliable. The ports, the road system. That Human Capital element, the labor supply has always been there. Haidi do stay with us. We will take a quick break but we want to hear more from you jonathan garner of morgan stanley, staying with us. Apple posting its Third Straight quarter of declining sales among an industrywide slump for smartphone demand. We look at the prospects for a turnaround, next. This is bloomberg. 23Health Customers surveyed reported taking healthier actions. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. Fabulous surroundings. But everyones looking at their phones for Financial Insights from merrill. Is he hailing a ride to the concert hall . No. Hes making sure his portfolio and retirement plans work in harmony. They want to adopt a child and build a new home. So theyre talking numbers with their merrill adviser. Shes not researching her next role. Shes learning how to handle market ups and downs without the drama. Personalized advice so impressive your money never stops working for you with merrill. A bank of america company. Lets take a look at apple suppliers. Third quarter iphone sales became below estimate. There is a cloud. Samsung is moving into the green a little bit. May be people taking a second look and looking further down the road. Alpine losing about. 5 . We want to dig deeper into this because if you look at apple suppliers as Companies Want to invest in got to know more about not just what has happened to apple and the latest quarter but what will happen next. Lets bring in mark gurman. I want to come back to something you said earlier. We are seeing the disappointment in key products they are selling, etc. , you say this is not just a quarter, it has been going on for a while. Where does it go next . Mark this is the Third Quarter in a row that you have seen an annual decline. That will continue. The Fourth Quarter will also be an annual decline based on the comments they made on the earning call today. They expect performance yearoveryear deceleration to be the same so we should expect 1 to 2 annual decline for the Fourth Quarter. Three quarters and around in terms of declines for apple have not happen since 2016. That has been seven years. Take a look for four quarters in a row, 2001. Over 20 years since this happened for apple in the past. The good news, looking even longer term ahead, they have an easy comparison for the first quarter, for the holiday quarter, the december quarter for 2023. Last year, they had significant iphone 14 and iphone 14 pro shortages. We all believe it will not be the case this time around for the iphone 15 pro production. That means there is unlikely to be a repeat and apple will have an easy growth comparison for the holiday quarter. Given the declines over the course of 2023, likely to see a little bit of a bounce back year across 2024. Haidi are we seeing investors becoming immune to how good the Services Numbers are . Mark yeah, i think it has gotten a little lost because investors and analysts see it as, of course they will set quarterly record after quarterly record for the Services Business. The cool part about it for apple is they are hitting all the records for Services Without doing anything new. The Services Business in terms of the Product Offerings that are somewhat stagnant so they are not generating new but they are still making money. It will be great once they start rolling out new types of services over time. Haidi bloombergs chief correspondent, mark gurman. A Strong Performance from its main ecommerce business. Is this revenue the Current Quarter to 143 billion. The average projection was just over 138 billion. Still with us is jonathan garner, chief asian market analyst with morgan stanley. One thing that stood out was how well investors reacted to the capital spending. Does it worry you, the uncertainty, when it comes to cash across a lot of tech or tech adjacent stocks and Companies Across asia when it comes to how much they are willing to put into Ai Investment at this point . Jonathan we are certainly very excited about the ai thematic. As i mentioned on the earlier segment, if you take taiwan, the market most exposed to that we have had some pretty spectacular gains at the stock level. For that index overall, we are within 4 or so of our target price right now. We recommended taking profits here. There will be a lot of sifting and sorting that goes out on that thematic but it has been and race by it has been embraced in the last three or four months. Haidi why dont you like australian stocks . We saw them underperforming even as u. S. Banks were going through an earlier crisis. By and large a lot of these sectors are sound. We are seeing inflows into aussie funds. What is your argument for that lack of preference . Jonathan again, it comes down to the basics of equities investing. It is the earnings outlook. You can divide the market into two. On that the market on the domestic side, it affects financials and you about a significant increase in Interest Rates. On the export earnings side as we touched on earlier we are not optimistic about a recovery in chinese Property Construction and that really impacts earnings. When we are bullish on segments like copper, that iron ore is a problem for the second half. We expect the relative earnings profile for australia Going Forward will not be that strong. You are right, the funds are very large and significant domestically and globally, so that means australia is not a highly volatile market in that sense but it does have an above average correlation to the s p 