Welcome to daybreak australia. I am haidi stroudwatts in sydney. I am vonnie quinn. Intel climbs on an upbeat forecast. The selloff in big tech while bonds rise, janet yellen tells bloomberg the recent you observe revise economic strife. You are seeing yields go up. This is simply a reflection of the strength of the economy. Also, the ftx founder faces prosecution as he takes the stand in the fraud trial. Lets get a quick check on wall street. S p futures tire. Nasdaq 100 futures point to a higher open in the very early going. This after the s p dropped another 1. 2 . That brings the yeartodate gains we have had very mixed earnings in particular from the tech company. Economists are only looking for rise of 1. 9 . A lot of mixed signals out of this economy. We have the 10year yield dropping for basis points. Now it is down to 8343 a barrel. Lets have a look at those after the bell earnings. We have amazon and intel. The market is reacting well to both. Intel is saying the west may be over for pcs. We will take a deeper dive into the latest tech earnings with su keenan. Lets start with amazon. A lot to unpack here. A mixed quarter. There is talk about ai, shares moving up once again. Quickly, to recap, amazon reported sales that beat estimates. Revenue and profit including on web sales. Cloud revenue came in slightly less than expected. That disappointed investors. The business operating income of 6. 9 billion was about 1. 3 billion more than expected. That was a win there. They reported the highest operating margins. That is a big positive. Spending on sales has declined and he says Amazon Web Service signed new deals with customers in september. They had in october affected. They did not relish up on the Third Quarter results. He also urged caution. They can be lumpy and inconsistent. He is also talking as the call gets further underway, telling investors generative ai is worth tens of billions of dollars for Amazon Web Services. He is touting amazons Artificial Intelligence strategy which he says the company is developing on large language models. That is something investors really want to hear more about. They are taking a big jump after this forecast. Any time you can talk about a rebound in pc sales, it is good news. That is what investors wanted to hear. That is what intel is saying. They are predicting a return of sales in the First Quarter fueled by a much improved pc market. There is growing momentum for intels turnaround efforts. The company has said the pc Computer Market is through the worst of this historic slump. That had to do with a lot of buildup of inventory. Sales will be 14. 6 billion. The profit will be about . 44 a share. Intel still struggling. Heard by a drop in customer spending. And a tilt toward those chips made by nvidia. It is a shot in the offer intel shares there were already up some 24 year to date. It looks like we saw the very strong economic data. We also saw the market drop on these earnings, particularly the big tech earnings. How would you rate this week given that we still have one more us session to go through with these amazon and intel earnings that weve just seen . Its been a very mixed bag this week. Its exciting times. Were moving out of the macro noise into the micro data points with earnings. And so i think investors are excited to get some real time updates as to what management teams are seeing. The reality is, though, that were still dealing with a macro backdrop that that many people think is going to weaken still. Yes, the print today was very strong, but its backward looking. Most of the companies were talking to today are very scared or hesitant to give guidance. That is positive in the future. Theres a lot of risk out there. We still are working through backlogs in many inventory channels, and companies are very uncertain. The demand environment. So its been a very mixed bag this year. But i do believe investors are excited to get Real Time Data points and real time commentary from management teams. Brian where is the softness going to come from . We had bill ackman saying theres probably going to be a recession in the Fourth Quarter or at least bill gross said that bill ackman said that the data is a lot less strong than recent data has appeared, but its not tracking that way. Where is the weakness . Yeah, my concern is that were still working through this tightening cycle of the fed has put us into over the last couple of years. The reality is the consumer has been the last breath, if you will. Thats held us up for the last couple of quarters and a lot of the us consumer is tapped out of excess savings at this point. Were starting to see delinquencies in credit cards. Were starting to see auto delinquencies rise. These are very early leading indicators of a challenge consumer backdrop. So where am i going to see weakness in the future . I do believe the consumer backdrop is slowing down. We see industrial spending slowing down. Were working through some major infrastructure projects. But as those tail off our company is gonna continue to deliver on the capex side. So im seeing pieces begin to slow, but the consumer has been the most concerned today. Well, and of course then we had a raft of earnings were practically halfway through, you know, earnings season and more than that at this point. And a lot of those Tech Companies got hit hard this quarter. Is this the end of the the tech earnings recession, if you like, or are we going to see a lot more declines before this