Transcripts For BLOOMBERG Bloomberg 20240704

Welcome to daybreak australia. I am how he stroudwatts haidi stroudwatts. I am animal jewelers in tokyo. Annabelle droulers in tokyo. Jay powell again signaling rate cuts will happen this year. The fed chair suggesting significant changes to the capital plans fiercely opposed by wall street banks. Haidi struggling lender n. Y. C. B. Getting a vote of confidence. Annabelle chinas top economic officials defend their ambitious target and hint at a liquidity boost to help get there. Haidi lets get you straight to the markets. A pretty reasonable set up in asia and we have a bit of downside as we get into the first part of the staggered trading session here in sydney, about. 2 author straight into the middle of trade. We are expecting a rise across the region. Interest rates will likely fall this year. Theres been so much managing of excitation 10 excitations in terms of the timing and the extent of easing we can expect from the fed and we have seen some of that drastic repositioning within certain parts of the market as well. So we are watching the dollar that fell to a mom a onemonth low after the soft u. S. Jobs data and that congressional testimony from jay powell seeing some weakness in the greenback which has been trading in a pretty range runway for the past two weeks. The aussie dollar, 65. 62, not too much of a beneficiary of that without a vallow weakness. Previously in the session, we have seen the aussie seymour leadership with a gain of as much as 1 along with higher Metals Prices and gains in wti as well lifting some of these commodities currencies. Take a look at the set up when it comes to japan and that sort of drumbeat to what we can expect from the boj continues to get louder and we are hearing the boj is said to be gaining more confidence over the strength of wage growth and that has been the missing puzzle piece in terms of making a call to scrap negative Interest Rates in march or april. That is the view from traders and economists and we are starting to see some of the messaging from their boj and some of those official starting to see that as well. New zealand trading down by. 3 . Watching sort of dollaryen as well given that bout of dollar weakness that we have seen. A little bit of strength for the yen along with tokyo prices heating up and not supporting these expectations for a rate hike. Take a look at china futures, up by just about under. 1 . We are seeing some sort of pushback when it comes to that 5 or around 5 gdp goal which of course markets have roundly dismissed as very ambitious without strong fiscal support measures but we did hear from them saying the gdp target can be attained and the pboc governors saying there is room to cut the rrr as well so perhaps trying to soothe some of these market jitters that the goal will not be supported with the intention of more fiscal support. Really ambitious target of course as we had set earlier this week but lets take a look at what is happening in u. S. Futures so far. It is that reaction that we are getting to jay powells testimony on capitol hill and it was pretty much the same message we have been hearing over the past few weeks not just from jay powell but a number of these open market colleagues and Committee Members as well so nothing really new to report but we did see that sort of really friendly coming in to stocks and bonds, both of those rising in tandem here. What was interesting, the big mover in the session and what we were really tracking were shares of new york Unity Bancorp because the stock was down as much as 47 during the session after hours and into the close. It was after a 1 billion liquidity injections out a bit of a vote of confidence in the lender but phil as we said, it was a focus on jay powell as well and it was interesting once we had the news around new york commUnity Bancorp, he was taking a lot of questions on the health of banks as well and these new regulations that could be coming into effect. Haidi jay powell of course reiterating to lawmakers that the central bank is in a rush to cut Interest Rates. Powell saying that borrowing costs should come down this year but made clear policymakers are not ready to move yet. We believe our policy rate is likely at its peak for this tightening cycle. If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year. The committee does not expect it will be appropriate to reduce the target range until it has gained greater onfince hat inflation is moving sustainably towards 2 . Haidi lets bring in our first guest at Morgan Stanley Investment Management. As we said that, the same message we have been hearing for a period, is there anything that markets need to digest or take away from what we heard today . I think it is just we are in this period of time when the fed is done raising rates and they have not started cutting and historically, thats a very good sign a very good time for equities. As reiterating his comments which is that the economy is Strong Enough to save us from not cutting rates. I am of the belief that if they accelerated and cut rates, that would send some nervousness through the market that perhaps theres some weakness out there that we dont know about. That is why the market turnaround and rally, one of many recently. This continued reiteration because the economy is Strong Enough. Part of the reason we have seen the economic strength and it has played out in those moves as well that we have seen better earnings