500, as does taiwan. We are thinking about all these different factors when we make these calls. Kathleen you are maintaining you are overweight on korea. Why, and how optimistic are you . How far could this go . Jonathan in an essence, it is less priced in two korea in to korea. Korea is only slightly above longrun average valuations and has more of quality value characteristic as a market if we think about style factors. That is relatively attractive to us, as well. Kathleen i am also curious, big picture, in terms of u. S. , we had a guest on saying, be of a says no u. S. Recession but that is far from a done deal. Is that a risk to some of your positive calls on asia or will a country like india be immune to that if there is a slow down . Jonathan india has a very low beat to the s p and that is testament to its domestic demand drivers. That certainly is relevant. This year has been about pricing out the prospect for a u. S. Recession in 2023. Markets in our view were overly concerned about that last october and that is why we upgraded. As we go forward to 2024 there is still a high degree of uncertainty over how the long and variable lags will be for Monetary Policy. Monetary policy is still tightening across many of the advanced economies and we do not know what the eventual impact will be on growth. Haidi i want to end our conveation on the same topic that we started, the focus on china. What would you need to see in terms of policy announcements and followthrough to change your view on chinese equities . Jonathan i mentioned the core thing is just how weak nominal gdp growth is and the earnings profile. Those valuations are very cheap. You are trying to get that Growth Engine back again and that is immensely challenging. We have a problem in the labor market. We have the debt that is intertwined and there needs to be a more holistic solution. On the external side with the framework, as india is significantly advantaged, china is disadvantaged in that framework, in particular given the hegemonic rivalry between the u. S. And china. It is a long road to climb to get china back in terms of actually delivering sustained Earnings Growth that will be capable of pulling Foreign Investment back into the Office Environment on a structural basis. Haidi jonathan garner, great to have you with us. More to come on daybreak asia. This is bloomberg. Or filing returns. Avalarahhh ahhh upbeat music woah. 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It is not a surprise that we have had to wait for this to happen. We see the evidence now. That gives us a basis for what will happen. What we are really saying is, look, it will have to remain strict to have the effect of bringing inflation down. Particularly next year. This year we will see inflation come down rapidly. A lot of that is the unwinding of things that happened last year. It is the last mile, if you like, i use this term loosely, it is the last mile where policy is really doing the work. We will have to say policy stay restrictive. The question is, for how long . Right, that is a question. We do not know what the moment so that is why we say sufficiently long. The reason is that i think because i am much more confident now that it is all a downslope. People want to say that and believe it. It gets built into peoples expectations and price setting, wage setting. Governor, do you believe it . Could you said you are victorious now . No one is ever victorious. It would be far too soon to say that. What i see is much more solid evidence that it is coming down. The number we have had a couple weeks ago, we have been waiting for the number because the number is a puzzle to us in the Inflation Numbers that did not seem to reconcile with what we were hearing and this gives us more confidence. Why put the wording in the guidance . What are you worried about . There is a path in the market where rates go up and come down. There is another path we laid out today, what happens if you keep rates where they are today . Both could return inflation to target. What we wanted to say is, look, before we get to the point where we can really say with confidence this is getting behind us, we can start to maybe bring rates down, we have to see a lot more evidence so policy will have to stay restrictive for a sufficient period of time to get to that point. Is this the new normal in terms of Interest Rates . The current level, more or less. Will we ever go back to what we had in the last 10 years . I would be surprised. Something would have to happen that we do not know about. If you do all the work that is done with rates, where might the rates settle . That would suggest it is lower than it is today but nowhere near down to where we were post financial crisis. That is uncertain and we are not yet there to the point where we can start reaching. Haidi the central bank said it will increase funding support for the private sector after a meeting with executives and property developers. This is adding to a long list of incremental announcements, policy tweaks and changes we have heard. Is this meaningful . Jill we are looking into what the details are but we know the head of the the new governor met with developers and talk through how the central bank would help them meet the reasonable financing needs. We have for that from the central bank before but meaningful in the context of a statement that came out a couple weeks ago. Including some progrowth measures, an idea that would be assistance for the property sector. They want to expand a support tool for private companies and