nasdaq 100 drop is over . I think we need to bifurcate the earnings challenges versus the multiple all scenario that we have today. Earnings actually look reasonable. Theyre growing nicely. Whether its alphabet, microsoft, but the reality is, what do you want to pay for that . As Interest Rates rise like they have been doing, theyre rising for several reasons. Yes, secretary yellen is correct. Weve seen some strength in the economy, but more importantly, theyre rising because we still believe the feds going to stay higher for longer. That will put pressure on multiples and the highest multiple stocks are those big cap tech stocks. So the earnings look good. Its the valuation that gives me a little bit pause. Brian, shifting gears just a little bit, i know that youre a japan investor as well. And with the yen right now at 150, 38, im curious as to your thoughts on where the japanese economy and market go from here, given that weve had a really nice bounce . Its been a great move in the japanese market recently and i think theyre one of the few economies thats really excited about the inflationary backdrop, maybe staying higher for longer. So what were looking for in japan right now is to continue to invest structurally over this long term shift in what id call governance, something that weve been looking for, for a long time. But the ability for Japanese Companies to kind of put that minority investor at a higher part in the hierarchy of who they care about and what they care about, what that means is were going to look for companies that are willing to invest their capital into the growth of their business that also might be returning capital through dividends and buybacks. So im looking for companies that have these unique balance sheets, which in japan, most of these companies do. But more importantly, are they going to use them in a way to for revenue type businesses. Cyclical stocks have done well on the back of the currency. I want to move toward recurring services that are undervalued today. Thank you for joining us. It has been a mixed week for asia markets. I am curious to how things are shaping up for todays session. I am curious too, because it has been a challenging week for month local friends. We are looking like we are setting up possibly a few green issues, particularly if we get leadership from the tech sector, which said that the rebound was the cause of the big drag we saw in asia. Msci asia pacific sliding. In sydney, we are looking pretty flat when it comes to sydney futures, off by about zero point 1 . The aussie dollar staging a mini rebound. That has benefited the aussie and the q. Week the kiwi. The stabilization with the chinese economy will stabilize as well. There has been a lift coming through when it comes to the hotter than expected inflation rate. The governor try to manage expectations. We see the repricing when it comes to looking up the next rbi meeting. This is the picture when it comes to new zealand, off by about 0. 5 . Vonnie, you mentioned we are still watching the yen over the 150 thresholds. This is the level where we are on watch for policymakers, but we also do know there has been a little more reluctance to intervene at these levels, given we are still looking at the potential for how and when the doj tweak plays out as well. That will be more top of mind for investors. We will take a bit of a breather for the selloff, particularly with tokyo and korea trading. Still ahead, sam brinkman freed taking the stand in front of a judge. We get an update on the trial. This is bloomberg. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. The Chinese Foreign minister is due to meet with President Biden this friday when he visits the white house. It could lay the groundwork for a meeting between biden and president xi. A diplomat met with anthony blinking. Relations have improved since the u. S. Shot down that alleged chinese spy balloon this year. Treasury secretary janet yellen says ties with china are on the mend. She said the countries went almost two years with no seniorlevel contact, a period she describes as dangerous. She spoke to bloomberg in washington. We do want to maintain the benefits of globalization, but without the vulnerability that comes from undue reliance on a few countries that may restrict trade for political or other reasons. You mentioned broadening our network of friends we can have partnerships with, but also china. I knew you took a trip to you have been talking about how our policy should be about deor diversified rather than decoupling. What you think is the current status of that . Do you think the chinese were still really thinking we are in a competition with them . First and foremost . You have articulated a strategy as you said it involves derisking in some areas where we are overly dependent on china. Clean energy is a good example. We also intend to focus on national security. That is an area we were not willing to compromise on. They just closed our objective was to target what we do as narrowly as possible so that it focuses on national security. In the welfare of the chinese people. And then importantly, that theyre part of that is we need to Work Together on global problems. Debt relief is one of those problems. Climate change is another. That is what we are trying to do in terms of our strategy. President biden and president xi met in bali. I think it was just over a year ago. I think it was a dangerous situation. Janet yellen there with bloombergs