coming through and the huge runup in equities. Is there any sort of risk that we are due for some sort of pullback, do you think . Look, we have the s p average is a 5 pullback every three months to four months and we have not had a pullback since last october so we are due for a pullback and the other thing i will tell you is last year, lots of people were bearish but the market pretty much went straight up and we had a 9 correction in the fall but that is about it so we are due for more volatility. I suspect it will be as we get into the summer, as people start to focus on the president ial elections, i think more and more volatility there. We are seeing now as a mutual fund manager, i see investors are capitulating and they have been under waiting equities and they poured a ton of money into the money markets last year, and now, they are coming around to invest. That just started in november of last year so we are four months into investors moving into the market really after liquidating last year. So i think thats why you see these days where yesterday was down and the market came right back today. The flows were positive so all pulled pullbacks are an opportunity for those underway in equities to get more investment at least for now. Interesting momentum trade. That is a theme not that has not only been prevalent but across large markets here in ishaqi as well but i do wonder where do you see the Investment Opportunities . If you are starting to see the bifurcation but also perhaps on the left behind opportunities given that this is a rally where we have seen some of the big winners just continue to surge ahead on some of those left behind stocks may be worth considering . The fact of the bifurcation has been very good for stock working so if you got the right ones, you are doing well, but more importantly, i think what frustrated me im sure it frustrated a lot of companies. There are a lot of companies that did very well last year. They are really left behind. To answer your question, i dont think you need to bottom dip companies that are doing poorly, thinking you can find the bottom. I think there are a lot of companies out there that are doing very well but you know, their multiples are cheap because their earnings did better than their stock price last year. Financials certainly would be one of them. Industrials i think are another area as well. Again, i think there are a lot of companies where fundamentals have been stronger than stock prices. When you take a look at geoPolitical Risk, obviously, we have super tuesday behind us and expectations for the president ial race are pretty well shaped. Do you invest thematically around that particularly in light of, you know, the in orbis applications the implications we saw when we last saw a Trump Presidency . Andrew it is a great question because the playbook says that the conventions are in the summer, and if the incumbent is leading coming out of the conventions, stocks tend to go up but if the challenger is leading, stocks go down because of the uncertainty of the challenger and if you go back to 2016, that is exactly what happened. The markets sold off until the night of the election when trump was elected and then the markets took off, realizing he was going to be relatively probusiness. The reason why that is kind of a question mark this time is this time, right now, the next president has already been president and its just a question of if it is going to be the current one or the previous one and how does the market react to that . Will it be the same playbook . We will have to see. I expect, to be clear, more volatility this summer. I think we are going to get a bigger pullback and that could be one of the reasons. I think when the fed actually does cut, that could be one of the reasons. I am concerned that last year, all the economists are predicting there was a consensus that a hard landing was going to occur. Could we get a weaker economic number . That could cause problems with volatility. I am concerned inflation will end up being a lot stickier than people think. I know more volatility is coming. Im just not sure what is going to cause it. What we have really seen quite a significant amount of volatility or very wild move has been in new York Community bank orb and those shares down as much as 47 , closing a bit higher but we did the some degree perhaps of contagion coming across. We saw the Regional Bank index a little bit under pressure, Southside Bancshares as well in the red. Are you concerned about that story at all . Andrew while certainly, its amazing how its one year to the day. The reason why the stock in the markets and the bank index turn was an infusion of capital from some pretty wellknown investors. I think that is a signal that maybe this is not a repeat of last year. Do stay with us. Our senior Portfolio Manager will be staying along with us when we talk a little bit more about china and some of these International Markets that may yield opportunities. Ella had, we will be talking currencies. The International Peoples congress could wear on the aussie dollar. Chinas leaders look to boost urbanization in a bid to stimulate economic growth. To beijing next for the latest out of them. This is bloomberg. Thanks to avalara, we can calculate 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 last year, we cut the reserve twice by 25 Percentage Points each per head last month, it was cut by another 50 basis points and that means we release