meet their reasonable finance needs. We do not know exactly what it means but last year financial regulators widened the program to some 35 billion or so. There is some ability for quite a bit of help on the part of the government trying to help these developers. This is all part of the ongoing incremental push of new progrowth measures. Nothing massive in scope but that trickle of statement after statement indicating more help for the economy. Kathleen i think if i were a chinese official i would say it is very targeted. It is meant to be more effective than just throwing a ton of money and hoping that turns things around. Jill yes, i think that is definitely true. At this point, the Chinese Government knows they cannot throw out tons and tons of stimulus. There are various issues facing the economy. We have talked extensively that local governments have incredible debt burdens so that makes fiscal stimulus on a largescale more difficult to implement. I will point out that in the statement they talked about dressing some of the debts risks. There is some chatter in china about the idea of helping local governments resolve debt issues. It is a targeted approach to try to shore up some of the issues within the economy when it comes to the property sector in particular. We have talked for years about regulatory crackdowns and how in crisis the sector is. It will take an extended length of time for these target measures to try to address some fundamental issues. That is jill disis joining us. Our next guest said chinas focus on highquality growth is shorthand for what can be achieved without this mass of policy stimulus and would like to see it again. With us is bert hofman, the director of the east Asian Institute at the university of singapore. You have been watching china for a long time, great to have you. This is more assistance to property developers. Do you see anything that hints at a more aggressive approach or is this just part of putting specific amounts of money in specific places, to not just throw out more fiscal stimulus or rate cuts . Bert i believe with jill that there is not a big stimulus coming. As a consequence, could not finish the housing they were building. That undermine the confidence, especially the households that they were holding back on consumption. This is a targeted approach to try to get the real estate finished and at least give some comfort to households. It was critical the state council excuse me, the Bureau Meeting on july 24 did not say the phrase of xi jinping housing is for living, not for speculation. It does open bar space. I think the rest of the economy it does open space. Investment is falling at the moment. Facing a lot of constraints and uncertainty. That is what the government is trying to do. Take away some of the uncertainty. Yes, they like the private sector. We will support you in all sorts of ways with a list of 31 measures released to the private sector. Kathleen is this going to work . Is chinas strategy we will be depressed for a while. The economy will be slow. It will take time, all these targeted approaches, but over time it will create more sustainable growth. We will make sure that ships and all sorts of things chips and all sorts of things will get the support they need rather than just pouring in money and hoping that creates jobs. Bert the government has done a lot on the supply side already. Reforms are ongoing. There is a lot ongoing in the tech severe and logistics sphere. What is missing is the supply side. China is doing quite ok and the transition to a new development as a more efficient quality innovation driven model that is on the way on the supply side but not on the demand side. Chinas problem is not supply, it is the lack of demand and that is where households come in. The World Economy is not doing great. Local governments do not have the firepower anymore to continue to build infrastructure because real estate is a large part of the Revenue Source by means of land financing. There is a lot to do on the demand side and some on the supply side, as well. Haidi if we accept a lot of the imbalances across property markets were worsened by the growth model that was so successful over the past 10, even 20 years, does it make sense to try to accelerate that same growth model . Clearly there is a political need for some supplyside stimulus but will that make the ultimate transition even harder . Bert you are right and that is why the government has been so hesitant, to avoid this allout stimulus. They are trying to look for different measures to trickle a little bit here, trickle a little bit there. I do not think it will be enough but the alternative would be to go back to the old model and basically it would be about Debt Forgiveness for real estate and local governments and that is really unattractive for the central government. They are trying to find other means but that will take time. A little bit if you want stimulus from the central government, it will happen in the latter half. Haidi i guess if you accept this is part of a longerterm structural new normal in the missing piece is the demand side, how do you most effectively address that . Direct fiscal transfers to households at some point . Bert in my view, yes. Not necessarily a shared view with chinese leadership but deepening your social safety net , fixing your Pension System is an important part of that, expanding Unemployment Insurance to migrant labor, which is the bulk of urban labor but not covered. Making the demand side a stabilizer and economy. Whether that will happen, we