Washington Bureau chief. Lets stick with china. There are signs the crisis in the comedy sector is spreading further. When you take a look at this, think about what it represents to chinas property market. This is the second biggest developer in china. It is one that is really be being considered a high quality company. We saw some big moves coming through on the taliban. This you are seeing here is looking at a dollar bond. It did tell us how fragile Market Sentiment is. Even highquality are also susceptible to headlines. This chart here looking at Investment Grade bond index for asian issuers. It is only second behind another tennis developer. The issues in that sector are really not done just yet. It doesnt go very well. We know that. We did want to highlight a different call. This one is a little bit more optimistic. This is from the investor here. Speaking about the outlook for chinese equities. They made these remarks into a local media outlet. He says the chinese stock market is just one of the factors but also really being affected by external factors. That includes the fed tightening cycle. It tells you how much of an impact or impact those external ones are having. It is still worth highlighting that they will have their Sales Numbers due out later and the expectation for that is we will see a weakness in the sales trend continuing and also dropped in the prior session. Obviously any kind of indication for these china stocks is want to watch. You can get around up in todays edition. Subscribers can find that friday edition and you can customize the settings. You can get that is on the industries and assets that matter to you. This is bloomberg. Ns built a streaming service. Movies and shows, live tv, more local sports. This is your big three that crushes cable. And he changed the batteries on all three smoke detectors. Fubo that first time you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. Quick some corporate stories we are tracking. We have taken some charges here. It is still very strong in the china region. Expectations a day after willing labor pays. Ford also pulled it fully operated results guidance, citing the effect of the six week strike and pending ratification of the deal. Jim probably said the firm was negatively impacted by the strike which estimated to cost a total of 1. 3 billion so far. Sources have told bloomberg similar to the tentative agreement they have. Both sides have seen this on multiple key issues. Western digital shares plunged after negotiations broke down. Sources told bloomberg discussions between both companies have ended for now after they said they would not support the merger. The chipmaker is an indirect shareholder. Plenty more to come right here on daybreak australia. This is bloomberg. We are seeing yields go up. Part of the increase in yields is a reflection of the strength of the economy. Interest rates will be higher for longer. That was janet yellen who said the surge in longterm bond yields is a reflection of a strong u. S. Economy. Lets get a check on those u. S. Futures before the chinese trading session. We are looking good early in the afterhours session. This is thanks to amazon and intel. Both of those earnings giving the nasdaq 100 futures a boost after a chronic week. The s p down another 1. 2 . It has been really difficult week. The nasdaq is down about up about 30 . I know you will continue to speak about those stocks. Yes. Take a look at those amazon afterhours numbers. We see cautious optimism here. A bit of a relief rally after we had such a bad day for tech the u. S. Session. That turned into asia as well. We are seeing amazon still up by over almost 5 . And that tournament story there. Lets talk through both of these companies earnings. He joins us now from beautiful maui. There are worse locations to be doing this interview from. Let me start off with amazon. The cautious optimism tone. Were you satisfied with these numbers and outlook . Yes. There was an expectation that that would be good. What we saw is microsoft a better than expected. Googler did worse than expected with google clouds. What would amazon do . They are right in the middle there. We are talking tens of a percent. Similar to what they had last quarter. The truth of it is the reason we are seeing a bit of a tournament on market is people recognizing these tech stocks are actually doing well. That is a reflection of business investment. To me, that is a sign of overall business strength and confidence to make investments in cloudbased computing and all these other things. Then on the flipside, people are buying things. They were a little more cautious on the outlook. Still, it was a pretty good story. Aws for cloud, what you think of that . I think we will see growth rates will be difficult to maintain as market gets bigger and bigger. I think what we are starting to see is the beginnings of generative ai on all these cloudbased companies. Microsoft talked about it. The u. S. Talked about it. They had this bedrock technology. That has been the story. They talked about all the Different Companies they were working with him generative ai workload. I think we will see some growth from this generative ai thing now and into 2024. How that translates directly into the numbers for amazon as it gets bigger and bigger in terms of growth rates, that is a little harder to say. That sense of caution we have for a while, there is a lot of strength in the cloud. Companies making these investments and