one trillion yuan in longterm the quiddity at a time. At present, the statutory reserve ratio is 7 on average and there is still room for future cuts. A possibility of more rrr cuts for chinese banks and he along with chinas commerce chiefs have defended the plan. Joan lee joins us now from the capital and clearly, the overwhelming reaction from markets and economists have been that this is a hugely ambitious goal without the fiscal intention to back it up. What are we hearing from beijing . John i think what we are hearing from beijing is an attempt to explain how they are going to get to that 5 . That is the big question being asked by finance, by markets. We saw the 5 goal but we also saw the government keep its deficit at 3 . It is not going to be additional fiscal spending. Where is this growth going to come from . We heard from the Central Bank Governor there could be more monetary loosening and he also heard from the head of the National Planning agency that china is going to try and push and accelerate urbanization by issuing more of the permanence the premise that allow them to enjoy the same social benefits that urban dwellers have for themselves. At the same press conference, we heard from other government officials or policymakers as well just talking about chinas exports and what we are seeing so far in the first two months of the year. Talk us through the numbers and the significance of that again that once again we are having Economic Data being sort of front run ahead of the actual official release. We are expecting an increase in trade in exports for the first two months of this year so january and february, that being announced by the commerce minister before the official data was released. I believe that are supposed to be coming today maybe. I need to double check. I think it underlines this change in approach from government officials here. We had a cut announced by the Central Bank Governor before that was made official. We have the premier announcing gdp growth for 2023 before that cannot officially. It seems like government officials are realizing if they announced these figures with a bit of surprise when it comes to timing, they get more bang for their buck. Haidi our grid a china Senior Executive editor, john lee. Lets our Greater China Senior Executive editor, john liu. Lets bring back andrew. Does this sort of reinforce that view of perhaps a bit more caution Going Forward given that we clearly have an effort to build confidence from policymakers out of that 5 growth target, but not a whole lot to back it up at this point . Andrew i think so. You know, china is an unusual place and that the companies seem to be reporting good numbers. He saw that last night. Estimates, revisions have gone up. I think investors fragility towards investing their is very high so any type of bad news sends to send these stocks lower. It is my view that there is a place in a Global Portfolio for china stocks but it has to be moderated because of that concern of the macro that overhangs these stocks. What is interesting, typically, in china, you can make money if you invest along policy lines. We are hearing the stocks regulator can keep an eye on market failures, suggesting there might be more intervention or more of the National Team being involved and we are seeing a huge amount of support when it comes to things like ai and text, so can it be pretty clearcut if you do want to invest in china what some of those things should be . Andrew i think so. I agree with that. Any of these large chinese internet stocks are very, very cheap many of these large chinese internet stocks are very cheap. The problem is where are you going to take that from the rest of the world . I think equity markets around the world are going up. So that is why i think there is a place for china. I think there is a place for these large internet stocks that have really been ground down and finally, revisions are moving up, but i just would not put a large percentage of my portfolio on china. I think the u. S. Market is going to be higher by yearend. And to that point, you know, there have been plenty of other options and you see the flows out of markets like china and into markets like india, into japan and potentially even more into south korea if they can fix their discount problem. Out of these kind of popular markers, where do you see the opportunities . I think japan is very intriguing. We have about, you know, just about the same amount in china as we have in japan for our Global Strategies and i think that is intriguing because of macro policy and Foreign Investors are clearly viewing that as an alternative so we have seen slows come out of china and into japan. These stocks were made pretty weak. So i like the big exporters in china. I think there is more room to move in these stocks but i would caution that, you know, while i think the macro has changed, i am not sure other than stock buybacks, there has been a major change in how many of these companies are run from any kind of return on equity standpoint so im a little nervous that people are may be getting too optimistic. I am not sure it is there other than clearly, there has been increased stock buybacks. Im really getting that sense that you prefer the u. S. By quite a long stretch here but just in terms of that investment breakdown, what would be your allocation to the u. S. Versus nonus markets then . Andrew i dont mean to just be u. S. I look at stocks as where are their