will see in the fall. There is a big meeting were normally a lot of Economic Reforms are being presented. That will happen in this fall and that would be an opportunity for the new administration to present plans with respect to the demand side. Haidi i am glad you mentioned the social net aspect because that is key. I also wanted to touch on local Government Debt and the commitment to clearing that and where it lies because we are hearing there is a commitment but at the same time, one of the levers they can pull is to get these local governments to use up their bond issuances and put that into more investment. This is the old playbook. How does not even work in terms of the calculus . Bert it helps a little bit in that you can switch expensive debt for these local financing vehicles with lower yielding government bonds so it is cheaper but that is only tinkering at the margin. What is important is the local government gets a much stronger revenue base. They could have their own tax base so they could generate more revenues for the task that i need to spend money on. The local government has basically run out of money without having revenues from financing. Going back to that model is not the future. Urbanization, there is still a lot to be done. There will not be as much from land financing Going Forward as there was in the past. Local governments need better revenues. Haidi how bad things would have to be for the Chinese Government to have to say we did not want to do it but we will have to step in with some of the Government Spending, maybe even some more rate cuts, aggressive or bigger . Bert mind you, the first half data is showing China Growing at 5. 5 . We are talking as if china is in a recession, it is not, but it is falling short. The Second Quarter is 3. 2 so there is risk they are falling short of a target set in march of about 5 growth. If they are falling significantly short, i think there will be more stimulus measures coming from the center. If they are on target of 5 , the Center Government would not want to intervene. Haidi how much of this is we need to adjust expectations . In terms of a structurally new normal of Slower Growth for china coming forward . Bert there is a big debate on that. Personally i believe china can grow at 5 , 5. 5 for the next decade. Some say it will be back to 2 , 3 like other developing economies. 5 is what i believe china but want to aim for given the targets they have set a couple years back, where xi jinping said i want to double 2020 gdp by 2035. They may want to revisit that but i think it does it is not necessarily or desirable for china. They have a lot to grow. Haidi always great to chat with you. Bert hofman, director of the east Asian Institute at the university of singapore. More to come on daybreak asia. This is bloomberg. 76 of 23andme Health Customers surveyed reported taking healthier actions. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. Haidi checking shares of australias enzo bank. Anz bank. Concerns over competition in mortgages and business lending. We are seeing reaction when it comes to anz. Software for suncorp. Lets get the latest with the finance editor in sydney, adam. Is that kind of expected given some management expectations and the low returning nature of that business . Adam what we have seen since this deal was agreed on last year, it has been a drawnout deal. Even a couple weeks ago, we had the extension that brought us into august so there was a feeling this might not get done. The competition issues have been very well flagged. This was anz buying a Retail Banking business in queensland. A very fastgrowing population. An area they saw tremendous amounts of growth Going Forward. It is clear what the strategy is that remains quite clear. The real issue for the Competition Commission is it shrinks and already style of Banking System that relies on home loans, primarily in australia, and it shrinks that market even further. That is the key issue. What they are saying is as we bring competition down and get swallowed up by some of the bigger players, there are a few things that are issues and those have been well telegraphed for many months. I think the decision today puts the official reaction from the regulator on the table. Everybody knows the state of the deal now. It does not permit really mean the deal is off the table. You might have to go through another few hurdles but there are plenty of people in the market that still expect it to get done. Kathleen there has been so much stress and strain in the housing market, mortgages going up and that might have complicated this a bit. Is that part of the equation as it settles out . Toward the end of the hikes, that might open the door again. Adam that is a great point, understanding where we are in the cycle. Optimal, peak rates environment. Globally, there might be a period where the pressure comes off. As you alluded to, competition has been incredibly fierce in the Mortgage Market for many months. Increasing Interest Rates more than 12 months ago. What you are seeing among the big players is market shares have been very hard to come by. Some banks backed off from the australian home loan market while others have entrenched and gone deeper into this area that they rely on. I think this decision today is partly reflective of the times we are seeing. A very, very competitive market and the regulator that does not want to narrow down competition any further in a market that is already putting australians under a lot of stress, of course. Inflationary issues are still