then the generative ai will drive a lot of growth into 2024. Intel sort of thing catch up when it comes to nvidia for the ai side but you are encouraged by at least this early stage turnaround in the pc market . Absolutely. Intel looks at the pc market, the Server Market lets remember this was the seventh consecutive quarter of revenue decline but they beat expectations and they beat topline and bottomline. They beat gross markets, they beat their forecast. There is a sense of it starting to turn around, the pc market numbers are better than expected. Also kind of in line with what microsoft said about windows. It feels like pc momentum is starting to come back. Driven by ai powered pcs. This is from your traditional server guys. It was also strong. That is functional Companies Investing their own data centers and the company said we have three different founding companies. Unfortunately dated not say who. I would have been nice to know. We have three companies that committed to their business. They said they are on track with the evolution of having these five different notes in four years. That is a big . On the execution. They seem to be sticking to it. As things come around, i think that is definitely encouraging. They seem to be passed the worst of it for sure. The earliest adopter when it comes i think theres earnings season there has been a lot of focus on how much Capital Spending to continues to be on ai. Our investors started to be less patient about seeing the payoff . There is a lot of money being spent. Intel is selling a lot. There is a little bit of hand in glove kind of thing happening. I think we will see in 2024, people say they are spending all this money. Where is the actual payoff . Similar things from google and workspace. There is a payoff going to be from other Large Companies . That is going to be a big question. I think for now we are ok. It does feel like earnings this time even as we do expect tech stocks to be a little weaker that the expectations are higher. I wanted to end on china out of all the detectives. Wait until you see the most protection from the ongoing slowdown in china, where you will see the biggest risk. Apple is a big . Every time somebody says they will have challenges here, they always seem to magically defy expectations. Lots of people would say apple seems to be a little bit of a risk and yet the brand is so strong here that i think there is this sense amongst chinese consumers that they want to continue having outlets. The brand people like to be associated with. I think they are at risk but i have yet to see anybody really when against apple to be honest with you. I think the intel ships are being limited for ai. There was a little bit of a . There. People have been kind of been building that into their model forecasts for a while. I am not sure it will have a dramatic impact in the near term. Always great to chat with the chief analyst at technology research. You can get that commentary on our Bloomberg Team of expert editors. Click sam bankmanfrieds widely anticipated testimony to the jury was delayed by a judge minutes before the cofounder was expected to take the stand. Lets bring in the executive editor of legal news. The jury was sent home for the judge to decide which parts of the testimony can be heard. It was basically a dress rehearsal if you will. Whether or not he could or could not testify in front of the jurors. This was a rare and unusual moment. Judge kaplan who oversees the trial lastminute told jurors to go home and then they will look at whether or not he can assess part of the argument the defense was making was even relevant to this case. In relevance of this trial sam bankmanfrieds defense has been arguing for months that he made all these decisions, bad Business Decisions and they were mistakes but there were others involved in making these decisions and it was the legal counsel, the lawyers, the Industry Experts who all told him this was legitimate and what he was doing was not illegal and thus proving he had no intention of defrauding his investors but that he has good intentions. But that he just made a bad mistake. Bringing in conversation into this trial is pivotal. It is very important for the defense. Now it is up to the judge how did dan bankmanfried do . What is the verdict . Not very well. He did not do very well on the stand today. He basically dodged a lot of questions and says he does not remember details on some of the key moment like when the prosecution asked him about the money flow. He says a lot of conversations and discussions he had with his legal counsel, with the lawyers, he cannot really remember them correctly. He seems less engaged than he would usually be. Weve seen a lot of his interviews and interaction with the press. At one point the judges ashlee called him out and said please listen to the questions carefully and answer accordingly. Overall, it does not look like he had a very strong argument. Especially compared to the bombshell testimonies we saw earlier from his Close Friends and confidantes. What are we expecting in the days to come . We expect a trouser resume tomorrow with the government continuing to to crossexamine him as early as tomorrow and then it will probably carry on to a couple of days next week and then it goes into jury deliberation. That means the verdict on one of the biggest fraud trials you will see could come as early as late next week. Quest that was andelman there. Sam bankmanfried is not the only