good ideas around the world . And if i look at our yeartodate performance in our funds, it has come from the u. S. , europe, china, japan and good stock picks in all parts of those regions so we had about 60 of our Growth Strategies in the u. S. , 20 im sorry, about 15 in europe, and the rest between china and the rest of asia and japan. That was the senior Portfolio Manager at Morgan Stanley Investment Management and we will have more to come on daybreak australia. This is bloomberg. Ing as much of your investment gains as possible . High taxes can erode returns quickly, so you need a taxoptimized portfolio. At creative planning, our Money Managers and specialists Work Together to make sure your portfolio and wealth are managed in a taxefficient manner. Its what you keep that really matters. Why not give your wealth a second look . Book your free meeting today at creativeplanning. Com. Creative planning a richer way to wealth. Its basically tennis for babies, but for adults. It should be called wiffle tennis. Pickle yeah, aw whoo these guys are intense. We got nothing to worry about. With e trade from Morgan Stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Got him. Good game. Thanks for coming to our clinic, first ones free. Get help reaching your goals with j. P. Morgan wealth plan, a digital money coach in the chase mobile® app. Use it to set and track your goals, big and small. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan wealth management. You are watching daybreak australia. Taking a look at the latest geopolitical stores, a missile strike on a commercial ship has resulted in the first confirmed civilian deaths. U. S. Officials say two people were killed and six injured aboard the carrier. They claimed responsibility for the strike, describing the carrier as a u. S. Ship which its owner and the Biden Administration have denied. The u. S. Is said to be pressing allies to further tighten restrictions on chinas access to semiconductor technology. Biden administrations latest push is aimed at plugging holes in export controls. The effort is drawing resistance in japan and the netherlands where the u. S. Wants them to stop servicing the chipmaking equipment owned by chinese clients. Xi jinping has called out patriots or called her patriots in taiwan and abroad to mobilize against proindependence perverts on the island. In a meeting, he spoke to a mainland Political Group focused on taiwan and asked for an International Effort to oppose taiwanese independence and advanced the peaceful unit peaceful reunification of china. We will have more to come on daybreak australia. This is bloomberg. When i was your age, we never had anything like this. What . Wifi . Wifi that works all over the house, even the basement. The basement. So i can finally throw that party. And invite shannon barnes. Dream do come true. Xfinity gives you reliable wifi with walltowall coverage on all your devices, even when everyone is online. Maybe well even get married one day. I wonder what i will be doing . Probably still living here with mom and dad. Fast reliable speeds right where you need them. Thats walltowall wifi on the xfinity 10g network. Annabelle kicking us off with breaking data this morning, we just had labor cash earnings, the year on year figure for january. That is pretty strong coming in at 2 and the estimate had been for 1. 9 there. But the survey im seeing here was for rather, that was the cash earnings, 2 . The survey had been for 1. 9 . Taking a look at the on the year figure, thats coming in at 2 in the survey had been for 1. 2 . Real cash earnings, you are seeing that setting to improve somewhat because it is coming in at contractionary territory. Still, the survey had been for 1. 5 . A little bit of yen strength off the back of that but pretty range bound so far. Still, that had been probably a better than what we were expecting for big rig economics. Lets bring in our japan editor, paul jackson. This is something the boj watches really closely. Labor cash earnings, year on year growth of 2 , survey of 1. 2 . What is your take away on that . Pretty good results. This means the possibility of a march rate hike is very much tangible and i think it will be a close call. This data is looking pretty strong. One figure to look at is that same sample, fulltime employee figure because that is maybe the most difficult part of the labor market for wages to go up. That has been 2 for around about five months. That points to a solid wage trend and this is what the bank of japan has been looking forward to feel reassured that we are in a positive growth cycle where inflation is going to pause going to be positive for the economy instead of the negative and this is the kind of thing the boj is looking for before he makes its rate hike decision. Stocks markets are undecided but we are seeing some banks being a lot more decisive, seeing lift off this month. Why could we potentially see a surprise . If you are looking at it this morning, suggesting over 50 chance of a march move. Of course, the banks need to be prepared for a march move. They have been wanting the end of negative rates for the whole time since 2016 so i am not totally surprised that we have that voice out there saying its going to come in march and they have an interest in it ending as soon as possible. I think its going to be a close call and when you look at the global situation, there is a feeling of a window of opportunity. We are going to have rate cuts around the world happening later in the year so if the boj want to get rid of its negative rates and possibly bump up rates to 0. 