around in the australian economy and one of the key drivers is house prices have gone up and the Mortgage Rates for your average australian are so much higher than 12 months ago. Haidi as you mentioned in your story, they can now appeal. Does this open up the opportunity for another player . One of the independent experts actually backed the potential for a bank to create a smaller competitor in the landscape. Adam that possibility has been on the table for some time now and maybe the decision today does get that argument other the more credibility. Our colleagues at Bloomberg Intelligence are saying that this morning in their report. They are saying that comeback bid may well increase in likelihood on the back of this. The next steps are going to the tribunal, anz and suncorp are being categorical about that being what will happen. We will also get more details on monday about why they have arrived at this deficient. What they have done today is outlined it but there will be more details in the next few days. Haidi we will continue to watch that story as it develops. Be sure to tune into Bloomberg Radio in the meantime. You can hear more from the newsmakers and get more analysis from the Daybreak Team broadcasting live from hong kong. Listen on the app. More ahead. This is bloomberg. Did you know you can get someone to shop for you . With stitch fix, it couldnt be easier. I share my style, size and budget. And they shop just for me. My shopper sends me stuff i feel good in. I keep what works, and send back the rest. Stitch fix. Kathleen parliament has canceled plans to elect a Prime Minister stoking concerns of a prolonged political stalemate. For more details, lets bring in our guest from bangkok. It is great to have you back. How do these latest developments affect the timeline . Is there any certainty or will this be something that, this is it, this is done and it will not be someone elected right away . Great question, uncertainty seems to be prolonged even two months after the general election. The pm vote that we were meant to have today was delayed again pending more clarity from the Constitutional Court, which was supposed to decide whether the earlier Parliament Vote was unconstitutional. Until the court makes that decision, we will not likely know when the next Prime Minister vote will be. Uncertainty will still be prolonged, even two months after the election. Haidi after the party broke away from the prodemocracy coalition, what is the plan for the next p. M. Vote . Patpicha the second largest winner of the election and it has said it would nominate a property tycoon as a Prime Minister candidate when that vote happens, whenever that is. Since we do not know when the next p. M. Vote is, they have time to couple together votes from the conservative parties and the military appointed senate that blocked the candidate in the first place to try to win the backing to get there candidate as p. M. The makeup of the new alliance is unclear. There was supposed to be an announcement of who would be in the couple listen yesterday but that briefing also got postponed following the Constitutional Court postponement and the p. M. Vote delay. It is unclear if the party that won the election would not be in the coalition that is trying to be formed. The key now is to try to win the senate and the conservative parties. That means they might have to join hands with some of the conservative parties. It remains to be seen if that will also include the militarybacked parties, which if it happens would risk upsetting prodemocracy supporters and its own supporters. Kathleen i was going to ask you about the return of the former Prime Minister. Could you give us a sense of what this means in just a few seconds . Patpicha the plan of the return is intertwined with the efforts to form the next government. Until there is more certainty around the government, Analysts Expect him to delay his plan to return which would not be the first time. This decision is not to be taken lightly because he faces 10 years in jail upon his return. Until arrangements are in place for his safe passage back, his return will likely get postponed again, as well. Haidi bloombergs Patpicha Tanakasempipat with us out of bangkok. Some of the stocks we are watching opening in hong kong and china, apple supplies are in focus. Aac tech on apples lackluster financials and a Third Quarter of weakness. Watching alibaba as well. Amazon on the other of the spectrum. Strong sales forecast, leading to a big jump in after hours trading. Ecommerce is in focus. Watching chinese developers. Promising increased support for the private sector after meeting with property developers. That is just about it for daybreak asia. We will look ahead to the start of trading in hong kong and shanghai. Stay with us for Bloomberg Markets the china open. This is bloomberg. Fabulous surroundings. But everyones looking at their phones for Financial Insights from merrill. Is he hailing a ride to the concert hall . No. Hes making sure his portfolio and retirement plans work in harmony. They want to adopt a child and build a new home. So theyre talking numbers with their merrill adviser. Shes not researching her next role. Shes learning how to handle market ups and downs without the drama. Personalized advice so impressive your money never stops working for you with merrill. A bank of america company. Every business never stops working for you with merrill. Thats why comcast business de is launching theal. Mobile made free event. 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