crypto founder feeling the heat. They found themselves increasingly unfettered from the traditional financial system. The revenue slump more commonly known as his wealth sits at 17 billion. This is bloomberg. Id like to thank stitch fix. For taking care of the shopping. For getting my fit just right. For finding me looks that work for me and my budget. Now getting dressed is so easy. You just get me. They get me. You just get me. And theyll get you, too. Take your style quiz today. In a speech at the yuan general assembly, this accused of overseeing what he called genocide against palestinians. Meanwhile, they killed my says deputy head of intelligence. The chief correspondent from south spoke exclusively with the president elect. They have the right to establish an independent bank aboard. We will give our full support in the future. They deserve the same rights, the right to live, a peaceful life, that is something we have always had would be the same. Are you concerned about possible trickledown effect when it comes to radical islam . We know of we know that between 2014 and 2018, these are the most people per capita fighting in the war there. Is it a concern you could see an impact from the war between israel and hamas customer hamas . In any country, i think this issue is the people going to that same end. For me, reaching out to people with extremist ideas is to bring them back to the main fold and to teach them and educate teach them and educate them. Respect everybody. I think we can bring back everyone to the main fold. I am concerned if anybody is out there, with any violent ideas, i want every citizen to be respectful of everybody else. Request that was the president elect speaking is supposedly with haslinda amin. Watch us live and see our past interviews on our interactive function tv. Plus, become part of the conversation by sending us instant messages during our shows. This is for terminal subscribers only. Check it all out at tv , this is bloomberg. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Corp. This will become Morgan Stanleys new ceo. Close organizations grow and change. We ended up with a phenomenal outcome. We had other unbelievably good executives. It is sort of what you hope for. You try to deal with the inevitable things you get from the market and the disciplines that, in times with any complex business that youre also trying to hand it off to the next generation. Close you will inherited a gift here, a massive transformation over 14 years. What are the best valuations are in Global Banking . There is more to come. There is more to come. We look at the fiveyear chart, the 10 year chart, the 15 year chart, the wealth and Asset Management businesses have these remarkable and durable earnings. We are thrilled about the Business Strategy we have in place and it will continue to deliver longterm value. We have been is such a prolonged bull market. Do you expect the next couple of years from Morgan Stanley to be a little bit more choppy . I dont know. I thought that she would be tough and it was. A lot of what is going on in the market conspires against our particular business specs. Very different business models. Our term will come. I personally think the u. S. Has dodged a recession. I think the fed is very close to being final within probably 25 basis points. We are starting to see a look for the chevron deal. We are seeing activity in different sectors. It is coming alive. What i care about is over the really long run. When we set out on this journey, we were not focused on a quarter. That is kind of good news because we are buying that stock. Every show you buyback your retiring dividend. And we are buying back stock and the stock is cheap. It is kind of a good situation. I think the firm will do great. There is just so much opportunity. We are definitely new paradigm. Interest rates will be higher for longer and the world has gotten smaller which means the clients need advice they need in the wealth and Asset Management space, corporate clients, we will have lots and lots of activity around those clients. I just want to make sure we are completely aligned with the Business Strategy we have in place. Something james has painstakingly put together for 14 years. The market knows what we want to do so i am incredibly optimistic over the next couple of years. That was james gorman and had pickup speaking with bloomberg. Lets have a look at how things are shaping up for fridays u. S. Session. They are up. 7 after the index dropped 1. 9 having already dropped 2. 5 in the wednesday session as the future is looking to be pointed to a gain of. 4 over the open and amazon and intel both after hours more than 5 even as web services portion of amazon did not point make the estimate. It wasnt some cautious optimism. We do see that sort of trend of delegates easing, some of the top beneficiaries have seen dollars coming under so much pressure. Really curbing some of those earlier gains. The euro also showing up some of those losses. There was still largely expected. We are seeing the dollar index looking pretty steady at this point after rising as much as. 3 . Morgan stanley saying those differentials continued the move in the dollar positive direction. We are also watching dollar china trading as well. Coming up on the next hour, the managing director joins us for the last interview. He is singapores longestserving central bank chief. This is bloomberg. 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