25 or 0. 5 this year, then there is an argument for getting on with it. Haidi when you take a look at real cash earnings, that is still negative. Is that something there is a risk they could hike too soon even . The economy has not been in great shape. It has been in technical recession. We are expecting revised figures to be a little bit more positive because we saw that good earnings and Capital Spending figures out last week but ultimately, the economy is not going gangbusters here so its not the typical kind of environment that you would expect banks to be raising Interest Rates but i think the bank of japan has addressed this point by saying, look, we are going to get rid of the negative rate. If we did that, conditions would still be very low Interest Rates. We are talking zero to begin with. This is going to be supportive of the economy. And they said regarding the fall in real wages, they are saying a song as the trend is looking positive upward, they can still move. Our government editor, paul jackson. We do have that on par with expectations gain in regular fulltime pay, cash earnings rise more than expected. The fall of real cash earnings, actually less than expected, but take a look at how we have been watching the boj trades play out this week. We are seeing banks outperforming benchmarks. Jgb yields have been up. The yen is at a onemonth high and the Options Market is signaling bullish yen bets near the highest of the year. The bigger the yen bullish bets so that is a pretty clear signal that. Lets bring in the associate director for International Economics and current currency strategy. Great to have you with us. In terms of boj tightening and the implications for currency . You were just mentioning the labor cash Earnings Results from japan earlier in your program and i think the results are probably pretty positive for the bank of japan who is looking for the wage price cycle, in particular the simple adjusted scheduled wage growth result is pretty robust at 2 . That will pave the way for the bank of japan to tighten policy in the coming months. We will get the important wage result. So the Japanese Union federation will release that and signs are looking pretty good for a pretty robust wage outcome. Perhaps even about 4 so if that wage outcome is robust or at least as robust as last year, chances are that the bank of japan can tighten policy and we think the bank of japan will likely have the policy in april rather than in march partly because the bank of japan will be able to get some more data between march and april so things like the First Quarter survey and the regular Economic Data and also the bank of japan will also update projections in the april meetings so a positive outlook will be able to lay the foundation for rate adjustment. Where do you see fair value for the yen in the case of where the boj does pull the trigger . Downside target is around 14 six for cba . 146 for cba . Carol thats right. We think the dollaryen Exchange Rate is fairly valued given the very positive Interest Rate differentials between the u. S. And japan and also the Global Equity market performance. So unlike some boj officials, dollaryen is in line with its fundamentals. However, if the bank of japan does tighten policy in coming months, perhaps as soon as this upcoming meeting in two weeks time, i think dollaryen can have more downside potential. I think the extent of dollaryen downside will likely depend on how far the bank of japan is willing to take rates up and we are now forecasting the bank of japan will tighten policy 2. 5 percent by july of 2025 and that is a bit more aggressive than what the market has priced in. I think the risks are skewed to be more gradual based on recent comments by the bank of japan officials. The risk is that the dollaryen may be struggling to sustain a recent rally of the bank of japan policy tightening. Haidi the other major event we are watching is the Ongoing National Peoples Congress. Pretty ambitious gdp number. Not a great deal of detail or even intention around policy and seamless support. Does this have implications when it comes to playing through proxies like the aussie dollar . Carol yes, so we have had the national Peoples Congress earlier this week. Pretty ambitious 5 target without a plan to achieve the ambitious target. And i think the markets are also pretty skeptical about whether or not the Chinese Government can actually realize the target so without further stimulus, i think the target might be a bit hard to achieve and they will likely speak to some more weakness in the aussie dollar in the near term. And we are targeting the aussie dollar to fall further to 64 u. S. Cents in the coming weeks. On top of the slowdown in the chinese economy, the rba is also about policy perhaps in september. Our forecast is for the rba to ease policy rate by 75 basis points by the end of this year. The markets are expecting a more gradual easing cycle so from that rate perspective, i think theres some more downside to the aussie dollar in the near term but beyond that, we are pretty bullish on the aussie dollar. If global Central Banks are able to cut Interest Rates in the upcoming year, then chances are, the Global Economic outlook can improve and Risk Appetite can improve as well and that is usually a very big positive for the aussie dollar so i think the aussie dollar can reach about 71 u. S. Cents by the end of this year. What about the aussie against others . Theres a few different outlooks. We have the rbnz still sounding a bit, you know, mixed on their outlook here perhaps in the end of the cycle but you have you have the boe playing into it. What are we expecting against other major currencies . Carol for the other major aussie rates, they will probably follow the aussie and u. S. Exchange rate trajectory so we have all the major cross rates tracking higher through the end of this year. One potential exception is the aussie and kiwi pair. Because of the potential improvement in the Global Economic outlook, that will be beneficial for both aussie and kiwi. The implication is that the dollar may perhaps trade sideways through the end of this year. Finally, on the greenback as well, when are you expecting in terms of any sort of we had it reaching a onemonth low today, given his testimony as well, the move that we had in treasury yields, but there is the fed story and then there is the Political Risk as well. Do using that have do you think that has been fully priced and at this point . Carol i assume youre talking about the president ial election and i inc. Markets are pricing in some chance of a Trump Victory. I think that is somewhat in the price already but if anything, i think if trump does return to the president ial position, i think any positive impact on the u. S. Will be smaller than what we have seen in 2016. A Trump Victory is less of a surprise compared to 2016 but in terms of the u. S. Dollar in the near term, based on what we have heard from powell yesterday, the fomc is likely to remain pretty cautious in terms of approaching the upcoming easing cycle. They are certainly in no rush to cut Interest Rates in the near term so with market pricing, you know, the first cut is not until june. I think the Interest Rate will be remaining broadly supportive of the u. S. Dollar in the near term. That was the International Economics and currency strategy associate director at cba. And remember, bloomberg users can interact with the charts shown using gtv. To catch up on key analysis and save charts for future reference as well. This is bloomberg. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh shares of new York Committee bank corp. Ended higher after bloomberg revealed it received an Equity Investment of over 1 billion. The lender confirmed that report and said the capital injection was led by Steven Mnuchins firm. Lets get more on the scoop and i want to bring in sally who leads our coverage. Does this fix all of the problems for this lender . Sally word on the street was this bank would have to raise capital. It could do asset sales but that probably would not help enough and it had to cut its dividend and provisions to cover loans and also just last week, it said to have Material Weakness in loan oversight which triggered fears of other issues down the line and higher costs. Lo and behold, we learn donald trump treasury secretary is reading a group of investors and injecting more than 1 billion into the bank in a deal that gives it control of the letter because he becomes is chairman. He becomes the ceo and broadly, the reaction has been fairly positive in the share price and analysts are saying this should quell the systemic concerns around nyc be and needs concerns about its capital levels and its management capabilities. Liberty is an investor. Capital partners, suited all Global Equities and equities business it is also an investor so all of that should instill a bit of confidence that this shores up the bank to a necessary degree. Confidence, i guess, but is there enough capital being injected here in order for it to get over the hurdles in front of it, do you think . It seems to be. Steve mnuchin certainly says it is. If you think about what this means for the broader sector, much of the problems were determined to be pretty idiosyncratic. They are subject to tough new york rent laws and they had limited the revenue it can generate from its units and it financed offices in places where work from home has continued. It had a pair of particularly problematic loans at the heart of this issue so one of that argues against the case that worrying that this might be a more nationwide, Systemic Risk year. Nonetheless, it did alarm people who have the sort of recent history of the original turmoil a year ago. Its not unfair to look at concerns surrounding your Community Banks weaker controls. May have fallen into that sort of similar issue. We have seen a lot of different leadership changes coming through at nyc be to try to nycb to try to tackle this. Do we know about his capabilities in this sort of area . Sally the interesting thing is he and Steve Mnuchin has been in this situation before. Steve mnuchin, he bought it during the financial crisis. And at that time, he brought them on board so they have sort of been a pair. And another bank, they have been a do well in this kind of rescue situation. A duo in this kind of rescue situation. He is very familiar with banking regulation. And probably what is needed in terms of the max capital and the reaction to this investment seems to have been broadly positive so far. We will learn more tomorrow when the bank hosts will no doubt give more information and clarification on some of these measures. Annabelle bloombergs sally in new york. Bloombergs big take. We have been speaking to people involved in apples failed electric car project, trying to figure out what went wrong when one of its most ambitious and costly investments came to a halt. Thats bring in mark gurman in san francisco. Lets bring in mark gurman from san francisco. It did not come as a surprise to people in the industry. Not to u. S. Well, someone who has tracked it for so long, but so many years in the making. Was it really just a story of indecision here . Mark this was absolutely a story of indecision. Have to implement technology. And really the realities of the current market which is short on Profit Margins and long on complexities or certainly, this was a difficult exercise. It took a decade for apple to come to this realization that maybe they should not be getting into the car business. If you read my story, and i highly encourage you to be that of to do so, there is so much detail about what the car was supposed to look like, how it would function, what features it would have, how the interior was more like a living room rather than what you would normally see from a car. How apple even through some of its top mines down to Southern California to meet with jay leno to get a tour of his private garage as a multimillion dollar car collection, to learn from him about the history of the Automotive Market and how apple was all in on level five driving technology that created backups, like an xbox controller or virtual string will use your iphone or the ability to call in if you get stock. Cool and Different Things that they explored and looked at to bring this carter market and just never was able to come to fruition of course. Haidi i would encourage anyone to read this story because the details are just phenomenal but i wonder how quickly did that decision come . Was it sort of a surprise in how that team was disbanded and what happens to that investment in assets now . What you saw over the last few years is the timeline for when apple thought it could release a car, get delayed. I wrote about when it was delayed to 2025 and 2026. At the end of last year, i wrote about how it was 2028. They moved from a level of economy and a level four autonomy. You had these changing technologies and at some point, pulling the plug was clearly the easiest move or the prudent decision for them to make. In terms of what happens to what they have developed, some of the Ai Technology has been repurposed in the apple neural engine. Some of the technology has runup in the Apple Vision Pro and that is a mixed reality device. You are seeing them put up for sale a racetrack that they own in the middle of the arizona desert where they have done a lot of this testing so they have some incentive to get roi on their investment here. Make sure you check out that story. Todays big take on the terminal ahead of [indiscernible]. Mark writing about the top 10 challenges for apple Going Forward. Much more ahead on daybreak australia. This is bloomberg. The latest corporate stories we are following this hour. U. S. Crash investors accusing boeing of failing to cooperate aboard the 737 max jet. The ntsb chair told a Senate Committee hearing that it is absurd that boeing has not provided all the information sought by investigators. Boeing hit back at the rebuke saying it is doing everything it can to assess the inquiry into the Alaska Airlines incident. Jd. Com shares soared after a Buyback Program and it reported a betterthanexpected increase in revenue. The ecommerce giant has benefited from a broader product lineup and price cuts targeting consumers amid chinas economic slowdown. Annabelle just taking a quick look at the action guessing for bitcoin prices so far in the session, other crypto tokens intern. It is a little bit of consolidation at this point in time. Pretty wild swings. We have tracked near the 70,000 mark for bitcoin prices. We had the big drop on tuesday coming through. Yesterday, they recovered what has been a question mark over how much leverage is in the system as well. A lot of investors really split on what sort of direction we are likely to take for bitcoin ahead of the month. Something typically associated with price gains. Coming up in the next hour, ocbc bank tells us why they expect three fed rate cuts this year starting in june. Plus, we discuss beijings ambitious 5 growth target. Hey you, with the small business. Whoa. Youve got all kinds of bright ideas, that your customers need to know about. Constant contact makes it easy. With everything from managing your social posts, and events, to email and sms marketing. Constant contact delivers all the tools you need to help your business grow. Get started today at constantcontact. Com constant contact. Helping the small stand tall. This is daybreak asia. We are counting down to asias major market opens and that side of relief is going to the pretty palpable. Jay powell indicating they are looking to cut rates. Not quite just yet but the path is pretty much the same when we thought we were on already. Haidi maybe not so palpable as any sense of relief when it comes to investors looking at china. We have seen policymakers across the board kind of hitting back, defending that around 5 gdp target, saying it is attainable and there is room for further cut rrr and the other thing of course we are watching is japan, this kind of rapid positioning for lift off from the boj and those wage numbers were not too bad. Annabelle certainly, actually pretty much stronger than what had been expected because we saw cash earn